Post Session: Quick Review

Last hour buying aided Indian equity markets in clocking a flattish close, albeit with negative bias amidst mostly negative global set-up on Wednesday. Benchmark equity indices recouped substantial portion of their losses in the late hours of trade after bargain hunters lapped up fundamentally strong bets at lucrative prices. Finance Minister’s confidence of fully financing Current Account Deficit (CAD), without drawing down on reserves combined with assurance of not breaching the red line for both deficits, mainly brought some solace to jittery nerves. By the close, Sensex and Nifty, witnessing marginal losses, ended above the crucial 19350 and 5700 levels respectively. Meanwhile, broader indices underperformed frontline peers with large margins, though recovered substantially from day’s low to end with loss of close to a percent.

However, some caution was witnessed at Dalal Street ahead of the outcome of the US Federal Reserve policy meeting, which kept the investors jittery about whether Fed would reassure markets that interest rates would remain low for a long time even if it starts scaling back stimulus this year.

On the global front, while most of the Asian pacific shares ended in red, European markets were trading on a mixed note as investors focused to events due later in the global day. Besides conclusion of the Federal Reserve's policy meeting, investors are waiting release of US GDP data, a data point that will be scrutinized for its potential impact on the Fed's monetary policy stance.

Closer home, substantial recovery in Metal, Consumer Durable and Oil & Gas counters, besides the gains of Information Technology and Health Care space, led to recovery of markets by the close of trade. Even recuperations of Rupee from perilous 61/$ level buttressed the sentiment to some extent. The currency rolled back some of its losses after Governor Duvvuri Subbarao said that the government would consider bond sales to further drain cash.  Additionally, better than expected results from Bharti Airtel and HCL Technologies also added to the positives. While, Bharti Airtel surged 7% despite reporting 9.62% fall in consolidated net profit after taxes at Rs 688.90 crore for the quarter, HCL Technologies rose close to 4% on reporting over 2 -fold jump in its standalone net profit at Rs 1447.21 crore for the June quarter. A late surge in the rest of telecom stocks was also witnessed on account of spurt of Bharti Airtel. The market breadth on the BSE remained negative; advances and declining stocks were in a ratio of 852:1377, while 141 scrips remained unchanged. (Provisional)

The BSE Sensex lost 6.57 points or 0.03% to settle at 19341.77.The index touched a high and a low of 19387.50 and 19126.82 respectively. Among the 30-share Sensex pack, 16 stocks gained, while 14 stocks declined. (Provisional)

The BSE Mid cap and Small cap indices ended lower by 0.69% and 0.74% respectively. (Provisional)

On the BSE Sectoral front, Metal up by 2.77%, Teck up by 2.37%, Oil & Gas up by 2.08%, IT up by 1.38% and Consumer Durables up by 1.29% were the top gainers, while FMCG down by 2.20%, Realty down by 2.05%, Bankex down by 2.01%, Power down by 1.74% and Capital Goods down by 0.17% were the top losers. (Provisional)

The top gainers on the Sensex were Bharti Airtel up by 7.33%, Dr Reddys Lab up by 4.66%, Hindalco Industries up by 4.40%, Wipro up by 4.35% and BHEL up by 4.06%, while, NTPC down by 5.84%, HDFC Bank down by 2.65%, ITC down by 2.44%, ICICI Bank down by 2.06% and Cipla down by 1.87% were the top losers in the index. (Provisional)

Meanwhile, the Reserve Bank of India (RBI) has opposed the issue of sovereign bonds to bridge a widening current account deficit (CAD) as the benefits of raising foreign exchange from such an instrument outweigh the costs. RBI Governor D Subbarao said that the central bank has done the cost-benefit analysis of the sovereign bond issue and made it clear that sovereign bond issue is not an appropriate option in the current circumstances as costs outweigh benefits. The country should issue sovereign bonds during its high growth phase and we are much vulnerable position right now, he added.

Citing the advantages of sovereign bonds, the RBI chief said that there are perceived benefits of sovereign bond issue as it will buffer reserves, lower interest rates, establish a benchmark for government borrowing and broaden the investor base. However, the high cost of this move would overcome all these benefits.

Earlier this month, the government had planned to come out with a sovereign bond issue to shore up the country’s foreign exchange reserves and strengthen the rupee, saying it was an option to tackle forex volatility. It is estimated that India can mop up $20 billion from NRI bonds. NRI bonds have helped the economy earlier, however the situation is a lot different now as the rupee has depreciated more than Rs 10 in this fiscal alone, languishing at Rs 61 against the dollar. The CAD is at a record high of 4.8 percent of the GDP or $88 billion making things worse and the economy lot vulnerable in the global environment now.

India VIX, a gauge for markets short term expectation of volatility gained 3.58% at 18.77 from its previous close of 18.12 on Tuesday. (Provisional)

The CNX Nifty lost 14.70 points or 0.26% to settle at 5,740.35. The index touched high and low of 5,752.10 and 5,675.75respectively. 26 stocks advanced against 24 declining on the index. (Provisional)

The top gainers on the Nifty were Bharti Airtel up by 7.51%, Dr. Reddy's Laboratories up by 4.67%, BHEL up by 4.36%, Lupin up by 4.35% and Hindalco Industries up by 4.22%

On the other hand, DLF down by 6.25%, Axis Bank down by 6.18%, Power Grid down by 5.97%, NTPC down by 5.59% and JP Associate down by 4.24%.

Most of the European markets were trading in green; Germany’s DAX up by 0.11%, the United Kingdom’s FTSE 100 up by 0.60% and France’s CAC 40 up by 0.03%.

All the Asian markets barring Shanghai Composite and Jakarta Composite, concluded Wednesday’s trade in red. Investors awaited the Federal Reserve’s outlook on its bond purchases, with Japanese shares also pressured by a strengthened yen and some downbeat results. The Shanghai Composite Index opened higher after yesterday late evening the Political Bureau of the ruling Communist Party's Central Committee stated that China’s economy will maintain steady growth in the second half of this year. Separately, the head of the National Development and Reform Commission, China’s top economic planner, Xu Shaoshi added that China has the capability to achieve the government’s annual economic growth target of 7.5% this year. China’s economy has been stuck in a protracted slowdown, easing to 7.5% growth in the second quarter from 7.7% in the first three months. Worries are growing that the prolonged slowdown could affect the global economy.

Indonesia’s economic growth likely slowed in the second quarter as investments eased and exports remained battered by weak global commodity prices and demand. Gross domestic product expanded 5.93% in the April-June period from a year earlier, slowing from 6.02% pace in the first quarter. The Central Statistics Agency (BPS) is scheduled to release the second-quarter GDP figures later this week. Japan’s manufacturing grew at a slower pace this month, though still registered expansion. The headline index fell to 50.7 from June’s 52.3, but remained above the 50 level -- the dividing line between growth and contraction -- for the fifth straight month.

Singapore’s jobless rate edged up 2.1% in June, up from 1.9% in March and 1.8% in December, respectively, the Ministry of Manpower stated. Employment creation remained strong, increasing to 32,500 in the second quarter from 28,900 in the previous quarter. The resident unemployment rate rose to 3% in June to 2.9% in March, while the jobless rate for citizens increased to 3.1% from 2.9% in the preceding two quarters.