Post Session: Quick Review

Indian equity markets finished last trading day of the week on a negative note, with Sensex and Nifty breaching their crucial psychological levels of 37,000 and 11,150, respectively, on the back of heavy selling. The markets opened on optimistic note, aided by Prime Minister Narendra Modi’s statement that the size of Indian economy would double to $5 trillion by 2022, with manufacturing and agriculture contributing $1 trillion each. Adding some support, the Reserve Bank eased norms for companies in the manufacturing sector to raise overseas funds and allowed Indian banks to market Masala Bonds in line with the government’s measures to prop up the rupee. But, the indices turned negative in afternoon deals, after former Union Finance Minister P. Chidambaram blamed the government’s heavy-handed approach to the NPA problem for the sharp decline in export credit. He said despite government’s claims of taking steps to boost exports, the export credit had declined sharply to Rs 22,300 crore in June from Rs 39,000 crore in the same month in 2017.

The trade remained negative in second half of the session, as the EEPC India said that at a time when the country is grappling with the widening of the current account deficit (CAD), any move to raise import duty on steel or steel products would severely hit India's crucial engineering exports and rather lead to further expansion of the CAD. However, the key indices managed to come off their day’s lows at end of the session, amid Employment Provident Fund Organisation’s (EPFO) data report that India created 9.51 lakh new jobs in the month of July 2018. As per the report, total 9,51,423 new payrolls were created during July 2018 as against 8,57,934 created in the previous month, registering a growth of 10.90%. Some comfort also came with a report that Private equity investments deal tally touched $12.84 billion in January-August. Some relief also came with Minister of State for Agriculture Parshottam Rupala’s statement that the farmer-producer organisation (FPO) model could help achieve the goal of doubling farmers’ income ‘well before time’.

On the global front, European markets were trading in green, encouraged by the better than expected retail sales report from the UK. Retail sales volume, including auto fuel, gained 0.3% month-on-month in August, slower than the 0.9% increase seen in July, but in contrast to the expected fall of 0.2%. This was the second consecutive rise in sales volume. Traders overlooked a report that Euro area consumer confidence weakened sharply in September to its lowest level in 15 months. As per initial estimates from the European Commission, the flash consumer confidence index dropped to -2.9 from -1.9 in August. Economists had forecast a score of -2. Asian markets ended in green, as easing trade tensions and solid manufacturing data from Japan helped to bolster investor confidence about the global economy.

Back home, on the sectoral front, Infrastructure sector related stock ended lower despite India Ratings and Research (Ind-Ra) maintained a stable outlook across the infrastructure sector with the exception of coal-based thermal power, which continues with its negative outlook for the remaining part of FY19. However, stock related to agri companies remained in limelight, amid reports that planting of kharif crops this season has increased over the previous year’s figure. According to latest numbers from the agriculture ministry, kharif crop planting has covered 1,057.81 lakh hectare from June to September 20, a 0.61% increase from 1,051.36 lakh hectares a year earlier.

The BSE Sensex ended at 36841.60, down by 279.62 points or 0.75% after trading in a range of 35993.64 and 37489.24. There were 14 stocks advancing against 17 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index fell 1.72%, while Small cap index was down by 3.00%. (Provisional)

The only gaining sectoral indices on the BSE were Oil & Gas up by 1.50% and Energy up by 0.77%, while Realty down by 3.48%, Bankex down by 3.13%, Power down by 1.91%, Healthcare down by 1.66% and Industrials down by 1.41% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were ONGC up by 1.90%, Wipro up by 1.73%, TCS up by 1.54%, Bharti Airtel up by 1.45% and ITC up by 1.30%. On the flip side, Yes Bank down by 29.20%, Tata Motors - DVR down by 3.68%, Kotak Mahindra Bank down by 3.42%, Axis Bank down by 2.54% and Adani Ports & SEZ down by 2.13% were the top losers. (Provisional)

Meanwhile, amid proposed hike in import duty on steel, engineering exporters’ apex body, Engineering Export Promotion Council (EEPC) of India stated that raising the import duty on steel or steel products will widen the current account deficit (CAD) and severely hit engineering exports from the country. It added that steel is a mother of the raw materials for a host of sectors, especially the engineering manufacturing. EEPC India also said its domestic prices have sky-rocketed in the past few years, thanks largely to the protection given to the steel makers by a slew of government measures which have proved detrimental to the interest of exports.

Pointing out how steel prices have shot up in the past two years, the apex body said price of boiler quality steel plates was Rs 39.95 ex stock yard in July, 2016. This has gone up to Rs 51 in July 2018, an increase of 21 percent, having a direct impact on cost of engineering exports. Besides, the delivery period has increased to 4 to 6 months from just a few weeks earlier.

Engineering exporters’ apex body said by no stretch of imagination, steel can be considered as non-essential or non-necessary imports. The entire focus on the Make in India programme is to scale up value addition in manufacturing within the country - by enabling low cost raw material, so that more and more value added products can be made for exports and for domestic consumption. It noted the need to focus on increasing exports for bridging the CAD gap, rather than curtailing essential imports like steel, observing that all-out efforts must be made in this regard and any more increase in duty on steel imports would lead to a huge weakening of India’s export competitiveness.

The CNX Nifty ended at 11143.10, down by 91.25 points or 0.81% after trading in a range of 10866.45 and 11346.80. There were 23 stocks advancing against 27 stocks declining on the index. (Provisional)

The top gainers on Nifty were Bharti Infratel up by 3.80%, BPCL up by 3.14%, Indian Oil Corporation up by 3.00%, HPCL up by 2.65% and Hindalco up by 2.02%. On the flip side, Yes Bank down by 29.04%, Indiabulls Housing Finance down by 8.38%, Bajaj Finance down by 4.81%, Tech Mahindra down by 4.14% and UPL down by 3.83% were the top losers. (Provisional)

All European markets were trading in green; UK’s FTSE 100 jumped 70.62 points or 0.95% to 7,437.94, France’s CAC increased 33.83 points or 0.62% to 5,485.42 and Germany’s DAX was up by 76.93 points or 0.62% to 12,403.41.

Asian markets ended in green on Friday to extend recovery as investors gravitated to the view that the US-China trade row would be less harmful to global growth than first feared. Chinese shares ended higher as investors continued to bet that Beijing would increase economic stimulus to boost the economy in the face of the trade war. Further, Japanese shares closed up, with a weaker yen and upbeat manufacturing data helping underpin investors’ sentiments. The manufacturing sector in Japan continued to expand in September, and at an accelerated pace, the latest survey from Nikkei revealed with a manufacturing PMI score of 52.9, up from 52.5 in August. Another report showed that overall nationwide consumer prices in Japan rose an annual 1.3 percent in August, exceeding expectations for 1.1 percent and up from 0.9 percent in July. Meanwhile, investors turned their focus to the second round of trade talks between Japan and the US scheduled on September 24.