Post Session: Quick Review

Indian equity benchmarks traded on a firm note for most part of the day and ended the session with gain of around four tenth of a percent. The market breath was in favor of advances with two stocks advancing against every declining stock. Buying in the second half of the session pulled the market higher with Nifty closing above 9,950 mark. Index heavyweight Reliance Industries closed in green for fifth straight session and was major contributor to the index gains. The equity benchmarks made a positive start and traded in fine fettle in early deals as traders took some encouragement with Prime Minister Narendra Modi’s statement at BRICS Summit 2017 that the Goods and Services Tax (GST) introduced in July this year is the biggest economic reform ever in India. In one stroke, a unified market of 1.3 billion people has been created. He said that programmes like Digital India, Start-up India and Make in India were changing the economic landscape of the country. Investors also took note that the all powerful GST Council may consider lowering tax on items of common consumption if the high trajectory of collections continues over the next few months. The tax reduction could be either on items of common consumption or a cut in headline rate which will benefit consumers. Some support also came after Union minister Suresh Prabhu said that the Commerce and Industry Ministry will soon bring in a policy framework for facilitating access to global markets for the Indian agriculture produce. Prabhu, who took charge as Commerce and Industry Minister, said that his ministry will work on developing global supply chain for the agriculture sector.

The street shrugged off CRISIL’s report which lowered its growth forecast to 7% for fiscal 2018, down from 7.4% earlier, as it sees disruptions arising from the implementation of the new uniform tax regime to continue to impact the economy for a few more quarters. In the quarter to June, economic expansion slumped to 5.7%, the slowest in the past three years and the country lost the tag of being the fastest growing large economy again to China. Meanwhile, investors also paid no heed to the report which showed that India’s services sector registered another monthly decline in activity in August, impacted for the second successive month by the goods and services tax (GST). Though, the seasonally adjusted Nikkei Services Business Activity Index rose to 47.5 in August from 45.9 in July, the reading was below the watershed ‘50’ mark which means contraction, mainly due to second consecutive drop in new business.

On the global front, Asian markets closed mixed, as tensions on the Korean Peninsula remained in focus. Japan’s services sector expanded in August at the slowest rate in six months as the pace of new orders eased, a private survey showed in a sign the economy is losing some momentum after this year’s solid gains. The China Caixin services PMI jumped to 52.7, well above the 51.8 level expected. The European markets were trading in green as attention turned to deal-making after Aveva’s tie-up with Schneider Electric. Activity in the UK service sector dropped more than expected in August, hitting an 11-month low and dampening optimism over the British economy as the sector makes up approximately 80% of gross domestic product.

Back home, select cement companies stock like UltraTech Cement, ACC, Ambuja Cements and Shree Cement closed in green on report that cement makers raised prices by up to Rs 27 per 50 kg bag in Mumbai. Select sugar stocks closed in green on report that the government has decided to import 3 lakh tonne sugar in order to meet that likely increase in demand and due to shortage of sugar post drought in southern states. Telecom stocks Bharti Airtel, Idea Cellular, Reliance Communications and Tata Teleservices (Maharashtra) closed in red on reports that TRAI may phase out Interconnection Usage Charge (IUC).

The BSE Sensex ended at 31819.28, up by 117.03 points or 0.37% after trading in a range of 31674.23 and 31863.47. There were 19 stocks advancing against 12 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.62%, while Small cap index was up by 1.03%. (Provisional)

The top gaining sectoral indices on the BSE were Consumer Durables up by 2.29%, Realty up by 1.54%, Energy up by 1.17%, Basic Materials up by 1.12% and Oil & Gas up by 0.86%, while Telecom down by 1.89%, TECK down by 0.08% and Healthcare down by 0.06% were the few losing indices on BSE. (Provisional)

The top gainers on the Sensex were Coal India up by 2.76%, Adani Ports & Special Economic Zone up by 2.13%, Bajaj Auto up by 1.39%, Reliance Industries up by 1.31% and Tata Motors up by 0.95%. (Provisional)

On the flip side, Bharti Airtel down by 2.01%, Sun Pharma down by 1.91%, Power Grid down by 0.65%, Cipla down by 0.63% and Tata Motors - DVR down by 0.50% were the top losers. (Provisional)

Meanwhile, impacted for the second successive month by the goods and services tax (GST), India’s services sector registered another monthly decline in activity in August. Though, the seasonally adjusted Nikkei Services Business Activity Index rose to 47.5 in August from 45.9 in July, the reading was below the watershed ‘50’ mark which means contraction, mainly due to second consecutive drop in new business. The Nikkei India Composite PMI Output Index which measures both manufacturing and services stood at 49.0 in August as against 46.0 in July, with a weaker pace of reduction that was only slight.

As per survey report, the rate of contraction was less severe in August month compared to the previous month. It said that the rebound from July’s downturn in manufacturing production was unable to offset the contraction in services activity. Private sector output witnessed subsequent declined again, while new business also mirrored trend of services activity, decreasing for the second month in a row but at a slower rate.  Besides, the decline in employment continued for the second straight month amid evidence of the non replacement of voluntary leavers.

On the inflation front, input costs rose at a quicker rate, while output charge inflation softened from July’s 53-month peak in August. In the manufacturing industry, purchase prices increased at the slowest pace in one year. The report further said that service providers’ outstanding business volumes increased due to delayed payments from clients. Payroll numbers in the service economy decreased in August, the decline in employment was the second in successive months, but job shedding eased to a marginal pace as the vast majority of service providers left headcounts unchanged.

The CNX Nifty ended at 9952.45, up by 39.60 points or 0.40% after trading in a range of 9901.05 and 9963.10. There were 30 stocks advancing against 21 stocks declining on the index. (Provisional)

The top gainers on Nifty were Coal India up by 3.23%, Tech Mahindra up by 2.80%, Ultratech Cement up by 2.49%, Ambuja Cement up by 2.08% and ACC up by 1.95%. (Provisional)

On the flip side, Bharti Airtel down by 2.51%, Sun Pharma down by 1.94%, Bharti Infratel down by 1.52%, Bosch down by 1.19% and Aurobindo Pharma down by 0.75% were the top losers. (Provisional)

The European markets were trading in green; UK’s FTSE 100 increased 6.87 points or 0.09% to 7,418.34, Germany’s DAX increased 94 points or 0.78% to 12,196.21 and France’s CAC increased 11.33 points or 0.22% to 5,115.30.

Asian equity markets ended mixed on Tuesday, with Japanese markets succumbing to selling pressure to hit a one-week low, after reports that the government is drafting a plan to bring thousands of South Korea-based nationals to safety in the event of a military conflict with North Korea. South Korea's Asia Business Daily, citing an unidentified source, reported on Tuesday that North Korea had been spotted moving a rocket that appeared to be an intercontinental ballistic missile (ICBM) towards its west coast. Meanwhile, Chinese shares ended higher after a private business survey showed activity in China's services sector expanded at a faster pace in August.