Post Session: Quick Review

Indian equity benchmarks traded in green for most part of the day and ended the session with strong gains. Heavy buying in last hour of trade pulled the markets higher with Sensex surpassing crucial 35,650 level. Domestic bourses made a cautious start and traded with marginal losses, following weak cues from Asian peers. Sentiments were downbeat with the rating agency ICRA’s report that Reserve Bank of India’s (RBI) plan to change disbursement norms of working capital would exert pressure on the liquidity profile of borrowers, specifically those having a high dependence on cash credit or overdraft facilities while lacking alternative sources of liquidity. However, key indices erased losses and turned into positive terrain, as traders received encouragement with NITI Aayog Vice Chairman Rajiv Kumar’s statement that the Indian economy is on the cusp of a major sustained and ongoing recovery and poised to grow above 8% from the next year, thanks to a slew of measures taken by the government in the last few years. Some support also came with private report showing that activity in India’s service industry rebounded in June from a mild contraction last month, expanding at its quickest pace in a year on the back of a surge in new business orders. The Nikkei/IHS Markit Services Purchasing Managers’ Index (PMI) climbed to 52.6 last month, its highest since June 2017, from 49.6 in May.

Markets extended their northward journey in the noon deals, after Union Cabinet approved the proposal to hike the Minimum Support Price (MSP) for Kharif crops, which was made in the Budget 2018 by Finance Minister Arun Jaitley. The MSP for paddy has been raised by around Rs 250 per quintal. The hike in MSP is one of the measures taken by the Narendra Modi government to end farmers woes in the country. Investors’ morale also remained upbeat on a report that SEBI has enhanced the overseas investment limit of alternative investment funds (AIF) and venture capital funds (VCF) to $750 million from the current $500 million. Meanwhile, Moody’s Investors Service’s latest report highlighted that higher crude price is a key risk to India’s growth, but subsidy reform in petrol and diesel has diminished the risk to sovereign credit profile.

On the global front, Asian markets ended mostly in red, on heightened anxieties about Sino-U.S. trade tensions ahead of Washington’s end-of-week deadline to impose tariffs on Chinese imports. European markets were trading mostly in red in early deals on Wednesday, amid elevated tensions between the U.S. and China over looming trade tariffs and investment restrictions.

Back home, PSU Bank sector was in focus with a report stating that India’s public-sector financial institutions control about 70 percent of all banking assets in the country, but they have the highest exposure to soured loans amounting to as much as $150 billion. In fact, the 21 state-owned banks had stressed loans of about 8.26 trillion rupees ($120 billion) as of December 31.

The BSE Sensex ended at 35653.87, up by 275.27 points or 0.78% after trading in a range of 35309.67 and 35667.31. There were 17 stocks advancing against 13 stocks declining on the index. (Provisional)

The broader indices ended mixed; the BSE Mid cap index fell 0.18%, while Small cap index was up by 0.36%. (Provisional)

The top gaining sectoral indices on the BSE were Auto up by 1.38%, Energy up by 1.05%, Healthcare up by 0.81%, Consumer Disc up by 0.81% and Bankex up by 0.72%, while Power down by 0.60%, Consumer Durables down by 0.57%, IT down by 0.56%, TECK down by 0.53% and PSU down by 0.51% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Bajaj Auto up by 4.19%, Maruti Suzuki up by 2.79%, Hindustan Unilever up by 2.08%, HDFC up by 2.07% and Reliance Industries up by 1.89%. (Provisional)

On the flip side, NTPC down by 1.45%, Vedanta down by 1.28%, ONGC down by 1.11%, Bharti Airtel down by 1.07% and Tata Motors down by 0.87% were the top losers. (Provisional)

Meanwhile, highlighting slew of measures taken by the government in the last few years, NITI Aayog Vice Chairman Rajiv Kumar has said that the India’s economy is on the cusp of a major sustained and ongoing recovery, and it is poised to grow above 8% from the next year. He stated that this on the basis of the macroeconomic balances that are in place, along with a higher growth.

He said ‘I think because of all these reforms, all the measures we have taken (over the last few years), we are now on the cusp of a major sustained and ongoing recovery’. He also said that the economic growth is likely to shift from 7.5% now to 8% and above next year and by 2022, the country will start growing at 8.5-9% and thereafter will sustain it. He pointed out that over the last four years, the economy has been hugely formalised and the dualism has been done away with to a great extent.

NITI Aayog Vice Chairman said ‘The dualism that existed between the formal and informal -- between those who paid taxes and those who did not, I think that is beginning to change in a major way with indirect tax base increasing by 40 lakh in two years over a base of 60 lakh, so, an incredible jump there.’ He added that all of this will help India integrate much better with global production network and would give competitiveness and thus a basis for a higher trajectory of growth which will be above 8% to go forward.

The CNX Nifty ended at 10771.85, up by 71.95 points or 0.67% after trading in a range of 10677.75 and 10777.15. There were 26 stocks advancing against 24 stocks declining on the index. (Provisional)

The top gainers on Nifty were Bajaj Auto up by 4.32%, Lupin up by 3.70%, Bharti Infratel up by 2.92%, Maruti Suzuki up by 2.88% and Bajaj Finserv up by 2.49%. (Provisional)

On the flip side, HPCL down by 2.49%, Cipla down by 2.27%, Grasim Industries down by 2.10%, NTPC down by 1.42% and BPCL down by 1.40% were the top losers. (Provisional)

European markets were trading mostly in red; Germany’s DAX decreased 10.64 points or 0.09% to 12,338.50 and UK’s FTSE 100 was down by 13.71 points or 0.18% to 7,579.58, while France’s CAC rose 8.63 points or 0.16% to 5,325.40.

Asian equity markets ended mixed on Wednesday as trade jitters continued to simmer ahead of the July 6 deadline, when US tariffs on Chinese goods are due to take effect. The yen rose against the dollar and the euro advanced amid fading political risks in Germany, while oil prices remained supported by data showing a larger-than-expected fall in US stockpiles. Chinese shares ended lower despite the yuan rising sharply against the US dollar following verbal intervention by the People's Bank of China. Meanwhile, Japanese shares retreated as technology stocks followed their US peers lower and index heavyweight Fast Retailing reported a 4 percent fall in same-store sales at its Uniqlo clothing outlets in June.