Post Session: Quick Review

Bulls tightened their grip on D-Street during Monday’s session with the both larger peers, Sensex and Nifty, posting gains of more than a percent. The key indices made a strong opening and remained bullish throughout the session, supported by Former Niti Aayog vice-chairman Arvind Panagariya’s statement that Rupee depreciation is not cause to worry and it was pending for a long time. He also said India’s macroeconomic management is sound. The street also got some support from a report that foreign investors have pumped in a little over Rs 6,700 crore into the Indian capital markets so far this month on improvement on the macro front, better corporate earnings and correction in the mid and small-cap space. The latest inflow comes following a net infusion of over Rs 2,300 crore in the capital markets both equity and debt last month.

Domestic sentiments got improved further, with Finance Minister Arun Jaitley’s statement that a series of reforms taken by the government transformed the weak economy. He also said that the reform measures has substantially cleaned up the system and made it more transparent, noting that decisiveness has led to easier decision-making and made the economy stand out before several other countries. Some support also came with a private report that the rupee is likely to average at 69 per US dollar this financial year, largely driven by stronger domestic macro fundamentals and foreign fund flows. Separately, the government is looking to complete nearly three-fourths of its disinvestment target by the end of December and has a pipeline of about 15 companies in which it will sell stakes to achieve this interim goal.

On the global front, European markets were trading in green, as a measure of German business confidence rose more-than-expected to 103.8 in August from 101.7 in July. The survey data from Ifo Institute showed that the current conditions index climbed to 106.4 compared to the forecast of 105.3. At the same time, the expectations index came in at 101.2 versus forecast of 98.4. Asian markets ended in green, as Powell's comments gave markets a breather from simmering trade tensions. Federal Reserve Chairman Jerome Powell said the US economy is ‘strong’ enough to handle more normalization of policy.

Back home, textile stocks ended lower, despite India’s textiles and clothing exports have surged 11% in July 2018 in comparison to same period of last year, on account of favourable government policies and rupee depreciation.  Besides, real estate related stocks also ended lower, with ICRA’s report stating that the adoption of new accounting standard IndAS has dented the net-worth of nine major listed real estate firms by 18% and revenues by 23.6% sequentially in June quarter.

The BSE Sensex ended at 38694.11, up by 442.31 points or 1.16% after trading in a range of 38416.73 and 38736.88. There were 30 stocks advancing against 1 stock declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index rose by 1.07%, while Small cap index was up by 0.70%. (Provisional)

The top gaining sectoral indices on the BSE were Utilities up by 2.44%, Power up by 2.37%, PSU up by 1.69%, Bankex up by 1.69% and IT up by 1.54%, while Realty down by 0.16% was the lone losing index on BSE. (Provisional)

The top gainers on the Sensex were Bharti Airtel up by 3.93%, Power Grid Corporation up by 3.12%, ICICI Bank up by 3.00%, Infosys up by 2.68% and SBI up by 2.26%. On the flip side, Sun Pharma down by 1.29% were the top losers. (Provisional)

Meanwhile, Former Niti Aayog vice-chairman Arvind Panagariya has said that Rupee depreciation is not cause to worry and it was pending for a long time. He also said India’s macroeconomic management is sound. He further said that the country’s export has suffered losses due to appreciation in exchange rates.

Panagariya said ‘I am personally very pleased the Reserve Bank of India (RBI) has used our foreign exchange reserves prudently in managing the exchange rate’. Besides, the rupee on August 16 slumped to a life-time low of 70.32 to the US dollar on strong demand for the greenback. The rupee on August 24 staged a good recovery to end higher by 20 paise at 69.91 against the US currency.

Expressing optimism over the growth of India economy growth, the former Niti Aayog vice chairman said that he expects the country’s growth rate to cross the 8% mark by the third or fourth quarter of fiscal 2018-19. He said ‘I am confident that in less than ten years we will cross the UK, Germany and Japan to become the third largest economy in the world’.

On the possibilities of populist measures being announced by the Modi government ahead of 2019 general elections, he said that the risk is omnipresent ‘but I do not see this happening’. He said the government has more or less announced its revenue and expenditure trajectories. He also pointed out that Foreign Direct Investments (FDI) in India in 2017-18 has been slightly higher than in 2016-17 and 70% higher than in 2013-14.

The CNX Nifty ended at 11691.95, up by 134.85 points or 1.17% after trading in a range of 11595.60 and 11700.95. There were 47 stocks advancing against 3 stocks declining on the index. (Provisional)

The top gainers on Nifty were Hindalco up by 3.67%, Power Grid Corporation up by 3.59%, ICICI Bank up by 2.95%, Bharti Airtel up by 2.76% and Tech Mahindra up by 2.70%. (Provisional)

On the flip side, Sun Pharma down by 1.27%, Bajaj Finserv down by 0.29% and Dr. Reddy’s Lab down by 0.18% were the top losers. (Provisional)

European markets were trading in green; France’s CAC surged 21.38 points or 0.39% to 5,453.88 and Germany’s DAX was up by 52.12 points or 0.42% to 12,446.64.

Asian equity markets ended higher on Monday after Fed Chair Jerome Powell expressed confidence over the US economy and justified gradual interest rate hikes. At the Jackson Hole Symposium in Wyoming, Powell said that as the most recent FOMC statement indicates, if the strong growth in income and jobs continues, further gradual increases in the target range for the federal funds rate will likely be appropriate. Japanese shares ended at a 10-week high, with a relatively cheaper yen and record highs on Wall Street Friday supporting underlying sentiments. Further, Chinese shares ended at two-week highs, lifted by a stronger yuan after a tweak in the central bank’s management of the currency boosted airline stocks and other firms with heavy dollar exposure.