Post Session: Quick Review

In spite of bleak economic data, local equity markets made a great start of new month on Monday, in sync with most of its global peers. Revival of global risk appetite combined with rupee recovery sub 66/$ level, bolstered the sentiment for Indian equity markets, which for fourth successive session, ended in positive territory with triple digit gains. In the splendid session of trade, benchmarks catching up with the rally of global peers firmed up, notwithstanding the weak GDP and factory output data. On the macro-front, India’s gross domestic product (GDP) growth dived to a four-year low of 4.4% in the April-June quarter of 2013-14, against 4.8% in the fourth quarter of the previous financial year, while adding to the country’s deepening economic glum, the Indian manufacturing activity shrank for the first time in more than four years in August. Building previous two sessions’ gains, both Sensex and Nifty, picked up gains over percent and half by the end of the trade and settled past the psychological 18,850 and 5,550 levels respectively. Meanwhile, broader indices, too showing fervor, rallied over a percent.

On the global front, Hong Kong stocks led Asia's gains on Monday after strong manufacturing data from China reinforced a picture of stability in Asia's largest economy. The official purchasing managers' index came out with a reading of 51 for August, a 16-month high and is the latest sign that the slowdown in Asia's largest economy could be stabilizing. The reading was higher than July's 50.3 and above the median 50.6 forecast. Meanwhile, European markets too rallied, boosted by the optimism over the Chinese and European economies even as investors infer a US strike on the Syrian regime as less likely. The euro zone-wide PMI was shown in August to have risen at the fastest pace in more than two years and the equivalent report for the UK revealed new orders and output at highest levels in nearly 20 years.

Closer home, hefty across the board rally, heartened investors. While, all the 13 sectoral indices ended in green, stocks from realty, Fast Moving Consumer Goods and Metal counters outperformed.  Meanwhile, Public Sector Oil Marketing companies witnessed massive buying after fuel prices were hiked. Marking the sixth increase in rates since May and eighth price hike since January, Petrol and diesel prices were hiked by 2.35 and 50 paise respectively. The market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 1397: 854, while 149 scrips remained unchanged. (Provisional)

The BSE Sensex gained 250.47 points or 1.35% to settle at 18870.19.The index touched a high and a low of 18942.06 and 18678.93 respectively.  The BSE Mid cap and Small cap indices ended higher by 1.40% and 1.09% respectively. (Provisional)

On the BSE Sectoral front, Realty up by 3.10%, Metal up by 3.09%, FMCG up by 2.87%, Oil & Gas up by 2.59% and Consumer Durables up by 1.87% were the top gainers, while there were the no losers. (Provisional)

Out of the 30 stocks on the Sensex, 19 settled higher, while 11 stocks settled lower. The top gainers on the Sensex were  Tata Steel up by 6.07%, Maruti Suzuki up by 4.58%, RIL up by 3.96%, Hindalco Industries up by 3.95% and ITC up by 3.30%. On the flip side,  Mahindra & Mahindra down by 1.91%, Tata Power down by 1.32%, HDFC Bank was down by 1.12%, Infosys was down by 0.90% and Hero MotoCorp was down by 0.69% were the top losers on the Sensex. (Provisional)

Meanwhile, adding to the country’s deepening economic glum, the Indian manufacturing activity shrank for the first time in more than four years in August. The HSBC Manufacturing Purchasing Managers’ Index (PMI), compiled by Markit, which gauges business activity in Indian factories but not its utilities, fell from 50.1 to 48.5 in August. The index had been running close to the 50 mark that separates growth from contraction since May, 2013, however this time around it breached the 50 mark, a reading which was the lowest since May 2009.

Decline in new orders, especially export orders, led to the contraction of Indian manufacturing activity during August. In a sign that domestic demand is also faltering, new orders, which include domestic orders, shrank at a faster pace. The index fell for the sixth straight month to 47.5 in August, its lowest since February 2009.  Meanwhile, new export orders shrank for the first time in a year. Consequently, Indian manufacturers reduced their production volumes for the fourth consecutive month in August and at the fastest rate in four-and-a-half years.

Encouragingly, August data highlighted a further expansion of employment levels in the Indian manufacturing sector. However, the rate of job creation remained slight. Additionally, input and output price inflation slowed despite the weakening of the currency, which likely reflects the softening demand conditions and, therefore, declining pricing power.

The bleak Purchasing Managers' Index (PMI) comes close on the heels of data on Friday that showed Asia's third-largest economy growing at its lowest quarterly rate in the three months to June since the global financial crisis, suggesting more pain ahead. 

