Post Session: Quick Review

Indian equity markets gave a warm welcome to the new RBI governor, Raghuram Rajan, widely heralded as the savior of the country, by putting up a scintillating performance and puffing up gains of close to two percent. Availability of fundamentally strong yet beaten down bets after last sessions’ carnage coupled with dramatic recovery of Rupee on aggressive RBI’s interventions and clarifications that Indian firms investing abroad can do so up to 400% of their net-worth by way of external commercial borrowings, which gave out a clear message that India wasn’t looking at capital controls, excited market participants. Shrugging off macro-economic data, Sensex and Nifty, ended above crucial 18,550 and 5,400 levels respectively, with gains of over percent and half. Meanwhile, broader indices showing a degree of underperformance, settled with gains of sub one percent. On the macro-front,  pointing to a further slowdown in India’s GDP growth, the HSBC services Purchasing Managers’ Index (PMI), based on a survey of around 400 companies fell to 47.6 in August from 47.9 in the previous month, the weakest since April 2009.

However, benchmark equity indices did surrender some ground post a negative start of European counterparts, only to recoup the same in the later deals. On the global front, Stocks in Asia and Europe were mostly lower Wednesday, as renewed concerns over possible US military intervention in Syria weighed on sentiment. Although Wall Street gave a positive lead to Asia, reopening Tuesday after the Labor Day public holiday, stocks retreated after the possibility of a US strike in Syria returned to the fore.

Closer home, markets after getting a decent start, gained ground as traders kept lapping up fundamentally strong stocks, which were beaten down in previous session. With across the board buying taking place, barring Realty, all the sectoral indices ended in green. Nevertheless, stocks from Metal, Health Care and Auto counters emerged as the best buying bets, where investors relentlessly piled up positions. On the flip side, Realty stocks slumped on RBI’s directive to banks on home loan disbursements, which came as a big blow for realty companies that have been betting on luring schemes to pull up sagging sales. In a notification floated on Tuesday, the central bank has barred banks from providing upfront housing loans for under-construction projects through innovative schemes termed as “80:20” or “75:25” by the developer. The market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 1361:931, while 149 scrips remained unchanged. (Provisional)

The BSE Sensex gained 320.19 points or 1.76% to settle at 18554.85.The index touched a high and a low of 18612.60 and 18188.43 respectively.  Among the 30-share Sensex pack, 28 stocks gained, while 2 stocks declined. (Provisional)

The BSE Mid cap and Small cap indices ended higher by 0.99% and 0.70% respectively. (Provisional)

On the BSE Sectoral front, Metal up by 2.74%, Health Care up by 2.65%, Auto up by 2.42%, Teck up by 2.15% and Bankex up by 2.12% were the top gainers, while Realty down by 0.46% was the only loser in the space. (Provisional)

The top gainers on the Sensex were BHEL up by 5.95%, Bharti Airtel up by 4.51%, ICICI Bank up by 4.36%, Tata Motors up by 4.31% and Hindalco Industries up by 4.12%, while, ITC down by 0.74% and Wipro down by 0.10% were the only losers in the index. (Provisional)

Meanwhile, amid rising concerns over the deteriorating macroeconomic indicators of the country, Prime Minister's economic advisor C Rangarajan expects that Indian economy will grow at around 5.5 percent in the current fiscal on the back of strong farm output, adding that the county needs to address the issues that had thwarted GDP expansion. Earlier, in April, PMEAC had said that economic slowdown has bottomed out and Indian GDP growth would be at 6.4 percent in FY14.

By adding further, Rangarajan said that agriculture growth will likely get a boost from a strong monsoon and it should grow by 4-5 percent in the current fiscal as against 1.7 percent in the previous fiscal. If the non-farm sector grows at the same rate as last year, the GDP growth rate would be closer to 5.5 percent in the current fiscal.

At present, domestic economy is struggling with slowdown as all the macro-economic indicators have deteriorated with the current account deficit (CAD) widening to a record high of 4.8 percent of GDP in the FY14. The domestic currency also depreciated to a record low of over 68.50 against the US dollar. Further, Indian economic growth also slowed down to four year low at 4.4 percent in Q1 FY14.

Concerned over the high fiscal deficit of the country, Rangarajan pitched for substantial increase in diesel prices to meet the fiscal deficit target as the rupee depreciated over 20 percent since May. The government has set the target to contain the country’s fiscal deficit at 4.8 percent of GDP in FY14.  

India VIX, a gauge for markets short term expectation of volatility lost 4.24% at 27.81 from its previous close of 32.49 on Tuesday. (Provisional)

The CNX Nifty gained 106.65 points or 2.00% to settle at 5,448.10. The index touched high and low of 5,460.25 and 5,318.90 respectively. Out of the 50 stocks on the Nifty, 47 ended in the green, while 3 ended in the red.

The major gainers of the Nifty were Ranbaxy up 8.70%, BHEL up by 6.46%, JP Associate up by 6.13%, Lupin up by 4.59% and Tata Motors up by 4.58%. The key losers were DLF down by 1.02%, ITC down by 0.23% and Maruti Suzuki down by 0.07%. (Provisional)

Most of the European markets were trading in red with, France’s CAC 40 down by 0.83%, Germany’s DAX down by 0.87% and the United Kingdom’s FTSE 100 down by 0.69%.

Most of the Asian markets barring Shanghai Composite and Nikkei 225 concluded Wednesday’s trade in red amid renewed concerns over US military intervention in Syria which weighed on sentiment. Seoul shares also slipped on profit-taking following a recent rally, but firm market fundamentals contained losses. Foreign investors turned net sellers for the first time since August 22. They sold a net 5.8 billion won ($5.28 million) of local stocks. Indonesia’s finance minister has called on the US Federal Reserve to provide more clarity about when it will wind down its stimulus program. Southeast Asia’s biggest economy and other emerging markets have been hit by huge outflows of foreign cash since May when the Fed first signaled it may taper off the $85 billion a month bond-buying program.

The HSBC China Services Purchasing Managers’ Index rose to 52.8 in August, hitting a five-month high and rising from 51.3 in July, HSBC Holdings PLC stated. The HSBC China Services PMI accelerated in August thanks to the growth of new business. A reading above 50 in the gauge of nationwide service-sector activity indicates on-month expansion. The HSBC China Services PMI is based on data compiled from monthly replies to questionnaires sent to purchasing executives in more than 400 private service-sector companies. Chinese Premier Li Keqiang stated that the country is on track to fulfill its growth target of 7.5% this year and the country will see a diamond decade of closer cooperation with ASEAN members.