Local indices end on optimistic note; Sensex settles above 38,050 level

Indian equity benchmarks ended on optimistic note amid choppy trading session on Monday, as government’s assurance on mass production of COVID-19 vaccines and more infrastructures spending boosted investor sentiment. The benchmarks staged a gap up opening but soon turned negative, as the government data showed that contracting for the fifth straight month, India's exports slipped 10.21 per cent to $23.64 billion in July, on account of decline in the shipments of petroleum, leather and gems and jewellery items. However, domestic indices once again entered into green territory in morning session, with report that foreign portfolio investors (FPI) remained net investors in Indian markets in the first half of August, pumping in Rs 28,203 crore in debt and equities on net basis in the period. Some support also came as Finance Minister Nirmala Sitharaman has exhorted large central public sector enterprises (CPSEs) to achieve 50 percent of their planned capital expenditure (capex) target for FY21 by the month of September in order to support economic growth amidst covid-19 pandemic.

Key indices managed to keep their heads above water in afternoon session, taking support from Commerce and Industry Minister Piyush Goyal’s statement that India will take equal and proportional measures to protect domestic manufacturing if other countries continue imposing restrictions or barriers on Indian goods. He also said that if some countries continue exporting low-quality goods or dumping products or routing exports through India's free trade agreement (FTA) partners, India would take actions. Markets added further strength in final hour of trade, even as a private report stating that as many as 159 companies listed on the BSE cumulatively saw a decline of Rs 22,538 crore in their EBITDA in the three months ended March 2020 compared to the December quarter, reflecting an early impact of the coronavirus pandemic. EBITDA stands for earnings before interest, tax, depreciation and amortisation.

On the global front, Asian markets ended mixed on Monday, as worries about rising U.S.-China tensions and the stalled U.S. stimulus talks overshadowed hopes of more supportive monetary policy from China. A cautious undertone prevailed after the U.S. and China postponed virtual trade talks planned for this weekend and U.S. President Donald Trump issued an executive order Friday giving ByteDance 90 days to either sell or spin off its TikTok business in the United States. Besides, Japan's gross domestic product plummeted an annualized 27.8 percent in the second quarter of 2020. That missed expectations for a decline of 27.2 percent following the 2.2 percent drop in the previous three months. European markets were trading higher, after the People's Bank of China injected liquidity into the financial system to help lenders manage upcoming government bond sales.

Back home, on the sectoral front, select banking stocks ended higher with latest data from the RBI showing that bank credit and deposits grew 5.51 per cent and 11.11 per cent to Rs 102.65 trillion and Rs 141.61 trillion, respectively, in the fortnight ended July 31. There was some reaction in agriculture related stocks with report that as the sowing of kharif crops enters its last leg, acreage this year has been almost 8.54% more than last year as of August 14.

Finally, the BSE Sensex gained 173.44 points or 0.46% to 38,050.78, while the CNX Nifty was up by 68.70 points or 0.61% to 11,247.10.

The BSE Sensex touched high and low of 38,119.38 and 37,734.14, respectively and there were 24 stocks advancing against 6 stocks declining on the index. 

The broader indices ended in green; the BSE Mid cap index rose 0.41%, while Small cap index was up by 0.84%.

The top gaining sectoral indices on the BSE were Power up by 2.96%, Metal up by 2.73%, Utilities up by 2.66%, Auto up by 2.50% and Consumer discretionary up by 1.83%, while Energy down by 0.69% and Telecom down by 0.58% were the top losing indices on BSE.

The top gainers on the Sensex were NTPC up by 7.92%, Bajaj Auto up by 4.24%, Tech Mahindra up by 3.62%, ONGC up by 2.79% and Maruti Suzuki up by 2.67%. On the flip side, SBI down by 1.73%, Bharti Airtel down by 1.42%, Reliance Industries down by 1.07%, Sun Pharma down by 0.58% and ICICI Bank down by 0.33% were the top losers.

Meanwhile, in order to support economic growth amidst covid-19 pandemic, Finance Minister Nirmala Sitharaman has exhorted large central public sector enterprises (CPSEs) to achieve 50 percent of their planned capital expenditure (capex) target for FY21 by the month of September. She also asked the secretaries to closely monitor the performance of CPSEs in order to ensure capital expenditure to the tune of 50 percent of capital outlay by the end of second quarter of 2020-21 and make appropriate plans for it.

While mentioning the significant role of CPSEs in giving a push to the growth of the Indian economy, the minister encouraged the CPSEs to perform better to achieve their targets and to ensure that the capital outlay provided to them for the financial year 2020-21 is spent properly and within time. She felt that better performance of CPSEs can help the economy in a big way to recover from the impact of COVID-19. She stated that the CPSEs discussed constraints being faced by them especially due to COVID–19 pandemic. She said ‘extraordinary situation requires extraordinary efforts and with collective efforts, we will not only perform better but also help the Indian economy to achieve better results.’

The combined capex target for 2020-21 for these seven CPSEs is Rs 1,24,825 crore as against Rs 1,29,821 crore in the previous fiscal. The achievement was Rs 1,14,730 crore i.e. 88.37 percent. During Q1 of FY 2019-20, the achievement was Rs 20,172 crore (15.53 percent) and achievement up to July 2020 (FY 2020-21) is Rs 24,933 crore (20 percent).

The CNX Nifty traded in a range of 11,267.10 and 11,144.50 and there were 39 stocks advancing against 11 stocks declining on the index.

The top gainers on Nifty were NTPC up by 7.47%, Eicher Motors up by 4.79%, Zee Entertainment up by 4.71%, Hindalco Industries up by 4.46% and Bajaj Auto up by 4.33%. On the flip side, SBI down by 1.55%, Bharti Airtel down by 1.47%, BPCL down by 1.28%, Reliance Industries down by 0.93% and Tata Motors down by 0.72% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 23.67 points or 0.39% to 6,113.71, France’s CAC increased 2.83 points or 0.06% to 4,965.76 and Germany’s DAX increased 22.12 points or 0.17% to 12,923.46.

Asian markets ended mixed on Monday after the United States and China postponed virtual trade talks planned for this weekend, while US President Donald Trump issued an executive order on Friday forcing ByteDance, the Chinese company behind TikTok, to sell-off or spin-off its US social media business in 90 days. Chinese shares ended higher after the Chinese central bank (PBOC) injected liquidity into the financial system. The PBOC extended 700 billion yuan of one-year loans via its medium-term lending facility on Monday, up from the two batches of MLF loans worth a combined 550 billion yuan that were due to expire in August, albeit at the same rate of 2.95%.However, Japanese shares ended down after data showed the country’s economy plummeted an annualized 27.8 percent in the second quarter of 2020, missed expectations for a decline of 27.2 percent following the 2.2 percent drop in the previous three months. Markets in South Korea and Indonesia were closed for holidays.