Further, reports suggested RBI of likely keeping its liquidity tightening measures in place for a while to help contain the depreciation of the currency, besides warning that the heightened macroeconomic uncertainty will continue weighing on growth in coming months.

India VIX, a gauge for markets short term expectation of volatility lost 0.93% at 27.55 from its previous close of 27.81 on Friday. (Provisional)

The CNX Nifty gained 78.95 points or 1.44% to settle at 5,550.75. The index touched high and low of 5,564.90 and 5,478.85 respectively. Out of the 50 stocks on the Nifty, 35 ended in the green, while 15 ended in the red.

The major gainers of the Nifty were JP Associate up 9.82%, IndusInd Bank up by 7.36%, Tata Steel up by 6.09%, DLF up by 5.55% and Ranbaxy up by 5.16%. The key losers were Kotak Bank down by 4.90%, M&M down by 2.07%, Tata Power down by 1.85%, Hero MotoCorp down by 1.38% and ACC down by 1.27%.(Provisional)

Most of the European markets were trading in green with, France’s CAC 40 up by 1.56%, Germany’s DAX up by 1.62% and the United Kingdom’s FTSE 100 up by 0.39%.

Most of the Asian markets concluded Monday’s trade in green after manufacturing data on China signaled an improvement in the world’s second-largest economy. Hong Kong shares logged best day in three weeks. Japan’s Nikkei average rose as real estate and construction stocks gained on hopes that Tokyo will win the race to host the 2020 Summer Olympics, while consumer finance shares climbed after a media report citing rising loan demand. The HSBC China Manufacturing Purchasing Managers’ Index, a gauge of nationwide manufacturing activity, rose to a final reading of 50.1 in August from 47.7 in July, HSBC Holdings PLC stated. The HSBC China Manufacturing PMI is based on data compiled from monthly replies to questionnaires sent to purchasing executives in more than 420 manufacturing companies. This follows a rise in the official manufacturing PMI, a competing index, to 51.0 in August. China’s official manufacturing Purchasing Managers Index rose to 51.0 in August compared with 50.3 in July, the China Federation of Logistics and Purchasing, which issues the data with the National Bureau of Statistics. A PMI reading above 50 indicates an expansion in manufacturing activity from the previous month, whereas a reading below indicates contraction.

Indonesia’s annual inflation rate rose to 8.79% in August, the highest since January 2009, the statistics bureau stated. The core inflation which excludes volatile food prices and administered prices, climbed to 4.48% in August from 4.44% in July. In August, the inflation rate was pushed up by higher food and gold prices as well as imported inflation from the depreciating rupiah. Bank Indonesia has estimated that at year-end, inflation will be 9.0-9.8%. Besides, manufacturing activity contracted sharply in Indonesia in August and the workforce declined, according to HSBC Markit purchasing managers’ index (PMI), which fell to a 15-month low. Contraction in output, new orders and export orders pulled down the index for Southeast Asia’s biggest economy to 48.5 from 50.7 in July. This is the fourth straight month of deterioration in the PMI, and marks the lowest print since May 2012. Separately, Indonesia’s trade deficit widened sharply to $2.31 billion in July from $847 million in June due to rising imports, the Central Statistics Agency stated. The trade deficit is the highest on record since the government began including imports into free-trade zones in overall imports in 2008. The previous record deficit was $1.90 billion booked in October 2012.

South Korea’s manufacturing activity contracted for the third consecutive month in August, though at a slower pace than in July, indicating business conditions remain challenging amid an expected withdrawal of US monetary stimulus, data released by HSBC showed. The HSBC Purchasing Managers’ Index was at a seasonally adjusted 47.5 in August compared with 47.2 in July, reflecting a slightly less steep decline in output and new orders. Meanwhile, South Korea’s exports expanded at a faster pace in August than the previous month in a sign of economic recovery, the Ministry of Trade, Industry and Energy stated, beating market expectations. Exports in August gained 7.7% from a year earlier to $46.365 billion, following a 2.6% rise in July. Imports increased 0.8% on year to $41.449 billion in August, compared with a revised 3.2% gain in July.

The Hong Kong government’s expenditure for April-July amounted to $138.4 billion, with revenue of $111.3 billion, resulting in a deficit of $27.1 billion. The Financial Services & the Treasury Bureau stated that deficit was mainly because some major types of revenue, including salaries and profits taxes, were mostly received towards the end of a financial year. Fiscal reserves stood at $ 706.8 billion at the end of July.