Post Session: Quick Review

Reversing previous session’s losses, Indian equity benchmarks staged a sharp recovery to settle with decent gains of around a percent on Wednesday, on the back of firm trend in the global markets. Key gauges traded on positive note since the beginning, as traders got encouragement with government data showing that India’s retail inflation based on Consumer Price Index (CPI) eased marginally to 3.15% in the month of July 2019, on the back of softening fuel and light prices, even as inflation in the overall food basket moved up. CPI was 3.18% in June 2019, while it stood at 4.17% in July 2018. Also, inflation stayed below the RBI’s medium-term target of 4% for an eleventh straight month. Buying further crept in with report that the slowdown-hit economy may soon get a booster dose from the government with Finance Ministry working on a stimulus package for the industry may include a slew of financial measures ranging from tax cuts, subsidies and other incentives.

Markets continued to trade in high spirit in afternoon session, on the back of easing wholesale price index (WPI) inflation data. Wholesale inflation fell to a multi-year low of 1.08 percent in July mainly on account of cheaper fuel and food items. Inflation based on WPI was at 2.02 percent in June this year and 5.27 percent in July 2018. Market sentiment also got a boost as the commerce ministry laid out an online system for claiming benefits under Transport and Marketing Assistance (TMA) scheme, aimed at promoting exports of agri goods. However, indices pared some of the initial gains in late trade, as market-men got anxious with a private report that the overall slowdown in the economy coupled with factors like the NBFC crisis, developer defaults and bankruptcies have slackened the sentiments of the real estate sector, which may result a decline in residential sales in the next six months.

On the global front, Asian markets ended higher on Wednesday, after the United States decided to postpone some tariffs on Chinese goods, fueling hopes for a trade deal between the two countries. European markets were trading in red, as a shrinking German economy and weak industrial data from China stoked fears of a global slowdown, forcing investors to turn defensive and overshadowing a temporary U.S.-China tariff truce. Back home, pharma stocks were in focus, amid reports that Indian pharmaceutical industry can achieve a target of double-digit growth by 2030 through a host of measures including regulatory support from government like increase in budgetary allocations for healthcare and promotion of innovation.

The BSE Sensex ended at 37319.05, up by 360.89 points or 0.98% after trading in a range of 37000.77 and 37473.61. There were 25 stocks advancing against 6 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index rose 0.87%, while Small cap index was up by 0.41%. (Provisional)

The top gaining sectoral indices on the BSE were Metal up by 2.77%, Telecom up by 2.49%, Basic Materials up by 2.09%, PSU up by 1.20% and Capital Goods up by 1.19%, while Healthcare down by 0.59% was the lone losing index on BSE. (Provisional)

The top gainers on the Sensex were Vedanta up by 4.90%, Tata Steel up by 4.84%, Yes Bank up by 3.87%, Tech Mahindra up by 3.00% and Bharti Airtel up by 2.72%. (Provisional)

On the flip side, Sun Pharma down by 4.94%, Kotak Mahindra Bank down by 1.07%, Tata Motors down by 1.07%, ONGC down by 0.97% and Tata Motors - DVR down by 0.43% were the top losers. (Provisional)

Meanwhile, with a view to enable authorities to take a considered view on the regulatory changes or new regulations that may be needed to support useful innovation, while containing the attendant risks, the Reserve Bank of India (RBI) has permitted fintech companies including startups, banks, financial institutions and any other company partnering with or providing support to financial services businesses to set up regulatory sandbox (RS) for live testing of innovative products in areas like retail payments, digital KYC and wealth management.

The RBI further mentioned that the focus of the RS will be to encourage innovations intended for use in the Indian market in areas where there is absence of governing regulations and there is a need to temporarily ease regulations for enabling the proposed innovation. The RS may run a few cohorts (end-to-end sandbox process), with a limited number of entities in each cohort testing their products during a stipulated period. The RS shall be based on thematic cohorts focussing on financial inclusion, payments and lending, digital KYC. The cohorts may run for varying time periods but should ordinarily be completed within six months.

Users of an RS can test the product's viability without the need for a larger and more expensive roll-out, if the product appears to have the potential to be successful, is another major benefit of such exercise. On risks and limitations of RS, the RBI said innovators may lose some flexibility and time in going through the sandbox process. However, running the RS in a time-bound manner at each stage can mitigate this risk.

The CNX Nifty ended at 11013.90, up by 88.05 points or 0.81% after trading in a range of 10935.60 and 11078.15. There were 37 stocks advancing against 13 stocks declining on the index. (Provisional)

The top gainers on Nifty were UPL up by 4.73%, Bajaj Finserv up by 4.58%, Zee Entertainment up by 4.55%, Vedanta up by 4.19% and Tata Steel up by 4.19%. (Provisional)

On the flip side, Sun Pharma down by 5.18%, Indiabulls Housing Finance down by 4.91%, Wipro down by 2.94%, Coal India down by 1.89% and Dr. Reddys Lab down by 1.72% were the top losers. (Provisional)

European markets were trading in red; UK’s FTSE 100 decreased 41.14 points or 0.57% to 7,209.76, France’s CAC fell 48.84 points or 0.91% to 5,314.23 and Germany’s DAX was down by 125.02 points or 1.06% to 11,625.11.

Asian markets ended higher on Wednesday after Washington delayed imposing tariffs on some Chinese products from September 1, fueling hopes for a trade deal between the world's two largest economies. Chinese shares ended higher as the tariff postponement from Washington helped investors shrug off weaker than expected economic data. Reports showed China's industrial production and retail sales grew at weaker pace in July. Industrial output growth eased to 4.8 percent in July from 6.3 percent in June. Output was expected to expand 6 percent. Growth in retail sales slowed to 7.6 percent from 9.8 percent a month ago. The expected pace of growth was 8.6 percent. During January to July period, fixed asset investment logged an annual growth of 5.7 percent compared to 5.8 percent increase in January to June. The rate was expected to remain unchanged at 5.8 percent. Further, Japanese shares closed up as eased worries over the US-China trade war and data showed a surprise rebound in Japan's core machinery orders in June. Cabinet Office data showed core orders, a highly volatile data series regarded as an indicator of capital spending in the coming six to nine months, rose 13.9 percent in June from the previous month.