Post Session: Quick Review

Thursday’s session turned out to be a choppy day of trade for Indian equity markets with frontline gauges ending the session with marginal gains. The S&P BSE Sensex hit new lifetime high, while Nifty ended just shy of 11,600 mark. Markets made optimistic start and traded slightly in green, as traders took some support with the SBI’s latest research report ‘Ecowrap’ stating that the country’s GDP is expected to grow by 7.7 percent in the April-June quarter on the back of pick up in leading indicators like cement production, sale of vehicles and bank credit. However, key indices erased gains and turned into negative terrain, as market-men got anxious with NITI Aayog Vice-Chairman Rajiv Kumar’s statement that he was more concerned about the rising trade deficit than the falling rupee, and called for efforts to push exports. Though, the selling proved short-lived as markets once again entered into green terrain and managed to keep their heads above water, as traders found solace with the finance ministry’s statement that the government will meet the fiscal deficit target for the current fiscal although there could be some slippages in the current account deficit (CAD) because of high crude oil prices.

On the global front, Asian markets ended mostly in green. European markets were trading mostly in green in early deals on Thursday, following some positive economic data from Germany and France, though trading was quiet as investors looked ahead to reports on Brexit negotiations.

Back home, banking sector stocks ended lower despite Moody’s Investors Service’s statement that the government’s plan to provide more capital support to public sector banks in current fiscal will restore capital adequacy and improve loan-loss coverage at many loss-making banks, but stress will persist. Besides, insurance sector was in focus with the Insurance Regulatory Authority (IRA) releasing a draft of new regulations that are expected to tighten the grip on the insurance sector. The new rules will require insurance firm to establish an actuary and cash and carry policy for insurance buyers.

The BSE Sensex ended at 38323.56, up by 37.81 points or 0.10% after trading in a range of 38227.36 and 38487.63. There were 14 stocks advancing against 17 stocks declining on the index. (Provisional)

The broader indices ended in mixed; the BSE Mid cap index was up by 0.20%, while Small cap index was down by 0.14%. (Provisional)

The top gaining sectoral indices on the BSE were IT up by 1.18%, FMCG up by 1.09%, Capital Goods up by 0.94%, TECK up by 0.92% and Energy up by 0.82%, while Metal down by 1.53%, Bankex down by 0.83%, Basic Materials down by 0.69%, PSU down by 0.54% and Telecom down by 0.36% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Larsen & Toubro up by 2.18%, Adani Ports &SEZ up by 1.89%, NTPC up by 1.89%, Reliance Industries up by 1.68% and Maruti Suzuki up by 1.43%. (Provisional)

On the flip side, Tata Motors down by 4.46%, Tata Motors - DVR down by 2.70%, Tata Steel down by 1.93%, Vedanta down by 1.92% and Bajaj Auto down by 1.55% were the top losers. (Provisional)

Meanwhile, ahead of the Central Statistics Office’s (CSO) quarterly Gross Domestic Product (GDP0 estimate release for April-June 2018, the State Bank of India (SBI) Research in its latest report has estimated that Indian economy is likely to grow by 7.7% in the Q1FY19 on the back of pick up in leading indicators like cement production, sale of vehicles and bank credit. SBI has based its assessment on its Composite Leading Indicator (CLI), which takes into account 18 major macro-economic indicators.

The research report ‘Ecowrap’ stated that the CLI is signalling that the economic activity for Q1 FY19 has picked up substantially and the Gross Value Added (GVA) growth would be 7.6%. However, it also said the headline GVA is being possibly pulled down by a weak agriculture growth. As per the report, major indicators that driving GVA in Q1 FY19 are cement production, passenger traffic, sale of both commercial vehicle and passenger vehicles, non-food credit growth and aircraft movement among others.

The SBI further said the quarterly trend of subsidy expenditure suggests that the government has been frontloading larger chunk of overall subsidy amount in the first quarter compared to other quarters and this is happening since 2016-17. In April-June 2018-19, subsidy expenditure to the tune of Rs 1,16,820 crore has been frontloaded. It said ‘We believe, by front loading subsidy amount in Q1 may have some impact on Q1 GDP figure and the gap between GDP and GVA might come down to some extent in Q1 as compared to remaining quarters in FY19’. It added in fact, a trend analysis suggests that first quarter of fiscal may even witness GDP declining below GVA or staying marginally above GVA.

The CNX Nifty ended at 11581.50, up by 10.60 points or 0.09% after trading in a range of 11546.70 and 11620.70. There were 24 stocks advancing against 26 stocks declining on the index. (Provisional)

The top gainers on Nifty were Tech Mahindra up by 2.69%, NTPC up by 2.30%, HCL Tech. up by 2.27%, Larsen & Toubro up by 2.16% and Dr. Reddys Lab up by 2.08%. (Provisional)

On the flip side, Tata Motors down by 4.56%, BPCL down by 3.05%, HPCL down by 2.70%, Indian Oil Corp. down by 2.69% and Hindalco down by 2.39% were the top losers. (Provisional)

European markets were trading mostly in green; France’s CAC rose 3.11 points or 0.04% to 7,577.35 and Germany’s DAX added 7.92 points or 0.15% to 5,428.53, while UK’s FTSE 100 was down by 12.46 points or 0.10% to 12,373.24.

Asian equity markets ended mostly in green on Thursday. Japanese shares ended higher after a weak yen supported overall sentiment. Activity in Japan’s manufacturing sector continued to expand in August, and at a faster rate, the latest survey from Nikkei revealed with a manufacturing PMI score of 52.5, up from 52.3 in July. However, the market sentiments improved despite the US imposed a second round of tariffs on $16 billion worth of Chinese goods and the Asian nation vowed to retaliate, in an escalation of their trade war. After the US imposed an additional 25 percent in duties on Chinese imports ranging from motorcycles to steam turbines and railway cars, China’s Ministry of Commerce said it would lodge a complaint against the measure under the World Trade Organization’s dispute settlement mechanism. Meanwhile, markets were also tracking political developments in Washington after Michael Cohen, US President Donald Trump's former personal lawyer, pleaded guilty to campaign finance violations and other charges and Paul Manafort, Trump's former campaign chairman was found guilty on five counts of tax fraud.