Bourses rebound on Wednesday amid easing inflation in the country

After yesterday's heavy sell-off, Indian bourses rebounded on Wednesday to end on higher note. Key indices made a positive start of the day, as India’s retail inflation based on Consumer Price Index (CPI) eased 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. Adding some comfort, Reserve Bank of India (RBI) said that bank credit to registered NBFCs (other than MFIs) for on-lending to agriculture, micro and small enterprises (MSEs) and housing sector up to prescribed limits will be classified as priority sector lending, in a bid to boost credit to the needy segment of borrowers.

Markets gained traction in noon deals, after India’s Wholesale price index (WPI) inflation also fell to a multi-year low of 1.08% in the month of July, on account of cheaper fuel and food items. According to the latest data released by the government, WPI slowed down to 1.08% (provisional) in July, 2019 as compared to 2.02% (provisional) for the previous month and 5.27% during the corresponding month of the previous year. Build up inflation rate in the financial year so far was 1.08% compared to a build up rate of 3.1% in the corresponding period of the previous year. Traders were optimistic, 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.

On the global front, European markets were trading in red, as Eurozone economic growth halved in the second quarter, as initially estimated. The flash estimate from Eurostat showed that gross domestic product grew 0.2 percent sequentially, following the first quarter's 0.4 percent expansion. Asian markets ended in green, after Malaysia's consumer price inflation slowed in July. The figures from the Department of Statistics showed that the consumer price index climbed 1.4 percent year-on-year in July, after a 1.5 percent increase in June. Among main groups, prices for furnishings, household equipment and routine household maintenance grew by 3.3 percent and those of food and non-alcoholic beverages and recreation services and culture rose by 2.4 percent, each.

Back home, the pharmaceutical industry stocks ended lower, despite 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. Further, stocks related to the housing finance companies (HFCs) remained in watch, with the Reserve Bank of India’s (RBI) statement that HFCs will be treated as one of the categories of NBFCs for regulatory purposes and it will come under its direct oversight. This comes after the Finance Act, 2019 amended the National Housing Bank Act, 1987, conferring certain powers for regulation of HFCs with the RBI.

Finally, the BSE Sensex gained 353.37 points or 0.96% to 37,311.53, while the CNX Nifty was up by 103.55 points or 0.95% to 11,029.40.

The BSE Sensex touched a high and a low of 37,473.61 and 37,000.77, respectively and there were 24 stocks advancing against 07 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.85%, while Small cap index was up by 0.41%.

The top gaining sectoral indices on the BSE were Metal up by 2.68%, Telecom up by 2.40%, Basic Materials up by 2.03%, Capital Goods up by 1.16% and PSU up by 1.15%, while Healthcare down by 0.52% was the lone losing index on BSE.

The top gainers on the Sensex were Vedanta up by 4.87%, Tata Steel up by 4.61%, Yes Bank up by 4.01%, Tech Mahindra up by 2.76% and Hero MotoCorp up by 2.65%. On the flip side, Sun Pharma down by 4.69%, Kotak Mahindra Bank down by 1.27%, ONGC down by 1.21%, Tata Motors down by 0.94% and Tata Motors - DVR down by 0.69% were the top losers.

Meanwhile, snapping five-month rising trend, 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. The overall food inflation, measured on consumer food price index (CFPI) moved up to 2.36% in July from 2.25% in June 2019 and 1.30% in July 2018.

As per the data of the Central Statistics Office (CSO), Ministry of Statistics and Programme, the CPI (Rural, Urban, Combined) on Base 2012=100 for July 2019, stood at 2.19%, 4.22% and 3.15%, respectively, compared to 4.11%, 4.32% and 4.17%, respectively in July 2018. The index value of CPI for combined stood at 144.2. The data also showed that CFPI for all India Rural and Urban for July 2019 stood at 0.57% and 5.61%, respectively, compared to 2.18% and -0.36%, respectively in July 2018. The index value of CFPI for combined stood at 143.4 for the month of July.

The rate of price rise in vegetables softened to 2.82% during the latest month as against a rise of 4.66% in June, while prices of 'pulses and products' went up to 6.82% from 5.68%. In case of fruits, the price trend showed upside movement with an inflation print of (-) 0.86% as against (-) 4.18% a month earlier. Prices of protein-rich 'meat and fish' rose at nearly the same level at 9.05% from 9.01% in June, however, inflation in eggs eased to 0.57% against 1.62%. In fuel and light category, deflation was witnessed with a print at (-) 0.36%, as against a rise of 2.32% a month ago.

The CNX Nifty traded in a range of 11,078.15 and 10,935.60. There were 37 stocks advancing against 13 stocks declining on the index.

The top gainers on Nifty were UPL up by 4.73%, Bajaj Finserv up by 4.57%, Zee Entertainment up by 4.55%, Tata Steel up by 4.13% and Vedanta up by 4.11%. On the flip side, Sun Pharma down by 5.18%, Indiabulls Housing Finance down by 4.96%, Wipro down by 2.86%, Coal India down by 1.89% and Dr. Reddy’s down by 1.72% were the top losers.

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.