Indices end higher amid volatility; Nifty settles above 11,450 marks

Indian equity benchmarks managed to close higher with gains of over half percent each on Tuesday despite high volatility, led by buying pressure in telecom, metal and power stocks, amid positive global equities. After making cautious start, domestic bourses gained traction, as the Reserve Bank of India (RBI) announced a host of steps, including term repo operations totalling Rs 1 lakh crore in mid-September in order to ease pressure on the liquidity and maintain congenial financial conditions with a view to ensuring sustainable recovery of economic growth. However, markets soon turned highly volatile, as some anxiety remained among the local traders with report that India's economy suffered its worst slump on record in April-June, with the gross domestic product (GDP) contracting by 23.9% as the coronavirus-related lockdowns weighed on the already-declining consumer demand and investment. There was some cautiousness too with report that the output of eight core infrastructure industries tumbled by 9.6%, for the fifth consecutive month in July, due to the decline mostly in production of steel, refinery products and cement.

But, local indices regained some traction to end higher, taking support from the survey report showing that  Indian manufacturing activity signalled growth in the month of August 2020, led by an improvement in customer demand as client businesses reopened, after lockdown restrictions eased amid the coronavirus disease 2019 (COVID-19). The Nikkei India Manufacturing Purchasing Managers’ Index (PMI) - a composite single-figure indicator of manufacturing performance - jumped to 52.0 in August as against 46.0 in July. A sharp appreciation in the rupee against the US dollar added to the momentum. Indian rupee settled at 72.87 against the US dollar, registering a surge of 73 paise over its previous close.

On the global front, Asian markets ended mostly in green, after a private survey showed china’s factory activity expanded at the fastest clip in nearly a decade in August. The Caixin/Markit Manufacturing Purchasing Managers' Index rose to 53.1 from 52.8 in July amid the sharpest increase in output and new orders since 2011. New export work rose for the first time this year, while employment moved closer to stabilization. Meanwhile, the latest survey from Jibun bank revealed that the manufacturing sector in Japan continued to contract in August, albeit at a slower pace, with a manufacturing PMI score of 47.2, up from 45.2 in July. European markets were trading mostly in green, after a survey showed Euro zone manufacturing activity remained on a recovery path last month, with conditions improving for the second straight month. The final Euro zone manufacturing PMI of 51.7 was unchanged from the flash reading and just a touch lower than the 51.8 reading in July.

Back home, on the sectoral front, there was some reaction in metal stocks as Miners' body FIMI urged the government to introduce a mechanism to monitor the price and sale of domestic steel, which has witnessed a steep rise in recent months. Stocks related to fertilizer sector too were in focus with India Ratings and Research (Ind-Ra) in a report stating that India's fertiliser sales are likely to grow 10-15 percent in 2020-21, however, the momentum seen in first half of the fiscal is likely to moderate during the second half.

Finally, the BSE Sensex gained 272.51 points or 0.71% to 38,900.80, while the CNX Nifty was up by 82.75 points or 0.73% to 11,470.25.

The BSE Sensex touched high and low of 39,226.82 and 38,542.11, respectively and there were 21 stocks advancing against 9 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 1.16%, while Small cap index was up by 0.54%.

The top gaining sectoral indices on the BSE were Telecom up by 3.81%, Metal up by 3.35%, Power up by 2.56%, Healthcare up by 1.94% and Basic Materials up by 1.60%, while IT down by 0.93%, Oil & Gas down by 0.44% and TECK down by 0.12% were the few losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 6.38%, Bajaj Finance up by 4.42%, Asian Paints up by 3.93%, Tata Steel up by 3.82% and NTPC up by 3.52%. On the flip side, ONGC down by 3.29%, Axis Bank down by 2.23%, Tech Mahindra down by 1.75%, Infosys down by 1.53% and ICICI Bank down by 0.99% were the top losers.

