Markets gain for second day

Extending gains to a second straight day, Indian equity benchmarks ended the Wednesday’s session with gains of over half percent each, supported by buying interest in realty, healthcare and auto shares. After making slightly positive start, key indices gained some traction, as traders took some support as Chief Economic Advisor Krishnamurthy Subramanian exuded confidence that the country would be back to a high growth path through reforms announced by the government, after overcoming the COVID-19 pandemic. Some support also came with a private report stated that consumer confidence index has shown a marginal uptick of 1.1 percentage points in September 2020. However, markets trimmed some of their gains in late morning session, as traders got anxious with the government data showing that contracting for the sixth straight month, India's exports slipped 12.66% to $22.7 billion in August, on account of decline in the shipments of petroleum, leather, engineering goods and gems and jewellery items. The trade deficit for August this year was estimated at $6.77 billion, against $4.8 billion in July 2020 and $13.86 billion in August 2019.

But, benchmark indices regained their upward momentum in second half of the session, taking support from Foreign Secretary Harsh Vardhan Shringla’s statement that India has received over $20 billion in FDI amid the coronavirus pandemic, showcasing the country as one of the most attractive destinations for investment globally.  Traders also took solace with RBI Governor Shaktikanta Das’s statement that India has seen some stabilisation in economic activity in the ongoing fiscal’s second quarter. He said that the economic recovery will be gradual, but some of the high-frequency indicators such as agriculture activity, manufacturing PMI, and private estimates of unemployment point to some stabilisation of economic activity in the second quarter. 

On the global front, Asian markets ended mostly lower on Wednesday, with investors turning cautious ahead of the U.S. Federal Reserve's monetary policy decision due later in the day. This is the Fed's first meeting since adopting a more relaxed approach on inflation and pledging to keep interest rates low for longer. Meanwhile, Japan had a merchandise trade surplus of 248.299 billion yen in August. That was well above expectations for a deficit of 37.5 billion yen following the 11.6 billion yen surplus in July. Exports were down 14.8 percent on year to 5.232 trillion yen, beating forecasts for a fall of 16.1 percent. Imports tumbled an annual 20.8 percent to 4.984 trillion yen versus expectations for a fall of 18.0 percent.  European markets were trading mostly in green, with retail stocks rising after Inditex SA results. Back home, stocks related to textile sector were in focus with rating agency ICRA’s report that the US restrictions on some textile imports from Xinjiang in China is likely to augur well for the Indian textile exporters. Sugar stocks were buzzing with report that sugar mills owed nearly Rs 13,000 crore to cane farmers as on September 11 for the crop procured during 2019-20 marketing season that started October last year.

Finally, the BSE Sensex rose 258.50 points or 0.66% to 39,302.85, while the CNX Nifty was up by 82.75 points or 0.72% to 11,604.55.

The BSE Sensex touched high and low of 39,359.51 and 39,037.96, respectively and there were 18 stocks advancing against 12 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.21%, while Small cap index was up by 0.44%.

The top gaining sectoral indices on the BSE were Realty up by 2.37%, Healthcare up by 1.58%, Auto up by 1.49%, IT up by 1.02% and Basic Materials up by 0.82%, while Utilities down by 0.94%, Telecom down by 0.90%, Power down by 0.53% and Oil & Gas down by 0.47% were the top losing indices on BSE.

The top gainers on the Sensex were Mahindra & Mahindra up by 4.24%, Bajaj Auto up by 3.44%, Sun Pharma up by 2.50%, HDFC Bank up by 2.11% and Infosys up by 1.95%. On the flip side, Indusind Bank down by 1.80%, NTPC down by 1.43%, SBI down by 0.95%, ONGC down by 0.88% and Bharti Airtel down by 0.83% were the top losers.

Meanwhile, Chief Economic Advisor Krishnamurthy Subramanian has exuded confidence that the country would be back to a high growth path through reforms announced by the government, after overcoming the COVID-19 pandemic. He said ‘we have been there before (in this kind of economic crisis) and will do that again.’
He pointed out that core sectors like cement, steel, railway freight and Information and Communication Technology were all in positive territory for the first time since July 2019. He said ‘if you look at the Purchasing Managers Index (PMI), there was a sharp increase in both PMI for manufacturing and services. But to say that there has been a decline in the GDP over the last 12 quarters is incorrect'.

Earlier, He said the centre was requesting state governments to bring in changes in labour laws, which is within their ambit since some were more than a hundred years old. He mentioned there are many archived labour laws as wages and salaries, are defined in multiple ways, creating a 'compliance nightmare'… there are several states which are planning to bring in changes in labour laws.

The CNX Nifty traded in a range of 11,618.10 and 11,516.75 and there were 29 stocks advancing against 19 stocks declining, while 2 stocks remain unchanged on the index.

The top gainers on Nifty were Dr. Reddys Lab up by 4.44%, Mahindra & Mahindra up by 4.01%, Hindalco up by 3.90%, Bajaj Auto up by 3.52% and Britannia Industries up by 3.05%. On the flip side, Indusind Bank down by 2.00%, NTPC down by 1.65%, Bharti Infratel down by 1.14%, SBI down by 1.07% and Axis Bank down by 1.02% were the top losers.

European markets were trading mostly in green; France’s CAC increased 6.91 points or 0.14% to 5,074.84 and Germany’s DAX rose 7.71 points or 0.06% to 13,225.38, while UK’s FTSE 100 decreased 8.13 points or 0.13% to 6,097.41.

Asian markets ended mostly lower on Wednesday as investors cautiously focusing to the US Federal Reserve's monetary policy decision due later in the day for clues on the monetary policy outlook after the world's largest economy adopted a more accommodative approach to inflation. South Korean shares snapped a four-day winning streak on profit taking. Though, Japanese shares ended higher as Yoshihide Suga was elected Japan's prime minister in a parliamentary vote, succeeding Shinzo Abe, but the Japanese yen’s surge pressured exporters. Japan posted a merchandise trade surplus of 248.299 billion yen in August, following the 11.6 billion yen surplus in July. Exports were down 14.8 percent on year to 5.232 trillion yen, after sinking 19.2 percent in the previous month. Imports tumbled an annual 20.8 percent to 4.984 trillion yen following the 22.3 percent decline a month earlier.