Firm trade persists on easing inflation data

Firm trade persisted on the street in late afternoon session, with Sensex and Nifty gaining more than 200 and 50 points, respectively, aided by firm opening of European markets coupled with easing inflation data. India’s retail inflation cooled down to 4.17% in the month of July 2018, mainly on the back of slowdown in prices of vegetables and fruits, while Wholesale price index (WPI) inflation eased to 5.09% in the month of July 2018, supported by fall in the prices of minerals, crude petroleum & natural gas. Traders were taking encouragement with a report that micro and small enterprises (MSEs) are getting more and more optimistic about their business prospects. The CriSidEx index, which measures sentiment among MSEs rose to a three-quarter high of 127 in the first quarter of the current financial year, up from 121 in the fourth quarter of the previous financial year. However, the markets trimmed some of their gains, as the Reserve Bank of India (RBI) in its annual inspection of banks’ books examined 200 stressed accounts dating back to 2011. Some concerns also came after the Prime Minister’s Office directs the Finance Ministry to take action against tax evaders under the GST regime. Meanwhile, according to an order passed by the Karnataka bench of the Authority for Advance Ruling (AAR), salary for services like accounting, IT, human resource, provided by the head office of a company to its branch offices in other states will attract 18% GST.

On the global front, European markets were trading in green, as the Turkish lira stabilized.  Some relief also came with after Turkish Finance Minister Berat Albayrak announced the government plans to calm the highly volatile financial markets. Asian markets were trading mixed, after Chinese data on factory output, retail sales and fixed-asset investment all came in weaker than expected in July, adding to signs of an economic slowdown. Retail sales in China jumped an annual 8.8 percent on year in July, a tad below expectations for a 9.1% gain and down from 9.0% in June. Back home, in scrip specific development, Jindal Drilling & Industries zoomed on reporting 81.87% rise in its net profit at Rs 9.93 crore for the quarter under review as compared to Rs 5.46 crore for the same quarter in the previous year.

The BSE Sensex is currently trading at 37868.62, up by 223.72 points or 0.59% after trading in a range of 37689.71 and 37932.40. There were 19 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.44%, while Small cap index was up by 0.25%.

The top gaining sectoral indices on the BSE were Realty up by 1.65%, Healthcare up by 1.21%, Energy up by 1.00%, IT up by 0.82% and Bankex up by 0.82%, while Telecom down by 0.38%, Capital Goods down by 0.23%, Industrials down by 0.17%, Power down by 0.16% and PSU down by 0.13% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 4.04%, Yes Bank up by 2.40%, Axis Bank up by 2.14%, Reliance Industries up by 1.68% and ICICI Bank up by 1.38%. On the flip side, Adani Ports & SEZ down by 1.14%, Hero MotoCorp down by 1.06%, Larsen & Toubro down by 0.63%, Tata Motors - DVR down by 0.62% and Bharti Airtel down by 0.61% were the top losers.

Meanwhile, snapping three-month rising trend, India’s retail inflation cooled down to 4.17% in the month of July 2018, mainly on the back of slowdown in prices of vegetables and fruits. This was lowest in nine months, while the previous low was in October 2017 at 3.58%. Inflation based on Consumer Price Index (CPI) for June has also been revised downwards to 4.92% from the earlier estimate of 5%. However, as for year-on-year comparison, retail inflation had increased by 2.36% in July last year. Besides, consumer food price inflation, a metric to gauge changes in monthly kitchen costs, eased to 1.37% in July, compared with 2.91% rise in the previous month. Though, it was higher as compared to (-) 0.36% July 2017.

As per the data of the Central Statistics Office (CSO), Ministry of Statistics and Programme, the CPI (Rural, Urban, Combined) on Base 2012=100 for July 2018, stood at 4.11%, 4.32% and 4.17% respectively, compared to 2.41% , 2.17% and 2.36% respectively in July 2017. The index value of CPI for combined stood at 139.8. The data also showed that Consumer Food Price Index (CFPI) for all India Rural and Urban for July 2018 stood at 2.18% and (-) 0.36%, respectively, compared to 0.07% and (-) 0.99%, respectively in July 2017. The index value of CFPI for combined stood at 140.2 for the month of July.

According to the data, among the food articles, inflation in vegetables declined by (-) 2.19% in July, compared to 7.80% in June. The rate of price rise in fruits slowed down 6.98%, as against 10.13% in the previous month. Pulses continued witness deflation and contracted (-) 8.91% in July from (-) 10.87% a month ago. The inflation in protein rich items like meat and fish, and also milk was also slower in July compared to the previous month. Inflation from pan, tobacco and other intoxicants fell to 6.34% in June from 8.05% a month ago. However, inflation in the ‘fuel and light’ segment based on the changes in the CPI increased to 7.96% from 7.14% in the previous month.

The CNX Nifty is currently trading at 11432.75, up by 77.00 points or 0.68% after trading in a range of 11370.80 and 11452.45. There were 33 stocks advancing against 16 stocks declining, while 1 stock remained unchanged on the index.

The top gainers on Nifty were Sun Pharma up by 4.27%, Yes Bank up by 2.72%, Ultratech Cement up by 2.52%, Bajaj Finance up by 2.41% and Bajaj Finserv up by 2.34%. On the flip side, UPL down by 2.53%, HPCL down by 1.35%, Adani Ports & SEZ down by 1.23%, Hero MotoCorp down by 1.13% and Bharti Airtel down by 0.97% were the top losers.

Asian markets were trading in trading mixed; Straits Times increased 0.56 points or 0.02% to 3,245.90, Nikkei 225 zoomed 498.65 points or 2.23% to 22,356.08, Taiwan Weighted gained 75.31 points or 0.7% to 10,824.23 and KOSPI rose 10.46 points or 0.46% to 2,258.91. On the flip side, Jakarta Composite decreased 109.80 points or 1.91% to 5,751.45, Hang Seng plunged 183.64 points or 0.66% to 27,752.93 and Shanghai Composite was down by 4.71 points or 0.17% to 2,781.16.

European markets were trading mostly in green; France’s CAC increased 10.78 points or 0.2% to 5,423.10 and Germany’s DAX surged 41.90 points or 0.34% to 12,400.64. On the flip side, UK’s FTSE 100 was down by 1.16 points or 0.02% to 7,641.29.