Post Session: Quick Review

Indian equity Markets traded with volatility for whole trading session and somehow managed to end in green terrain on Wednesday, on the back of broadly positive global cues and a recovery in the domestic currency. Earlier in the day, key indices traded on a subdued note, as traders remain concerned with Care Ratings’ report that the ongoing economic slowdown that India is witnessing may be because of weak investment growth. Two catalysts of investment - demand and availability of funds - have witnessed weak growth in the preceding months. Low capacity utilization in most of the industries left them with surplus capacity and this surplus has pulled down the need for any more expansion. Some cautiousness also crept in with report that the country's services sector activity growth eased in August as new business inflows rose at a slower pace; following which job creation and output expansion moderated. The IHS Markit India Services Business Activity Index declined from 53.8 in July to 52.4 in August, pointing to a slower rate of increase in output.

However, markets made a smart recovery in the afternoon, as sentiments turned optimistic with report that India's central bank recommended a slew of measures for developing a secondary market for corporate loans, including easing of regulations to allow foreign portfolio investors (FPIs) to directly purchase distressed loans from banks. Traders also took a note of SME Minister Nitin Gadkari has called a meeting of heads of banks, finance ministry officials, and CEOs of various of central PSUs on September 5 to sort out the problem of delayed payments being faced by small and medium enterprises.

On the global front, Asian equity ended in green on Wednesday, after data showed improving services-sector activity in China last month. The private Caixin China services purchasing managers index rose to 52.1 in August from 51.6 in July. Data suggested that domestic demand was stronger than foreign demand and an employment measurement jumped. European markets were trading in green, as political developments in Italy and Britain eased investors' nerves. Back home, steel stock were in focused with the report that India Ratings and Research (Ind-Ra) has revised its outlook on the steel sector to ‘stable-to-negative’ from ‘stable’ for the remainder of this fiscal, owing to sluggish demand growth expectation. Ind-Ra has also revised downwards its FY20 steel demand growth expectation to around 4% from the previous forecast of 7%.

The BSE Sensex ended at 36691.19, up by 128.28 points or 0.35% after trading in a range of 36409.54 and 36776.31. There were 19 stocks advancing against 12 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index rose 0.10%, while Small cap index was up by 0.31%. (Provisional)

The top gaining sectoral indices on the BSE were Telecom up by 1.78%, Metal up by 1.76%, PSU up by 1.44%, Oil & Gas up by 0.92% and Bankex up by 0.90%, while Auto down by 1.69%, Consumer Durables down by 1.40%, Consumer Discretionary Goods & Services down by 0.89% and FMCG was down by 0.22% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Bharti Airtel up by 2.52%, SBI up by 2.48%, Tata Steel up by 2.32%, Vedanta up by 1.83% and HCL Technologies was up by 1.72%. (Provisional)

On the flip side, Maruti Suzuki down by 3.65%, Sun Pharma down by 2.81%, Tata Motors down by 2.71%, Asian Paints down by 2.60% and Tata Motors - DVR was down by 2.44% were the top losers. (Provisional)

Meanwhile, Care Ratings in its latest report has said that the ongoing economic slowdown that India is witnessing may be because of weak investment growth. Two catalysts of investment - demand and availability of funds - have witnessed weak growth in the preceding months. Low capacity utilisation in most of the industries left them with surplus capacity and this surplus has pulled down the need for any more expansion. It also mentioned that the problems in the financial sector involving Non-banking financial companies (NBFCs) have affected the flow of funds and added to the worry.

The report also underlined that current financial year (FY20) may not see any major upward shift given the fairly low Image result for Gross domestic products (GDP) growth witnessed in Q1 FY20.  Gross fixed capital formation (GFCF) rate, a measure of how much of GDP in a year has been accounted for by investment, has been rising very gradually from 28.2 per cent in FY17 to 28.6 per cent and 29.2 per cent in FY18 and FY19 respectively. However, it has declined for five successive years following FY12 when it was at 34.3%.

Investment in the corporate sector can be measured by the changes in gross fixed assets of companies. In FY19 for a set of 1405 companies, incremental GFA was Rs 4.84 lakh crore, out of which, only two companies accounted for 17.3 per cent of the total investments. Besides, the report stated that that the pace of investment would depend on how soon a healthy rural economy can be the starting point for consumption demand that will feedback to investment.

The CNX Nifty ended at 10836.85, up by 38.95 points or 0.36% after trading in a range of 10746.35 and 10858.75. There were 30 stocks advancing against 20 stocks declining on the index. (Provisional)

The top gainers on Nifty were Indian Oil Corporation up by 2.81%, Dr. Reddys Lab up by 2.66%, BPCL up by 2.62%, Tata Steel up by 2.60% and JSW Steel was up by 2.59%. (Provisional)

On the flip side, Maruti Suzuki down by 4.04%, Sun Pharma down by 3.11%, Britannia Industries down by 2.74%, Tata Motors down by 2.71% and Asian Paints was down by 2.52% were the top losers. (Provisional)

European markets were trading in green; UK’s FTSE 100 increased 40.33 points or 0.55% to 7,308.52, France’s CAC rose 57.10 points or 1.04% to 5,523.17 and Germany’s DAX was up by 136.94 points or 1.15% to 12,047.80.

Asian markets ended higher on Wednesday on renewed hopes of US-China trade deal. Investors kept a close eye on international trade developments after US President Donald Trump warned that he would be ‘tougher’ on Beijing if negotiations extended beyond the 2020 US presidential election and he is re-elected. Chinese shares ended sharply higher after report showed activity in China's service sector expanded at the fastest pace in three months in August, easing some concerns of a slowdown in the world’s second largest economy. Hong Kong shares ended up after reports the embattled leader of Hong Kong, Chief Executive Carrie Lam, will officially withdraw a controversial bill that would have allowed extraditions to China. Japanese shares ended marginally higher as a weak yen and encouraging service sector activity data prompted some late bargain hunting.