Post Session: Quick Review

Snapping two days losing streak, key Indian benchmarks ended Wednesday’s session with strong gains amid firm European markets. The markets made a cautious start, amid a private report stating that regulatory policies pose the biggest risks for companies over the next three years, followed by cyber security and technology disruptions. The report showed a divide on the viewpoint of risk management amongst Indian organisations. Traders were concerned ahead of macroeconomic data such as Index of Industrial Production (IIP) and Consumer Price Index (CPI) to be announced after the market hours. Weak cues from other Asian markets coupled with heavy sell-off also kept the markets under pressure for the first half of the session.

However, the key indices staged a smart recovery in second half of the session, after India's exports grew by 19.21% to $27.84 billion in August on account of healthy performance by sectors such as petroleum. Investors got some support with Moody’s Investors Service’s report that the sharp depreciation in rupee’s valuation is unlikely to impact India’s sovereign credit profile as rupee-denominated government bonds and robust foreign exchange reserves mitigate the risk. Some support also came after the government relaxed the norms for exported electronic goods, like mobile phone, colour TV, certain medical devices, which need to be imported back for repairs.

On the global front, European markets ended in green, as German economic sentiment improved more-than-expected to a four-month high in September, despite trade war fears. As per survey data from the Centre for European Economic Research or ZEW, the economic sentiment indicator climbed to -10.6 from -13.7 in August. Adding some optimism, Eurozone employment increased at a steady pace in the second quarter. The data from Eurostat showed that employment increased 0.4 percent sequentially in the second quarter, the same rate as seen in the first quarter. However, Asian markets ended in red, after US President Donald Trump said that the US was taking a tough stance with China.

Back home, on the sectoral front, steel stocks ended higher, supported by the Steel Ministry’s statement that it is expecting India to rise to the second position in global steel output after China. Further, banking stocks were in limelight as the department of financial services (DFS) expecting good recovery of bad loans by the public sector banks (PSBs) in the second quarter of the current financial year. Agri stocks remained in focus after the cabinet approved a new procurement policy under which one scheme will focus on compensating oilseeds farmers if rates fall below the MSP, and another will allow states to rope in private players for procurement.

The BSE Sensex ended at 37717.96, up by 304.83 points or 0.81% after trading in a range of 37342.00 and 37752.58. There were 18 stocks advancing against 13 stocks declining on the index. (Provisional)

The broader indices ended mixed; the BSE Mid cap index rose by 0.52%, while Small cap index was down by 0.27%. (Provisional)

The top gaining sectoral indices on the BSE were FMCG up by 2.40%, Metal up by 1.52%, Capital Goods up by 1.06%, Basic Materials up by 0.93% and Healthcare up by 0.76%, while Telecom down by 0.76%, Realty down by 0.35% and Bankex down by 0.02% were the few losing indices on BSE. (Provisional)

The top gainers on the Sensex were Power Grid Corporation up by 3.75%, ITC up by 3.11%, Sun Pharma up by 2.98%, Adani Ports & SEZ up by 2.96% and Kotak Mahindra Bank up by 2.32%. On the flip side, Axis Bank down by 2.30%, Tata Motors down by 1.70%, Bharti Airtel down by 1.28%, ICICI Bank down by 1.07% and Yes Bank down by 0.71% were the top losers. (Provisional)

Meanwhile, the State Bank of India (SBI) in its Ecowrap report has stated that recent rise in petrol and diesel prices coupled with continuing plunge in the Indian rupee is likely to give state governments a windfall gain of around Rs 22,700 crore over and above the budget estimates for current fiscal. It said the windfall gain is due to the value added tax (VAT) levied by the state governments on petrol and diesel.

As per the report, this windfall gain will have positive impact on state finances, which might push down the states’ fiscal deficit by 15-20 bps, other things remaining unchanged. The report estimated that since the states are having an incremental revenue over the budgeted one, they could cut on an average petrol prices by Rs 3.20 /litre and diesel by Rs 2.30/litre, without affecting their revenue arithmetic.

The Ecowrap report noted that an increase of $1 a barrel in crude price translates to Rs 1,513 crore revenue gain on an average to all the major 19 states. It added that states like Maharashtra, Madhya Pradesh, Punjab, Tamil Nadu, Andhra Pradesh, Rajasthan and Karnataka have the privilege to cut petrol prices by at least Rs 3 from their existing rates and Rs 2.5 on diesel.

The CNX Nifty ended at 11369.90, up by 82.40 points or 0.73% after trading in a range of 11250.20 and 11380.75. There were 31 stocks advancing against 19 stocks declining on the index. (Provisional)

The top gainers on Nifty were Power Grid Corporation up by 3.69%, ITC up by 3.23%, Adani Ports & SEZ up by 3.13%, Sun Pharma up by 3.09% and Hindalco up by 2.72%. On the flip side, Axis Bank down by 2.26%, Tata Motors down by 1.83%, HPCL down by 1.35%, BPCL down by 1.15% and ICICI Bank down by 1.12% were the top losers.

European markets were trading mostly in green; France’s CAC increased 27.94 points or 0.53% to 5,311.73 and Germany’s DAX rose 22.49 points or 0.19% to 11,992.76. On the flip side, UK’s FTSE 100 was down by 10.84 points or 0.15% to 7,262.70.

Asian markets ended mostly in red on Wednesday after China said it would seek permission from the World Trade Organization next week to impose sanctions on US goods in retaliation for Washington's non-compliance with a ruling in a dispute over dumping duties. Investors also braced for a protracted trade war between the world's two biggest economies after US President Donald Trump said the US was taking a tough stance with China. Media reports suggested that China is putting off accepting license applications from American businesses hoping to operate in the country, as the Trump administration prepares to impose tariffs on all $500 billion-plus imports from China. Japanese shares ended lower on concerns over tourism demand and potential damage to business after a powerful earthquake in Hokkaido.