Post Session: Quick Review

Snapping a four-session gaining run, Indian equity benchmarks ended Friday’s trade on a pessimistic note, with Sensex and Nifty slipping below their crucial 38,300 and 11,600 levels, respectively. Markets made a cautious start and traded marginally in green, as market-men took some solace with report that India will explore opportunities to increase exports of petroleum products, cars and motorcycles, and mobile phones to Kenya during the joint trade committee meeting of the two countries. Soon traders turned cautious with a report stating that the government has imposed standard conditions for as many as 25 sectors like steel, coal and oil, seeking environment clearance (EC) for expansion of existing projects or new projects. Anxiety also spread among traders with a private report stating that India’s rural wage growth has slumped from an average of 11% in the financial years 2013-15 to a mere 0.45% in the financial years 2016-18, due to the negative impact of demonetization. The rural wage growth slumped to decimal points from double-digit in last three years despite government support. The sentiments remained in lackadaisical mood with private report that Raghuram G. Rajan, who warned of a credit crisis in 2005 before it hit, is now cautioning that trade wars when combined with a build-up in leverage and high asset prices could result in a toxic mix that dragged global growth.

On the global front, Asian markets ended mixed. European markets were trading in green in early deals on Friday, following U.S.-China trade talks and ahead of a key speech by Jerome Powell, the chair of the U.S. Federal Reserve. Back home, select Sugar stocks ended higher with the food ministry extending the deadline for exporting 2 million tonne of sugar by three months to December as only a fourth of it has been shipped so far. Besides, insurance sector was in focus with International rating agency Moody’s Investors Service in its latest report stating that the launch of government’s flagship health insurance scheme, Ayushman Bharat, is credit positive for India’s insurers as it will help grow health premiums and provide insurers with cross-selling and servicing opportunities.

The BSE Sensex ended at 38253.49, down by 83.27 points or 0.22% after trading in a range of 38172.77 and 38429.50. There were 15 stocks advancing against 16 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index fell by 0.30%, while Small cap index was down by 0.38%. (Provisional)

The top gaining sectoral indices on the BSE were Metal up by 1.87%, Basic Materials up by 0.88%, Energy up by 0.66%, Healthcare up by 0.51% and Oil & Gas up by 0.39%, while Consumer Durables down by 0.94%, Bankex down by 0.82%, IT down by 0.64%, FMCG down by 0.61% and Industrials down by 0.57% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Vedanta up by 4.03%, ONGC up by 1.60%, Axis Bank up by 1.22%, Wipro up by 0.83% and Tata Steel up by 0.78%. (Provisional)

On the flip side, Yes Bank down by 3.61%, ICICI Bank down by 2.12%, Hero MotoCorp down by 1.86%, Adani Ports & SEZ down by 1.85% and Infosys down by 1.52% were the top losers. (Provisional)

Meanwhile, Moody’s Investors Service in its Global Macro Outlook for 2018-19 has forecasted that India’s gross domestic product (GDP) growth is likely to be around at 7.5% in 2018 and 2019 as it is largely resilient to external pressures like those from higher oil prices. It said the run-up in energy prices over the last few months will raise headline inflation temporarily but the growth story remains intact as it is supported by strong urban and rural demand and improved industrial activity.

The report stated that robust activity is shown in the industrial sector, a normal monsoon together with the increase in the minimum support prices for Kharif crops should support rural demand. Thus, despite external headwinds from higher oil prices and tightening financing conditions, growth prospects for the remainder of the year remain in line with the economy’s potential.

Moody’s said the Reserve Bank of India (RBI) in July raised the benchmark repo rate by 25 basis points for the second time in two months to 6.5 per cent. It added that two concerns behind the tightening cycle are rising core inflation and vulnerability to tightening external financial conditions. The impact on food inflation from increased procurement prices to farmers will be mitigated somewhat by the expected rise in farm output because of a good harvest. Moody’s expect the RBI to continue on a steady tightening path into 2019.

For G-20 economies, the rating agency projected growth at 3.3% in 2018 and 3.1% in 2019. It said the advanced economies will grow 2.3% in 2018 and 2% in 2019, while G-20 emerging markets will remain the growth drivers at 5.1% in both 2018 and 2019. It also said growth prospects for many of the G-20 economies remain solid, but there are indications that the synchronous acceleration of growth heading into 2018 is now giving way to diverging trends.

The CNX Nifty ended at 11557.55, down by 25.20 points or 0.22% after trading in a range of 11532.00 and 11604.60. There were 23 stocks advancing against 27 stocks declining on the index. (Provisional)

The top gainers on Nifty were Vedanta up by 4.28%, ONGC up by 1.77%, Grasim Industries up by 1.57%, Axis Bank up by 1.15% and Bajaj Finance up by 0.77%. (Provisional)

On the flip side, Yes Bank down by 3.77%, Titan Co down by 2.95%, ICICI Bank down by 2.15%, Hero MotoCorp down by 1.97% and Adani Ports & SEZ down by 1.96% were the top losers. (Provisional)

European markets were trading in green; France’s CAC rose 26.67 points or 0.49% to 5,446.00, Germany’s DAX added 26.87 points or 0.22% to 12,392.45 and UK’s FTSE 100 was up by 17.26 points or 0.23% to 7,580.48.

Asian equity markets ended mixed on Friday as trade war tensions and the prospects of a no-deal Brexit threatened to deepen the risks to global growth. The oil markets held steady while the dollar remained buoyant after US-China trade talks ended without any tangible results. Investors looked ahead to US Federal Reserve Chairman Jerome Powell's big Jackson Hole speech later today for Fed views on Turkey's currency crisis and the US-Chinese trade spat. Japanese shares ended higher as the yen remained weak and a government report showed the country's annual inflation stalled in July, raising speculation the Bank of Japan may delay its exit from ultra-loose policy. Further, Chinese shares ended marginally higher, aided by strength in banking shares.