Post Session: Quick Review

Indian equity benchmarks traded in green for most part of the day and ended the session with modest gains ahead of corporate results. Earnings season for the July-September quarter kicks off this week with over 30 companies scheduled to report their Q2 numbers. Realty and Consumer Durables stocks helped markets to close in green but Nifty failed to hold 10,000 mark. The market breath was in favour of advances with 4 stocks advancing, while 3 stocks were declining on the bourses. The benchmarks despite a cautious start, gained momentum and traded in fine fettle in early deals as traders took some support after the GST Council on Friday announced a slew of decisions to reduce compliance burden, including the eventual setting up of an e-wallet for input tax credits for exporters, and the option for small businesses to file returns and pay taxes only once a quarter. The GST Council also reduced the tax rates on 27 items. Separately, India needs to grow at a faster pace, Finance Minister Arun Jaitley said, while asserting that there was public support for the government’s reform initiatives despite the difficulties arising from implementing GST, for instance. The country has to grow at a much higher rate than it had been growing in recent history. Jaitley added that Modi government’s initiatives like Swachh Bharat, Goods and Services Tax (GST) and demonetisation are having desired impact, with the latter two resulting in increasing tax compliance and squeezing quantum of cash in the economy. Traders also took note of Revenue Secretary Hasmukh Adhia’s statement that the government will clear pending GST refunds of exporters by November-end and over the next six months no tax will be levied on exports as the Council has decided to revert to the pre-GST era. Meanwhile, trying to deflect the criticism arising from the sharp fall in India’s gross domestic product (GDP) growth numbers, Union minister for IT and Law and Justice Ravi Shankar Prasad has said that slowdown in the economic growth in Q1 of 2017-18 (April-June) is transitory and that will definitely pick-up pace in the next quarter as the macro fundamentals are strong.

Investors took note that after a brief lull in the previous quarter, Nifty 50 companies are expected to report double-digit growth in profits with improved profitability in the September quarter, aided largely by a better showing by automobile players, oil marketing companies (OMCs), metal and mining companies and private sector lenders. On the other hand, sectors including capital goods, cement, construction, infrastructure, IT, and pharmaceuticals may continue to languish. Jewellery stocks were buzzing after the Government withdrew its GST notification on gems and jewellery. Permanent Account Number (PAN) card will no longer be mandatory on the purchase of jewellery for over Rs 50,000. Select Movies & Entertainment stocks were buzzing in today’s trade on report that the Indian film industry is expected to grow at 11.5% year-on-year, reaching total gross realization of Rs 23,800 crore ($3.7 billion) by 2020. At present, the film industry grosses a total revenue of Rs 13,800 crore ($2.1 billion), and it has grown at a CAGR (compound annual growth rate) of over 10% in the last couple of years.

On the global front, Asian markets closed mostly higher, as investors digested the release of China Caixin services PMI. The Caixin services purchasing managers’ index showed non-manufacturing activity in China expanded at its slowest levels in almost two years in September. The Caixin/Markit PMI stood at 50.6 last month, compared to the 52.7 figure seen in August. The European markets were trading in red. Britain’s statistics office said that it had underestimated the pace of growth in costs in the labor market, one of the pieces of data that the Bank of England is looking at as it considers whether to raise interest rates next month.

The BSE Sensex ended at 31847.18, up by 32.96 points or 0.10% after trading in a range of 31781.75 and 31935.63. There were 14 stocks advancing against 16 stocks declining on the index, while one stock remained unchanged. (Provisional)

The broader indices ended mixed; the BSE Mid cap index was down by 0.06%, while Small cap index was up by 0.64%. (Provisional)

The top gaining sectoral indices on the BSE were Realty up by 1.96%, Consumer Durables up by 1.09%, FMCG up by 0.62%, Bankex up by 0.33% and Consumer Disc up by 0.30%, while Oil & Gas down by 0.98%, Energy down by 0.72%, Utilities down by 0.67%, Power down by 0.62% and PSU down by 0.58% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Hindustan Unilever up by 1.45%, Dr. Reddy’s Lab up by 1.44%, Coal India up by 1.36%, Adani Ports & Special Economic Zone up by 1.35% and Kotak Mahindra Bank up by 0.96%. (Provisional)

On the flip side, Power Grid down by 1.86%, ONGC down by 1.70%, Bharti Airtel down by 1.12%, Reliance Industries down by 0.85% and NTPC down by 0.83% were the top losers. (Provisional)

Meanwhile, amid worries over an economic growth slowdown, Reserve Bank of India (RBI) Governor Urjit Patel has raised hopes of upturn in economic growth of the country in the near future. RBI Governor expects the country’s growth to pick up in last two quarters of the current financial year (FY18) to exceed 7 percent, based on high frequency real economy indicators suggesting that growth will pick up in the third and fourth quarters.

Urjit Patel said that the economy is recovering, after gross domestic product (GDP) growth slipped to its three-year low of 5.7 percent in the April-June quarter, but reiterated that for them the country’s growth is important but not at cost of inflation, adding that the country need to be a careful and should aim at achieving the inflation target without losing sight of supporting economic growth.

The statement of the RBI governor came in backdrop of some calls for lower interest rates, as RBI left rates unchanged at a review by the monetary policy committee (MPC). RBI Governor pointed that in the medium term, the RBI aims for annual inflation of 4 percent with the flexbility of plus/minus 2 percent on either side to make room for food price volatility and so in view of this the monetary policy committee (MPC) will strive to achieve its 4 percent inflation target on a ‘durable basis’.

The CNX Nifty ended at 9988.20, up by 8.50 points or 0.09% after trading in a range of 9959.45 and 10015.75. There were 29 stocks advancing against 21 stocks declining on the index. (Provisional)

The top gainers on Nifty were Yes Bank up by 1.71%, Coal India up by 1.55%, Tech Mahindra up by 1.39%, Hindustan Unilever up by 1.29% and Dr. Reddy’s Lab up by 1.25%. (Provisional)

On the flip side, Aurobindo Pharma down by 2.33%, Power Grid down by 1.86%, ONGC down by 1.84%, BPCL down by 1.59% and GAIL India down by 1.47% were the top losers. (Provisional)

The European markets were trading in red; UK’s FTSE 100 decreased 12.63 points or 0.17% to 7,510.24, Germany’s DAX decreased 5.05 points or 0.04% to 12,950.89 and France’s CAC decreased 4.26 points or 0.08% to 5,355.64.

Asian equity markets ended mostly higher on Monday, with Chinese markets leading the surge as traders returned to their desks after the week-long ‘Golden Week’ holidays. Meanwhile, China’s major stock indexes touched 21-month highs following a week-long holiday, boosted by a coming cut in banks’ reserve requirement ratio and last week’s stellar performance in global equity markets. Though, Hong Kong stocks dipped after hitting near 10-year highs last week, as investors took profits in property and financial shares in the wake of a disappointing China services survey and worries on North Korea curbed risk appetites. Trading activity remained light across the region due to holidays in Japan, South Korea and Taiwan.