Markets snap five-day losing streak; Sensex re-conquers 36,600 mark

Snapping five days of losing streak, Indian equity benchmarks ended the Tuesday’s trade in green terrain with frontline gauges recapturing their crucial 36,600 (Sensex) and 11,050 (Nifty) levels. Soon after a cautious start markets gained traction and entered into green terrain mid-morning deals with traders taking encouragement with report that rising imports from China have taken a heavy toll on the employment-generation potential of the manufacturing sector, especially among the micro, small and medium enterprises (MSMEs). Key gauges pared all of their gains and entered into red terrain in late noon session as sentiments turned pessimistic with private report stating that India’s current account deficit (CAD) is expected to be widened by 0.20% to 2.8% of GDP for fiscal year 2018-19. The widening current account gap is one of the major concerns which is putting pressure on the rupee, which has depreciated 13% against dollar this year. Sentiments also weighed down with World Bank’s report that India’s current trade in goods with its neighbouring countries in the South Asian region is a mere 30.65% of the potential trade of $62 billion, which can be boosted if certain restrictions on the current trade, like tariffs, port restrictions and other non-tariff barriers can be eased. 

Some anxiety also came with a private report that India’s crude oil demand is forecast to grow to 500 million tonnes per year by 2040, but persistent increase in oil prices might act as a dampener for the rate of growth. But, rally in last leg of trade helped markets to end near intraday high levels. Sentiments turned positive with PHD Chamber of Commerce and Industry Vice President D K Aggarwal’s statement that India is approaching towards $100 billion FDI inflow per annum by 2022 as volumes of foreign direct investment are increasing year after year. Meanwhile, the Central Board of Direct Taxes (CBDT) has postponed the deadline for filing income tax returns (ITR) as well as reports of Audit to October 15, 2018, from September 30 for financial year 2017-18. It had received representations from stakeholders seeking extension of the last date for filing of returns by taxpayers whose accounts have to be audited.

Firm opening in European counters too aided sentiments, as optimism over the Italian budget also buoyed the sentiment. Asian markets ended mixed on Tuesday amid concerns over the ongoing trade spat between the US and China.

Back home, stocks of oil marketing companies (OMCs) declined as fuel prices increased, with petrol registering a record high of Rs 90.22 a litre in Mumbai. Diesel prices too rose in the financial capital to Rs 78.69 a litre. Stocks related to public sector banks (PSBs) edged lower ahead of Finance Minister Arun Jaitley’s annual review meeting with chief executives and the top management of PSBs on September 25. Stocks related to Aviation sector edged lower on report that the domestic air passenger traffic registered lowest growth since May, at 17.17% in the month of August. According to the Directorate General of Civil Aviation (DGCA) data, domestic airlines flew 113.54 lakh passengers in August 2018, over to 96.90 lakh passengers carried in the same month of last year.

Finally, the BSE Sensex surged 347.04 points or 0.96% to 36,652.06, while the CNX Nifty was up by 100.05 points or 0.91% to 11,067.45.

The BSE Sensex touched a high and a low of 36,705.79 and 36,064.10, respectively and there were 20 stocks advancing against 11 stocks declining on the index.

The broader indices ended mixed; the BSE Mid cap index gained 0.36%, while Small cap index was down by 0.74%.

The top gaining sectoral indices on the BSE were Healthcare up by 1.75%, Bankex up by 1.39%, FMCG up by 1.16%, Auto up by 1.00% and Basic Materials was up by 0.66%, while Realty down by 1.67%, Utilities down by 0.94%, Telecom down by 0.73%, Oil & Gas down by 0.44% and Industrials was down by 0.42% were the top losing indices on BSE.

The top gainers on the Sensex were Axis Bank up by 2.96%, HDFC up by 2.95%, Kotak Mahindra Bank up by 2.88%, Hindustan Unilever up by 2.72% and Maruti Suzuki up by 2.66%. On the flip side, Power Grid Corporation down by 3.07%, Yes Bank down by 2.83%, Coal India down by 1.94%, Adani Ports down by 1.65% and Tata Steel was down by 1.10% were the top losers.

Meanwhile, in order to support domestic suppliers to plan their production schedule, the government is considering developing nationwide specifications for public procurement of goods by Central government agencies. The proposal is likely to be included in the new industrial policy being prepared by the commerce and industry ministry. The policy may also suggest extending the offset policy in public procurement in sectors beyond defence such as electronics and ICT.

Standardised specifications of products would enable government departments and public sector units (PSUs) to release large orders helping the industry achieve economies of scale. As per estimates, the government and PSUs procure goods and services worth over Rs 5 trillion every year. Standardised specifications would also help domestic industry plan their production and technology well in advance. In absence of this, government agencies place small orders with different specifications and requirements.

Policy actions can help public procurement add significant value to the domestic industry. Besides, the ministry has developed an e-marketplace portal (GeM) for buying of goods and services by different government agencies and departments. Offset policy has helped countries in encouraging investments and transfer of technology. This is currently used in defence sector in India.

The CNX Nifty traded in a range of 11,080.60 and 10,882.85. There were 35 stocks in green as against 15 stocks in red on the index.

The top gainers on Nifty were Kotak Mahindra Bank up by 3.26%, HDFC up by 3.18%, SBI up by 3.08%, HUL up by 2.99% and Lupin up by 2.95%. On the flip side, Indiabulls Housing Finance down by 5.60%, Bharti Infratel down by 2.83%, GAIL India down by 2.61%, Yes Bank down by 2.61% and Power Grid Corporation down by 2.53% were the top losers.

European markets were trading in green; UK’s FTSE 100 increased 32.79 points or 0.44% to 7,491.20, France’s CAC rose 17.80 points or 0.32% to 5,493.97 and Germany’s DAX was up by 40.97 points or 0.33% to 12,391.79.

Asian markets ended mixed on Tuesday as the latest exchange of US-China tariffs, rising oil prices and political turbulence in the US coming ahead of the mid-term elections dented sentiments. Investors also awaited cues from the US Federal Reserve's monetary policy decision on Wednesday, at which the central bank is widely expected to raise interest rates by 25 basis points. Chinese shares ended lower as markets resumed trading after a holiday on Monday. However, Japanese shares ended higher, helped by gains in chip-related stocks that offset weakness in construction equipment manufacturers, which fell on worries that a new round of US-China trade tariffs could hurt global demand. Markets in Hong Kong and South Korea are closed for public holidays.