Post Session: Quick Review

Indian equity benchmarks traded in green throughout the day on Monday and ended the session with strong gains, on back of encouraging global cues after favourable US jobs data boosted risk appetite. Hectic buying activity in last hour of trade largely forced the markets to close at day’s high, with Sensex closing near 36,000 level. Domestic indices began trading on a positive note, as traders got support with industry body Assocham’s statement that the government’s decision to hike the minimum support price (MSP) for 14 khariff crops would boost farmers’ income, resulting in a huge rural demand push to the Indian economy. Markets gained traction and traded in fine fettle, taking support from a report by the World Trade Organization (WTO) showing that India has initiated far more number of measures widely considered to be trade restricting since last year, when the US and China began locking horns on a global trade war spanning hundreds of billions of dollars.

Rally got extended in last leg of trade with Chief Executive Office and Managing Director of BSE Ashishkumar Chauhan’s statement that India will hit double-digit growth rates soon with growing GDP, legislative reforms such as GST and IBC. Sentiments remained jubilant with Economic Affairs Secretary Subhash Chandra Garg’s statement that India's macroeconomic story is quite good. He also noted that the risks to the macro story and stability are far more manageable than ever. Meanwhile, the Union Minister for Commerce and Civil Aviation Suresh Prabhu sought to dispel the notion of other countries that India subsidised its exports. He said the government was merely trying to mitigate the adversities of the exporters, which did not tantamount to subsidising of exports from India.

On the global front, Asian markets ended in green, as favourable US jobs data whetted risk appetites, while sterling slipped after two members of the British government resigned over Brexit and put the future of Prime Minister Theresa May in doubt. European markets were trading in green in early deals on Monday, as a wave of optimism about the resilience of the global economy spread across markets despite the escalation of the U.S.-China trade dispute and a new Brexit crisis within the British government.

Back home, stocks related to steel sector ended higher with a private report that India’s crude steel output grew six per cent to 26 million tonne (MT) in the first quarter of the ongoing financial year. The country had produced 24.5 MT of crude steel during April-June, 2017-18. Besides, power sector were in limelight with the power ministry mulling a reward of Rs 50 lakh for state utilities employees and a grant of Rs 50 crore for discoms which will meet household electrification target under Saubhagya scheme at the earliest.

The BSE Sensex ended at 35944.33, up by 286.47 points or 0.80% after trading in a range of 35779.72 and 35977.37. There were 25 stocks advancing against 6 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index gained 1.29%, while Small cap index up by 1.63%. (Provisional)

The top gaining sectoral indices on the BSE were Energy up by 1.59%, Capital Goods up by 1.48%, Industrials up by 1.46%, Utilities up by 1.43% and Power up by 1.41%, while there were no losers. (Provisional)

The top gainers on the Sensex were Asian Paints up by 3.07%, Vedanta up by 2.94%, Yes Bank up by 2.92%, Reliance Industries up by 2.12% and Sun Pharma up by 1.96%. (Provisional)

On the flip side, TCS down by 1.28%, Hero MotoCorp down by 0.49%, Indusind Bank down by 0.43%, HDFC down by 0.35% and Bharti Airtel down by 0.21% were the top losers. (Provisional)

Meanwhile, days after the government hiked the minimum support price (MSP) for 14 khariff crops, the industry chamber, Associated Chambers of Commerce and Industry of India (ASSOCHAM) has said that this better realizations for famers’ crops would boost their income and will result in a huge rural demand push to the Indian economy. The government had increased the MSP for paddy by a record Rs 200 per quintal that will cost the exchequer over Rs 15,000 crore, and help fulfil its poll promise to give farmers 50% more than their cost of production.

The industry chamber also said the MSP may not be an ideal and a perfect solution to address the farmers’ woes, but the long-term reforms would take long time and farmers cannot be allowed to suffer that long. It further said the entire rural landscape constitutes about 70% of consumer basket and unless they have adequate purchasing power, the much-needed demand push for India Inc would not materialise.

ASSOCHAM noted that the concern over MSP increase leading to inflationary pressure may be addressed by improving the administrative machinery in the foodgrains and vegetable mandis, which are still under the clutches of cartels. It added that the state governments have a key role in demolishing the mandi cartels which trigger a huge volatility in agri prices, especially those of fruits and vegetables. Besides, it suggested setting up of a number of procurement and processing companies in the Public, Private Partnership (PPP) which can act as a bridge between the farmers and the consumers which may even be B2B consumer.

The CNX Nifty ended at 10851.30, up by 78.65 points or 0.73% after trading in a range of 10807.15 and 10860.35. There were 39 stocks advancing against 11 stocks declining on the index. (Provisional)

The top gainers on Nifty were Vedanta up by 3.31%, Asian Paints up by 2.99%, Yes Bank up by 2.98%, Dr. Reddys Lab up by 2.71% and Axis Bank up by 2.16%. (Provisional)

On the flip side, Ultratech Cement down by 1.57%, TCS down by 1.51%, Titan Co down by 1.32%, Zee Entertainment down by 0.90% and Hero MotoCorp down by 0.85% were the top losers. (Provisional)

European markets were trading in green; Germany’s DAX increased 47.86 points or 0.38% to 12,544.03, UK’s FTSE 100 was up by 36.46 points or 0.67% to 5,412.23 and France’s CAC added 32.86 points or 0.43% to 7,650.56.

Asian equity markets ended higher on Monday as strong US jobs growth data helped investors shrug off renewed concerns over an escalating US-China trade dispute. US job growth increased more than expected in June but slowing wage increases helped reduce the probability of another Fed rate hike for September. Japanese shares hit a one-week high as the yen turned broadly lower in reaction to the strong US jobs data released on Friday. Meanwhile, China’s share market bounced despite heightened trade tensions between Washington and Beijing after each imposed major tariffs on the other’s goods last week and investors nervously watched for more policy action.