Post Session: Quick Review

Indian equity benchmarks ended with strong gains on Tuesday. After a positive start, markets traded higher, taking support with data showed the country’s annual retail inflation eased slightly in August, against expectations. India's retail inflation in August of 6.69 percent was lower than the 6.73 percent recorded in July, but it remained above the upper end of the Reserve Bank of India's (RBI) medium-term target for the fifth straight month. Some support also came with Minister of State for Finance Anurag Singh Thakur’s statement that the lowering of corporate tax rate has made India a globally competitive and favoured destination for investment and the impact of this landmark reform will be felt in the coming years. The government last year slashed the base corporation tax rate to 22 percent from 30 per cent, leading to revenue implication of Rs 1.45 lakh crore.

In late morning deals, key indices faced some volatility, after the Asian Development Bank (ADB) said that India's economy is expected to contract by 9 per cent this year -- worse than the 4 per cent contraction it had forecasted three months ago. However, it expects India to bounce back with 8 per cent growth next year as the country begins to emerge from the economic devastation caused by coronavirus (COVID-19) pandemic. Adding more worries among traders, S&P Global Ratings slashed its FY21 growth forecast for India to (-) 9 percent, from (-) 5 percent estimated earlier, saying that rising COVID-19 cases would keep private spending and investment lower for longer. However, markets gained traction in second half of the session to end near intraday high points, as the Reserve Bank of India’s (RBI) report showed that bank credit grew 5.49% to Rs 102.11 lakh crore, while deposits increased 10.92% to Rs 141.76 lakh crore in the fortnight ended August 28.

On the global front, European markets were trading higher supported by improving Chinese economic data and positive results coming from retailers. Asian markets ended mostly higher on Tuesday, after industrial production in China was up 5.6 percent on year in August. The National Bureau of Statistics said that blew away expectations for an increase of 5.1 percent and was up sharply from the 4.8 percent gain in July. The bureau also said that retail sales advanced an annual 0.5 percent - also beating expectations for a flat reading after slipping 1.1 percent in the previous month. Fixed asset investment slipped 0.3 percent on year, again beating forecasts for a fall of 0.4 percent after dropping 1.6 percent a month earlier.

The BSE Sensex ended at 39044.35, up by 287.72 points or 0.74% after trading in a range of 38753.68 and 39102.25. There were 21 stocks advancing against 8 stocks declining, while 1 stock remain unchanged on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.85%, while Small cap index was up by 1.44%. (Provisional)

The top gaining sectoral indices on the BSE were Telecom up by 1.94%, Healthcare up by 1.93%, Bankex up by 1.73%, Basic Materials up by 1.39% and Power up by 1.22%, while Realty down by 0.58% was the only losing index on BSE. (Provisional)

The top gainers on the Sensex were Indusind Bank up by 4.11%, Bajaj Finance up by 2.28%, Sun Pharma Inds. up by 2.23%, ICICI Bank up by 2.09% and Axis Bank up by 1.94%. On the flip side, Titan Co down by 1.37%, Maruti Suzuki down by 0.96%, ITC down by 0.87%, Asian Paints down by 0.61% and Bajaj Auto down by 0.48% were the top losers. (Provisional)

Meanwhile, the Asian Development Bank (ADB) in its latest report has predicted that India's economy is likely to contract by 9 per cent this year -- worse than the 4 per cent contraction it had forecast three months ago. However, ADB expects India to bounce back with 8 per cent growth next year as the country begins to emerge from the economic devastation caused by coronavirus (COVID-19) pandemic.

For developing Asia, the Asian Development Outlook (ADO) 2020 Update forecasts minus 0.7 per cent gross domestic product (GDP) growth this year -- marking its first negative economic growth since the early 1960s.

The report further noted that growth will rally to 6.8 per cent in 2021, in part because growth will be measured relative to a weak 2020. This will still leave next year's output below pre-COVID-19 projections, suggesting an L-shaped rather than a V-shaped recovery. About three-quarters of the region's economies are expected to post negative growth in 2020.

The CNX Nifty ended at 11521.80, up by 81.75 points or 0.71% after trading in a range of 11442.25 and 11535.95. There were 33 stocks advancing against 16 stocks declining, while 1 stock remain unchanged on the index. (Provisional)

The top gainers on Nifty were Indusind Bank up by 3.95%, Cipla up by 2.89%, UPL up by 2.67%, Bharti Airtel up by 2.42% and ICICI Bank up by 2.16%. On the flip side, Titan Co down by 1.13%, Maruti Suzuki down by 1.07%, HDFC Life Insurance down by 0.88%, Eicher Motors down by 0.87% and ITC down by 0.85% were the top losers. (Provisional)

European markets were trading higher, UK’s FTSE 100 increased 39.69 points or 0.66% to 6,065.94, France’s CAC increased 13.32 points or 0.26% to 5,065.20, Germany’s DAX increased 8.39 points or 0.06% to 13,202.05

Asian markets ended mostly higher on Tuesday, tracked by gains from Wall Street overnight, while investors are cautiously focused to the upcoming central bank meetings this week for further direction. The US Federal Reserve's monetary policy statement is due on Wednesday, while the Bank of Japan and the Bank of England are scheduled to announce their respective monetary policy decisions on Thursday. Though, Japanese shares closed lower on profit taking after a three-day rally in the run up to the ruling party election, where Abe ally Yoshihide Suga was picked as the new leader. The Japanese yen's surge also pressured exporters. Chinese shares ended higher on optimism about the economic recovery in China after data showed that the country's industrial production and retail sales increased in August from a year ago and beat expectations, while fixed asset investment declined for the January-to-August period.