Post Session: Quick Review

Indian equity benchmarks ended trading session in green on Wednesday. Markets made a cautious start, impacted with the Finance Ministry’s statement that the gross GST collection in August stood at Rs 86,449 crore, down from Rs 87,422 crore collected in July. Traders turned cautious with Moody's Investors Service stating that India will be among the large emerging market sovereigns to have highest debt burden by 2021. It stated that the coronavirus pandemic-induced deterioration in growth and fiscal dynamics will leave most large emerging market sovereigns with higher debt burdens over the next few years.

Key indices remained volatile for the most part of the trading session, as the government capped export incentives under the scheme, MEIS, at Rs 2 crore per exporter on outbound shipments made during the period from September 1 to December 31, 2020. The move comes after the Department of Revenue asked the commerce ministry to review the coverage of Merchant Export from India Scheme (MEIS) so that the fiscal benefits under the programme can be brought down to Rs 9,000 crore in the current financial year.

However, in the last hour of the trade, markets jumped to end higher with notable gains, taking support with CII-IBA survey report stating that the financial conditions are looking up in the current quarter (Q2FY21) due to policy decisions and steps the government and Reserve Bank of India have taken to support economy. Market participants took a note of Union Minister of Commerce and Industry Piyush Goyal’s statement that the whole package of the US-India trade deal is almost ready and it can be finalised when the local political situation in the United States is conducive.

On the global front, European markets were trading higher with signs of a global economic recovery overshadowing weak German retail sales. Asian markets ended mostly higher on Wednesday, even after consumer prices in South Korea were up 0.6 percent on month in August. The Statistics Korea said that exceeded expectations for an increase of 0.2 percent following the flat reading in July. On a yearly basis, consumer prices climbed 0.7 percent - again beating forecasts for 0.4 percent and up from 0.3 percent in the previous month.

The BSE Sensex ended at 39086.03, up by 185.23 points or 0.48% after trading in a range of 38736.22 and 39141.84. There were 18 stocks advancing against 12 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 1.26%, while Small cap index was up by 1.66%. (Provisional)

The top gaining sectoral indices on the BSE were Energy up by 1.80%, Industrials up by 1.70%, Power up by 1.60%, Metal up by 1.49% and Telecom up by 1.34%, while there were no losing sectoral indices on the BSE. (Provisional)

The top gainers on the Sensex were Mahindra & Mahindra up by 5.77%, Tata Steel up by 2.30%, Indusind Bank up by 2.08%, Reliance Industries up by 1.97% and HCL Tech. up by 1.67%. On the flip side, Bajaj Auto down by 2.62%, Asian Paints down by 1.63%, Sun Pharma down by 1.48%, HDFC down by 1.25% and Nestle down by 1.12% were the top losers. (Provisional)

Meanwhile, the Directorate Generate of Foreign Trade (DGFT) in its latest notification has said that a limit has been imposed on total rewards under the Merchandise Exports from India Scheme (MEIS).  The total reward which may be granted to an IEC (Import Export Code) holder under the scheme shall not exceed Rs 2 crore per IEC of exports made in the period September 1, 2020 to December 31, 2020.

Further, it has been notified that any IEC holder who has not made any exports for a period of one year preceding September 1, 2020 or any new IECs obtained on or after the date of publication of this notification would not be eligible for submitting any claim under this scheme. The DGFT also said that the MEIS will be withdrawn with effect from January 1, 2021.

Meanwhile, it is estimated that 98 per cent of the exporters’ claim of MEIS will be unaffected by the changes.  The unaffected exporters who have already factored in MEIS in the pricing of their products do not face any change or uncertainty since neither coverage of products nor rates of MEIS will be changed.  An advance notice of 4 months of the end date of MEIS provides certainty for the future pricing decisions.

The CNX Nifty ended at 11535.00, up by 64.75 points or 0.56% after trading in a range of 11430.40 and 11554.75. There were 37 stocks advancing against 13 stocks declining on the index. (Provisional)

The top gainers on Nifty were Zee Entertainment up by 8.10%, Mahindra & Mahindra up by 5.79%, Tata Motors up by 4.52%, Bharti Infratel up by 3.84% and Adani Ports & SEZ up by 3.18%. On the flip side, Bajaj Auto down by 2.63%, Asian Paints down by 1.79%, Hero MotoCorp down by 1.74%, Sun Pharma down by 1.33% and HDFC down by 1.30% were the top losers. (Provisional)

European markets were trading higher; UK’s FTSE 100 increased 98.91 points or 1.69% to 5,960.96, France’s CAC increased 105.00 points or 2.13% to 5,043.10 and Germany’s DAX was down by 263.37 points or 2.03% to 13,237.62.

Asian markets ended mostly higher on Wednesday as investors were cheered by upbeat manufacturing data from major economies and that fueling expectations of a global recovery, even though the corona virus pandemic has regions around the globe battling recessions. Japanese shares ended up as Chief Cabinet Secretary Yoshihide Suga gathered support to be the next prime minister at a leadership election on September 14. Bank of Japan Deputy Governor Masazumi Wakatabe said the central bank must maintain its strong commitment to achieve its 2 percent inflation target and consider ways to improve its monetary policy as the corona virus pandemic stokes fears of deflation. However, Chinese shares ended lower after US Secretary of State Mike Pompeo said the Trump administration would take further moves in the coming days and weeks to restrict the activities of Chinese companies for the benefit of the US economy.