Post Session: Quick Review

Indian equity markets changed gears in the dying hours of trade to end a flat, underscoring the cautious undertone of markets on penultimate session of F&O expiry. After trading lower for most part of the day and then giving an impression of positive close, benchmark equity indices ended just below the neutral line, as market-participants lacking conviction in the fundamentals of markets, preferred booking profits ahead of F&O expiry. Rupee’s slide to historic lows and global uncertainty kept investors wary of investing into risky asset class such as equities, which undertaking a safer approach bought safe haven instruments, viz bonds and gold. Additionally, challenging global environment also added to investors’ woes. Nevertheless, the markets recovered significant from day’s low on account of short-covering and bargain-buying activities. By the end of trade, Sensex and Nifty, ended above the 17,950 and 5250 psychological levels respectively. For the day, markets logged highest ever turnover of Rs 4.46 lakh crore. However, broader indices failing to match the recovery of their larger peers, ended with a cut of over a percent.

On the global front, Jitters over a possible US-led military strike against the Syrian government knocked Asian equities to a seven-week low on Wednesday and pushed oil prices and safe-haven gold to multi-month highs. Meanwhile, European shares following suit, too were trading lower on Wednesday. 

Closer home, sentiment took a hit for the worse after Indian currency continuing its inexorable slide for third successive session, hit historic lows of 68/$ on growing concerns over potential increase in government's subsidy burden following the passage of the food security bill and, uncertainty over a possible US led military strike against Syria, which pressured  the equity markets across the globe. While, much of the profit-booking was witnessed in Consumer Durables, Public Sector Undertaking and Banking counters, traders found some value in stocks belonging to Information Technology and Metal.

The market breadth on the BSE remained negative; advances and declining stocks were in a ratio of 849: 1362, while 126 scrips remained unchanged. (Provisional)

The BSE Sensex lost 5.80 points or 0.03% to settle at 17962.28.The index touched a high and a low of 18101.84 and 17448.71 respectively. Among the 30-share Sensex pack, 16 stocks gained, while 14 stocks declined. (Provisional)

The BSE Mid cap index ended lower by 1.10% and Small cap index ended higher by 1.04%. (Provisional)

On the BSE Sectoral front, IT up by 2.71%, Teck up by 1.71%, Health Care up by 1.52%, Metal up by 1.50% and Power up by 0.11% were the top gainers, while Consumer Durables down by 3.05%, PSU down by 2.37%, Bankex down by 1.91%, Realty down by 1.73% and Oil & Gas down by 1.46% were the top losers. (Provisional)

The top gainers on the Sensex were Wipro up by 3.98%, Tata Power up by 3.55%, TCS up by 3.37%, Jindal Steel up by 3.24% and Sun Pharma up by 3.00%, while, ONGC down by 5.50%, HDFC down by 5.07%, Gail India down by 3.43%, Bharti Airtel down by 2.36% and Coal India down by 2.27% were the top losers in the index. (Provisional)

Meanwhile, in an attempt to reduce the fiscal burden on account of recapitalisation of PSU banks, the Reserve Bank of India (RBI) has proposed a 'continuous authorization' policy for new private banks and dilution of the government's stake below the 51% in public sector banks (PSBs), in its consultation paper on Tuesday. With a view of sustaining the competitive pressure on existing banks, while not straining the banking system as 'block' licensing may do, India’s Apex Bank strongly feels the case of reviewing the current 'Stop and Go' licensing policy and considering adoption of a 'continuous authorization' policy.

In its discussion paper titled ‘Banking Structure in India - The Way Forward, RBI has underscored that, in future there would be better pay-off in enabling PSBs to improve their performance while promoting private sector banks. Keeping this in mind, it has suggested government to consider diluting its stake below 51% in conjunction with certain protective rights by amending the statues governing the PSBs. Another alternative proposed is moving to a Financial Holding Company (FHC) structure.

The long-awaited discussion paper on the RBI's thinking also advocates the need for new entrants into the banking system, in line with the government's goal to reform a sector dominated by lethargic state banks and which only reaches half the country's households. Further, the report also reiterated its preference for foreign banks to establish subsidiaries in India, in a move that is aimed at ring-fencing their local operations from the overseas parents and bring them at par with Indian banks in terms of regulations.

India VIX, a gauge for markets short term expectation of volatility gained 10.06 % at 32.38 from its previous close of 29.42 on Tuesday. (Provisional)

The CNX Nifty lost 15.00 points or 0.28% to settle at 5,272.45. The index touched high and low of 5,317.70 and 5,118.85 respectively. 24 stocks advanced against 26 declining on the index. (Provisional)

The top gainers on the Nifty were Ranbaxy up by 10.05%, Cairn up by 5.26%, JP Associate up by 4.00%, HCL Tech up by 3.74% and Jindal Steel & Power up by 3.35%.

On the other hand, BPCL down by 8.20%, ONGC down by 6.42%, PNB down by 6.18%, UltraTech Cement down by 5.78% and HDFC down by 5.39%.

The European markets were trading in red; France’s CAC 40 down by 0.36%, Germany’s DAX down by 0.99% and the United Kingdom’s FTSE 100 down by 0.57%. ical levels respectively. 

Most of the Asian markets barring Jakarta Composite and Taiwan Weighted concluded Wednesday’s trade in red, as jitters over a possible US-led military strike against the Syrian government continued knocking Asian equities to a seven-week low and pushed oil prices and safe-haven gold to multi-month highs. An acute risk-off mode also boosted the appeal of the Japanese yen, which held near a one-week high against the dollar and euro after having posted its biggest rally in more than two months. Indonesian shares tumbled to a 14-month trough before concluding the trade in green, while Philippine stocks sank hitting more than eight-month low and Thai equities dropped to near one-year low. Indonesia’s central bank board will meet in a surprise move amid widespread speculation that it will have to raise interest rates again to defend the fast-falling rupiah, now it’s lowest since April 2009.

China will maintain stable macro-economic policies and refrain from any stimulus measures, a senior Chinese official stated, but he urged the United States to study very carefully the timing of an exit from its economic stimulus. Vice Finance Minister Zhu Guangyao stated that China has been sustaining a healthy growth momentum despite all the challenges from external and within, and the country is on track to achieve the growth rate of around 7.5% in line with the government target. Separately, the Census & Statistics Department stated that the value of Hong Kong’s total exports and imports of goods both showed year-on-year increases in July, at 10.6% and 8.3%. The value of total goods exports rose 10.6% year-on-year to $305.4 billion. Within this total, the value of re-exports increased 10.9% to $300.6 billion, while the value of domestic exports fell 6.7% to $4.8 billion.

From a tumbling currency to a crippling current-account shortfall, slowing economic growth, high inflation and retreating investors, Indonesia’s stature as emerging-market superstar is under siege. Standard & Poor’s warned that Indonesia needs to reduce costly fuel subsidies and rein-in the nation’s current account deficit if it hopes to minimize the impact of shrinking growth rates and weakening currencies currently affecting emerging economies. Rupiah forwards gained by the most in more than six weeks and government bonds declined on speculation the central bank will raise interest rates. Bank Indonesia’s board of governors will convene for an extra meeting to evaluate economic, monetary and banking conditions.