Markets manage to end higher in volatile session

Indian equity benchmarks managed to settle in positive terrain on Wednesday’s highly volatile session. After a cautious start, indices altered between green & red terrain, amid 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. Adding more worries on the street, India’s services sector activity expanded at a slower pace in the month of August, impacted by slower rise in new business inflows. As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index eased to 52.4 in August from 53.8 in July.

However, markets staged recovery in second half of the session, on the back of firm cues from global markets. Traders took support with reports 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. Further, market participants also got comfort, as 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, European markets were trading in green, despite the UK service sector growth remained subdued in August reflecting slower growth in output and new orders. The data from IHS Markit revealed that the IHS Markit/Chartered Institute of Procurement & Supply Purchasing Managers' Index fell more-than-expected to 50.6 in August from 51.4 in July. Asian markets ended higher, after Malaysia's exports rose unexpectedly in July, while imports declined less-than-forecast. The data from the Department of Statistics revealed that exports rose 1.7 percent year-on-year to MYR 88.0 billion in July. Imports declined 5.9 percent to MYR 73.7 billion.

Back home, stocks related to the metal industry ended higher, despite credit rating agency, India Ratings and Research (Ind-Ra) 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 textile industry stocks remained in focus, after Tirupur Exporters' Association (TEA) claimed that the union textile secretary has given an assurance to TEA to address issues being faced by the knitwear industry and help the growth of exporting units.

Finally, the BSE Sensex gained 161.83 points or 0.44% to 36,724.74, while the CNX Nifty was up by 46.75 points or 0.43% to 10,844.65.

The BSE Sensex touched a high and a low of 36,776.31 and 36,409.54, respectively and there were 18 stocks advancing against 13 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.14%, while Small cap index was up by 0.29%.

The top gaining sectoral indices on the BSE were Telecom up by 1.91%, Metal up by 1.72%, PSU up by 1.42%, Bankex up by 1.06% and Oil & Gas up by 0.82%, while Auto down by 1.74%, Consumer Durables down by 1.31%, Consumer Disc down by 0.92%, FMCG down by 0.12% and Realty down by 0.06% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 2.97%, SBI up by 2.46%, Tata Steel up by 2.40%, Vedanta up by 1.94% and NTPC up by 1.79%. On the flip side, Maruti Suzuki down by 3.64%, Sun Pharma down by 2.97%, Tata Motors down by 2.80%, Asian Paints down by 2.64% and Tata Motors - DVR down by 2.35% were the top losers.

Meanwhile, MSME Minister Nitin Gadkari is going to discuss issues being faced by small & medium enterprises including delayed payments. The Minister has called a meeting of heads of banks, finance ministry officials, and CEOs of several of central PSUs on September 05, 2019.

MSMEs have been expressing concern over failure of the Micro and Small Enterprise Facilitation Council (MSEFC) in resolving cases of delayed payments within the stipulated 90 days. This major issue is on the agenda of the meeting convened by Gadkari.

The meeting may also consider modification of the relevant rules governing the sector for recovery of dues by way of arrears of land revenue. Besides, proposal of setting up of more than one MSEFC in each state is also on the agenda.

The CNX Nifty traded in a range of 10,858.75 and 10,746.35. There were 30 stocks advancing against 20 stocks declining on the index.

The top gainers on Nifty were Tata Steel up by 2.88%, BPCL up by 2.82%, IOC up by 2.81%, Dr. Reddy’s Lab up by 2.66% and JSW Steel up by 2.45%. On the flip side, Maruti Suzuki down by 4.04%, Sun Pharma down by 3.04%, Britannia down by 3.02%, Tata Motors down by 2.57% and Asian Paints down by 2.52% were the top losers.

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.