Post Session: Quick Review

Key benchmark indices witnessed highly volatile trading session and ended flat on Monday. Most part of the time, markets traded in green. The broader indices, the BSE Mid cap index and Small cap index ended with healthy gains. Traders were seen piling up positions in Metal and Oil & Gas sectors’ stocks, while selling was witnessed in Bankex sector stocks.

Markets made positive start tracking mostly positive global cues. Traders took note of International Monetary Fund’s (IMF) deputy managing director Gita Gopinath’s statement that India should invest in creating a skilled workforce, putting in place a better infrastructure while undertaking land, labour and taxation reforms to meet its aspiration to become a developed country by 2047. Besides, a government survey showed that the unemployment rate in urban areas for individuals aged 15 years and above was 6.6 per cent in April - June 2024 (Q1 FY25), remaining unchanged from the first quarter of FY24. As per the Periodic Labour Force Survey, India's unemployment rate for the quarter ended on June 30 declined from Q4 FY24 when the rate stood at 6.7 per cent. Further, soon markets turned volatile as data released by the Reserve Bank of India showed that India’s foreign exchange reserves decreased by $4.8 billion, reaching $670.12 billion for the week ending August 9, falling from the previous all-time high. Forex reserves, as of August 2, had touched an all-time high of $675 billion, reflecting a robust external sector performance. In afternoon session, markets continued to alter between green and red. Finally, markets ended with minor gains.

On the global front, European markets were trading mostly in green after posting significant gains last week on the back of encouraging U.S. data releases. Asian markets ended mostly in green as investors awaited cues from the FOMC meeting minutes along with speeches by Fed Chair Jerome Powell and other Fed speakers this week for additional clues on the rate trajectory. Back home, the Indian Construction Equipment Manufacturers' Association (ICEMA) in its latest report has said that India's construction equipment industry witnessed a 5 per cent rise in sales to 28,902 units during the April-June quarter of 2024-25 (Q1FY25).

The BSE Sensex ended at 80,424.68, down by 12.16 points or 0.02% after trading in a range of 80,332.65 and 80,724.40. There were 18 stocks advancing against 12 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index gained 0.53%, while Small cap index was up by 1.33%. (Provisional)

The top gaining sectoral indices on the BSE were Metal up by 2.28%, Oil & Gas up by 1.76%, Energy up by 1.52%, Consumer Durables up by 1.30% and Utilities was up by 1.17%, while Auto down by 0.85%, Bankex down by 0.36% and Capital Goods was down by 0.05% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Tata Steel up by 2.94%, TCS up by 1.65%, NTPC up by 1.46%, JSW Steel up by 1.16% and Asian Paints up by 0.89%. On the flip side, Mahindra & Mahindra down by 2.55%, Indusind Bank down by 1.30%, Axis Bank down by 1.20%, Bharti Airtel down by 1.01% and Tata Motors down by 1.00% were the top losers. (Provisional)

Meanwhile, International Monetary Fund (IMF) deputy managing director Gita Gopinath has said that India will need to undertake more reforms to be able to continue on the path of raising economic growth and to make sure that enough job creation happens in the country. Gopinath further said that India will be required to reduce import tariffs if it wants to be an important player in the global supply chains. She added ‘The significant improvements have been made by the government over the years in terms structural reforms’. While noting that the world is in an environment where trade integration has been questioned, Gopinath said it is important for India to remain open for global trade.

She said ‘Tariff rates in India are higher than in its other peer economies. If it wants to be an important player on the world stage and an important part of global supply chains, it is going to require reducing those tariffs’. She said it is a tremendous aspiration to get to a developed country status but it does not happen automatically, and requires ongoing, consistent efforts, pretty broad scale, across many areas to deliver on that. She also said ‘India has grown well in terms of its overall growth rate, and at 7 per cent, it is the fastest growing major economy in the world. The question is, how does one keep up the momentum and raise it further so that you can increase per capita incomes in India to get to being an advanced economy.’

About taxation, she said India has parallels with other developing countries, where most of the tax revenue that is collected is indirect taxes and not direct taxes, not in form of income taxes. She said ‘We have been advising other developing countries too, that it is helpful to broaden the personal income tax base and so that you can have more income coming from there’. Referring to the cut in corporate tax rate by the Modi government, she said although it was helpful it is less the tax rate that matters, but what matters is just making sure that there are no loopholes and there are not too many leakages that happen in terms of tax exemptions. She said ‘It is very important to have sufficient progressivity in your tax system...making sure that you are (India) getting enough from your capital gains tax from your capital income tax is going to be critical’. She also suggested that now there is better technology to implement property tax and this is again another area where work is needed.

The CNX Nifty ended at 24,572.65, up by 31.50 points or 0.13% after trading in a range of 24,522.95 and 24,638.80. There were 30 stocks advancing against 20 stocks declining on the index. (Provisional)

The top gainers on Nifty were Hindalco up by 3.89%, BPCL up by 3.40%, Shriram Finance up by 3.16%, Tata Steel up by 2.97% and LTIMindtree up by 2.02%. On the flip side, Mahindra & Mahindra down by 2.65%, Indusind Bank down by 1.21%, Bajaj Auto down by 1.19%, Axis Bank down by 1.17% and SBI Life down by 1.03% were the top losers. (Provisional)

European markets were trading mostly in green; France’s CAC rose 29.82 points or 0.4% to 7,479.52 and Germany’s DAX was up by 31.28 points or 0.17% to 18,353.68. On the flip side, UK’s FTSE 100 was down by 4.84 points or 0.06% to 8,306.57.

Asian markets settled mostly higher on Monday tracking Wall Street gains last Friday due to faded recession fears and growing hopes for a Federal Reserve’s interest rate cut in September. Meanwhile, investors were awaiting cues from the FOMC meeting minutes along with speeches by Fed Chair Jerome Powell and other Fed speakers this week for further cues on the interest rate path. Chinese shares rose ahead of Tuesday's interest-rate decision by China's central bank. However, Seoul shares declined as investors booked profits following recent gains. Japanese shares fell as the yen strengthened against the US dollar on dovish Fed expectations, and ahead to the release of Japanese inflation data due this week that could influence the Bank of Japan's policy posture.