Post Session: Quick Review

Indian equity benchmarks ended lower on Wednesday. After a positive start of the trading day, markets traded in green terrain in early morning deals, as India's economy grew by 20.1 per cent in the first quarter of 2021-22, helped by a low base of the year-ago period. According to data released by the National Statistical Office (NSO), the gross domestic product (GDP) had contracted by 24.4 per cent in the corresponding April-June quarter of 2020-21. Adding more optimism, Moody's Investors Service said the economic activity in India is picking up with the gradual easing of COVID restrictions and there could be further upside to growth as economies around the world gradually reopen.

Some support also came in as the government data stated that high tax collections due to tighter rules for the goods and services tax (GST), and an economy on the recovery path coupled with expenditure compression resulted in the Centre's fiscal deficit narrowing to 21.3 per cent of the Budget Estimates (BE) in the first four months of the current financial year. Traders took some support with Chief Economic Adviser (CEA) KV Subramanian’s statement that India's macroeconomic fundamentals are much stronger, and the country is poised for stronger growth on the back of structural reforms, capex push by the government, clean up in the financial sector and rapid inoculation that will help revive the contact-intensive service sectors.

However, in late morning deals, key indices cut gains to trade volatile for the remaining trading session and finally ended the trading day on a lower note. Traders got worried, after India’s manufacturing sector activities moderated in August, as business orders and production rose at softer rates due to the pandemic and rising input costs. The seasonally adjusted IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) stood at 52.3 in August, down from 55.3 in July, indicating a softer rate of growth that was subdued and below its long-run average.

On the global front, European markets were trading higher as fresh signs of weakness in Asian economies were offset by hopes for more stimulus, while investors shook off concerns about rising inflation. Asian markets ended mostly higher on Wednesday, after the manufacturing sector in Indonesia continued to contract in August, albeit at a slower pace, the latest report from Markit Economics showed manufacturing PMI score at 43.7. That's up from 40.1 in July, although it remains beneath the boom-or-bust line of 50 that separates expansion from contraction.

The BSE Sensex ended at 57338.21, down by 214.18 points or 0.37% after trading in a range of 57263.90 and 57918.71. There were 12 stocks advancing against 17 stocks declining, while 1 stock remained unchanged on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.92%, while Small cap index up by 0.22%. (Provisional)

The top gaining sectoral indices on the BSE were Realty up by 5.46%, Power up by 1.73%, Consumer Durables up by 1.46%, Utilities up by 1.29% and Capital Goods up by 1.22%, while Metal down by 1.83%, IT down by 1.35%, TECK down by 1.17%, Basic Materials down by 0.82% and Auto down by 0.05% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Asian Paints up by 3.20%, Nestle up by 1.73%, Axis Bank up by 1.54%, Dr. Reddy's Lab up by 1.17% and Titan Co up by 0.94%. On the flip side, Mahindra & Mahindra down by 2.89%, Tata Steel down by 2.67%, Bajaj Finserv down by 2.04%, TCS down by 1.91% and HDFC down by 1.90% were the top losers. (Provisional)

Meanwhile, Indian manufacturing activity eased in the month of August, impacted by the pandemic and rising input costs. As per the survey report, the Nikkei India Manufacturing Purchasing Managers’ Index (PMI) - a composite single-figure indicator of manufacturing performance - fell to 52.3 in August as against 55.3 in July.

The report further said that manufacturing production increased for the second straight month in August amid reports of improved sales and demand. However, growth was curbed by the pandemic and elevated price pressures. The overall rate of expansion was modest and below its long-run average.

On the price front, a softer but still sharp rise in input costs underpinned a quicker increase in charges. Manufactures passed part of the additional cost burden on to clients by lifting their fees. The rate of inflation quickened to a three-month high, but was below that seen for input costs.

Besides, employment levels were broadly stagnant in August as companies reportedly had sufficient workforces to cope with current requirements and confidence remained subdued. Although output was predicted to increase in the year ahead, the overall degree of optimism weakened from July.

The CNX Nifty ended at 17076.25, down by 55.95 points or 0.33% after trading in a range of 17055.05 and 17225.75. There were 25 stocks advancing against 25 stocks declining on the index. (Provisional)

The top gainers on Nifty were Asian Paints up by 3.17%, Tata Motors up by 2.77%, SBI Life Insurance up by 2.39%, Nestle up by 1.84% and Axis Bank up by 1.58%. On the flip side, Mahindra & Mahindra down by 2.95%, Tata Steel down by 2.69%, Cipla down by 2.63%, Hindalco down by 2.18% and Bajaj Finserv down by 2.11% were the top losers. (Provisional)

European markets were trading higher, UK’s FTSE 100 increased 62.26 points or 0.87% to 7,181.96, France’s CAC increased 89.37 points or 1.34% to 6,769.55 and Germany’s DAX was up by 116.47 points or 0.74% to 15,951.56.

Asian markets ended mostly higher on Wednesday despite concerns over resurgence in corona-virus cases in the Asian region. Chinese shares settled higher as weak factory activity data raised hopes for more policy support. The manufacturing sector in China declined into contraction in August, the latest survey from Caixin revealed with a manufacturing PMI score of 49.2, down from 50.3 in July. Japanese shares gained amid bets Japanese Prime Minister Yoshihide Suga's manoeuvring might help to diminish potential concerns about the country's political stability. Private report said that Suga intended to dissolve the lower house of parliament in mid-September and was considering holding the general election on October 17. Although, Suga said he had no plans to dissolve the country's lower house because of the severity of the Covid-19 situation.