Meanwhile, the ministry of Commerce and Industry in its latest data has showed that the growth of eight core infrastructure industries have contracted by 9.6 percent in July 2020 as compared to same period of last year, due to decline mostly in production of steel, refinery products and cement. This is the fifth month of contraction in a row for the eight-core industries. The production of eight core sectors had expanded by 2.6 percent in July last year. The Eight Core Industries - coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity - comprise 40.27% of the weight of items included in the Index of Industrial Production (IIP).  

Among eight core sectors, Coal production having 10.33 percent weight decreased by 5.7 percent in July, 2020 over July, 2019, and its cumulative index fell by 12.9 percent during April to July, 2020-21 over corresponding period of the previous year. Petroleum Refinery production having 28.04 percent weight declined 13.9 percent in July, 2020 over July, 2019, while its cumulative index dropped by 17.1 percent during April to July, 2020-21 over the corresponding period of previous year.

Electricity generation having 19.85 percent weight fell 2.3 percent in July, 2020 over July, 2019, while its cumulative index decreased by 12.4 percent during April to July, 2020-21 over the corresponding period of previous year. Cement production having 5.37 percent weight decreased by 13.5 percent in July, 2020 over July, 2019 and its cumulative index fell by 32.2 percent during April to July, 2020-21 over the corresponding period of previous year. Steel production having 17.92 percent weight declined by 16.4 percent in July, 2020 over July, 2019, while its cumulative index fell by 42.0 percent during April to July, 2020-21 over the corresponding period of previous year.

Crude Oil production having 8.98 percent weight fell by 4.9 percent in July, 2020 over July, 2019 and its cumulative index dropped by 6.1 percent during April to July, 2020-21 over the corresponding period of previous year. The Natural Gas production having 6.88 percent weight declined by 10.2 percent in July, 2020 over July, 2019, and its cumulative index was down by 14.7 percent during April to July, 2020-21 over the corresponding period of previous year. However, Fertilizer production having 2.63 percent weight increased by 6.9 percent in July, 2020 over July, 2019, and its cumulative index was up by 3.9 percent during April to July, 2020-21 over the corresponding period of previous year.

The CNX Nifty traded in a range of 11,553.55 and 11,366.90 and there were 35 stocks advancing against 15 stocks declining on the index.

The top gainers on Nifty were Bharti Airtel up by 7.11%, JSW Steel up by 6.41%, Hindalco up by 5.26%, Asian Paints up by 4.30% and Bajaj Finance up by 4.28%. On the flip side, Bharti Infratel down by 5.11%, ONGC down by 2.99%, Axis Bank down by 1.72%, Adani Ports & SEZ down by 1.64% and Infosys down by 1.37% were the top losers.

European markets were trading mostly in green; France’s CAC increased 10.00 points or 0.2% to 4,957.22 and Germany’s DAX increased 83.53 points or 0.65% to 13,028.91, while UK’s FTSE 100 decreased 81.59 points or 1.37% to 5,881.98.

Asian markets ended mostly higher on Tuesday after data showing that China's manufacturing sector continued to expand in August, the Caixin/ Markit Manufacturing Purchasing Managers' Index rose to 53.1 from 52.8 in July amid the sharpest increase in production and new orders since 2011. Seoul shares ended higher as investors shrugged off surging new infections, with the country's corona virus tally surpassing 20,000 today. While, South Korea's government has proposed an 8.5 percent national budget increase for next year, signaling it would continue to step up stimulus to pull Asia's fourth-largest economy from the pandemic-induced slowdown. Japanese shares ended on a flat note, despite shares of trading companies extended a rally driven by the acquisition of a 5 percent stake by Warren Buffett's Berkshire Hathaway in each of Japan's five biggest trading houses. Japan’s factory activity contracted at the slowest pace in six months in August, the latest survey from Jibun bank revealed today with a manufacturing PMI score of 47.2, up from 45.2 in July. The unemployment rate in Japan came in at a seasonally adjusted 2.9 percent in July against 2.8 percent in June.