Post Session: Quick Review

Indian equity benchmarks traded between green and red terrain throughout the session and ended flat on Tuesday, with Nifty ending just shy of 11,400 mark.  Markets made positive start and traded slightly in green, as traders took some support with rating agency ICRA’s report that revenues of Indian corporates have grown by 22% in the June quarter from a year ago. It added that the increase in revenues has been attributed to the strong growth in both consumer-based industries such as consumer goods, and auto; and commodity sectors such as cement, iron, steel, and oil and gas. Soon traders turned cautious with president of the International Economic Association, and former chief economist at the World Bank, Kaushik Basu’s statement that in the event of US-China currency war there will be a sideline effect on India and a depreciation of the rupee, which, if managed well by policymakers, will be good for the country. Anxiety also spread among traders with a report stating that the rupee is over-valued and the fair value of the local currency is 70-71 to a greenback. The widening current account deficit and higher interest rates have made the rupee the worst among its Asian peers so far this year.

On the global front, Asian markets ended mostly in green, following Wall Street higher as strong corporate profits helped to defuse fears over U.S.-China trade tensions. European markets were trading in green in early deals on Tuesday, as Euro zone confidence among investors improved to a 3-month high in August as they see signs of relief in the EU's trade dispute with the US. The survey data published by think tank Sentix showed that the investor sentiment index climbed to 14.7 in August from 12.1 in July. This was the highest score since June.

Back home, stocks related to tea sector edged lower after ICRA stating that higher wage rates for tea estate workers is likely to impact the operating cost of bulk tea players significantly. Besides, tourism sector was in focus after a report stating that there has been 14 per cent growth in foreign tourists arrivals (FTAs) in India in 2017 as compared to 2016. The total foreign exchange earnings (FEEs) accrued through tourism in 2017 was Rs 1,77,874 crore.

The BSE Sensex ended at 37681.61, down by 10.28 points or 0.03% after trading in a range of 37586.88 and 37876.87. There were 13 stocks advancing against 18 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 0.17%, while Small cap index was down by 0.23%. (Provisional)

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.44%, Metal up by 1.42%, Basic Materials up by 0.72%, Consumer Disc up by 0.48% and Auto up by 0.18%, while PSU down by 1.08%, Oil & Gas down by 0.99%, Energy down by 0.84%, Telecom down by 0.78% and Industrials down by 0.58% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Tata Steel up by 3.89%, Asian Paints up by 1.74%, NTPC up by 1.37%, Vedanta up by 1.34% and Maruti Suzuki up by 1.16%. (Provisional)

On the flip side, Adani Ports &SEZ down by 6.41%, Coal India down by 2.69%, SBI down by 1.60%, Bharti Airtel down by 1.50% and ONGC down by 1.21% were the top losers. (Provisional)

Meanwhile, former chief economic advisor, Kaushik Basu has said that in the event of US-China currency war there will be a sideline effect on India and a depreciation of the rupee, which, if managed well by policymakers, will be good for the country. He also said that the rupee is over-valued and the fair value of the local currency is 70-71 to a greenback. He added that the widening current account deficit (CAD) and higher interest rates have made the rupee the worst among its Asian peers so far this year.

He said ‘Our exchange rate has tended to appreciate in the past couple of years as we are inflating faster than the industrialised countries. Barring the correction that has taken place in the past few months, the rupee has been appreciating. The right level for the rupee is 70-71 to the dollar.’

Basu also said that India’s method of computing its ease of doing business ranking was not entirely accurate. He further said of the 30 places jump, more than half was due to change in criteria of World Bank’s calculation and added that a part of the jump in rankings was also because of the measure India has undertaken.
Kaushik Basu , the former chief economist of the World Bank, also raised concerns over the jobs market saying the poor employment growth is a matter of concern. Jobs data is very poor in the country. A part of it is legitimate as so much of work is very different work from what one get in the West.

The CNX Nifty ended at 11391.35, up by 4.25 points or 0.04% after trading in a range of 11359.70 and 11428.95. There were 22 stocks advancing against 28 stocks declining on the index. (Provisional)

The top gainers on Nifty were Tata Steel up by 3.91%, Titan Co up by 3.16%, Bajaj Finance up by 1.99%, Eicher Motors up by 1.97% and Grasim Industries up by 1.86%. (Provisional)

On the flip side, Adani Ports &SEZ down by 6.27%, Coal India down by 2.88%, BPCL down by 1.85%, HPCL down by 1.77% and SBI down by 1.67% were the top losers. (Provisional)

European markets were trading in green; UK’s FTSE 100 rose by 47.24 points or 0.61% to 7,711.02, France’s CAC added 38.85 points or 0.70% to 5,516.03 and Germany’s DAX was up by by 46.75 points or 0.37% to 12,662.51.

Asian equity markets ended mostly in green on Tuesday, with upbeat corporate earnings results from the United States. Though, some gains were capped by ongoing concerns about the simmering trade war between China and the United States. Meanwhile, Iranian President Hassan Rouhani dismissed calls for talks with the US as the first phase of sanctions came into effect overnight. Rouhani said that America ‘cannot be trusted’ and wants to ‘create chaos in Iran’. Chinese shares bounced back on bargain hunting after recent steep losses on concerns about the impact of trade war on businesses. Further, Japanese shares ended higher as Chinese markets rebounded and heavyweight SoftBank posted strong first-quarter results.