Post Session: Quick Review

The Indian markets took a breather on Wednesday from their last four days incessant rally, when the bulls seemed fatigued and bears taking the charge. There was not much development from the domestic front and the markets mainly looked swaying on the global cues. Bourses made a flat but positive start, soon slipping into red as profit booking emerged at higher levels, though recovery appeared from the low points of the day and markets once again entered into green in the very first hour of trade, but there after selling in some blue-chip stocks dragged the markets lower and indices kept moving in a tight range, the sluggish start of the European markets too dampened the sentiments, however buying emerged at lower levels in last hours and helped the markets recover most of their losses, while the Sensex closed in red, Nifty managed to retain its vigor and ended higher for the fifth straight day.

On the global front, the markets got a good lead from the US markets that closed higher on abating fears that Syrian crisis won’t escalate and could be resolved without US military action. The Asian markets ended mostly higher on diminishing chances of any military intervention in Syria by US. The European markets though made a mixed start, despite the decline in UK’s unemployment rate.

Back home, the markets consolidated after four sessions of strong gains, though the losses were limited and contained to limited counters but some bluechips that have surged in the rally along with some banking stocks suffered profit booking, dragging the markets lower. Benchmark indices found firm resistance at the level of 20000 (Sensex) and 5900 (Nifty) levels and despite breaching them in intraday trade could not hold up to their gains, slipping below them again. Broader markets that were underperforming the benchmarks played safe and outperformed them today. Market took cues from the optimism of the India Inc, which encouraged by growth in exports and narrowing of trade deficit said that it expects the positive developments to help the rupee appreciate and growth to revive in the coming months. Further the PMEAC chairman C Rangarajan too asserted that India's economy is likely to grow at around 5.5 percent this fiscal. There was sudden spike up in the markets in the last hours of trade which helped the benchmarks pare their losses, as rupee strengthened and came very close to breach the 63 per dollar mark on lower side. Metal sector stocks were the undisputed leader for the day, followed by realty and banking, while the defensive sector FMCG suffered the maximum profit booking followed by consumer durables and IT. One non sectoral gauge that remained buzzing was the PSU oil marketing companies, which moved higher by 3-5 percent for the day on easing international crude oil prices. Though, there were reports that the government will go for a one time hike of Rs 3-4 instead of earlier speculated over Rs 5 one time hike, on decline in crude and strength in rupee.

The market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 1405: 952, while 154 scrips remained unchanged. (Provisional)

The BSE Sensex lost 40.57 points or 0.20% to settle at 19956.52.The index touched a high and a low of 20055.53 and 19777.63 respectively.  Among the 30-share Sensex pack, 15 stocks gained, while 15 stocks declined. (Provisional)

The BSE Mid cap and Small cap indices ended higher by 1.43% and 1.14% respectively. (Provisional)

On the BSE Sectoral front, Metal up by 3.07%, Realty up by 2.90%, Bankex up by 1.60%, PSU up by 1.51% and Health Care up by 1.20% were the top gainers, while FMCG down by 1.21%, Consumer Durables down by 1.03%, IT down by 0.49%, Teck down by 0.39% and Oil & Gas down by 0.35%, were the top losers in the space. (Provisional)

The top gainers on the Sensex were Tata Steel up by 4.31%, Tata Power up by 4.01%, SBI up by 3.66%, Hindalco Industries up by 2.91% and Sun Pharma up by 2.62%, while, Tata Motors down by 2.29%, Hindustan Unilever down by 2.21%, BHEL down by 1.82%, ITC down by 1.77% and Bharti Airtel down by 1.36% were the only losers in the index. (Provisional)

Meanwhile, in a move to enhance the inflow of foreign capital into the country, the Reserve Bank of India (RBI) further relaxed norms that would encourage banks to raise funds in overseas market. Under new norms, the RBI allowed bank for swap facility for term deposits in dollar denomination at a concessional rate of 1 percent below the market rate for the period of 1 to 3 years. Banks can now borrow such funds from their head office, overseas branches and correspondents and overdrafts in nostro accounts up to a limit of 100 percent of their unimpaired Tier I capital as at the close of the previous quarter or $10 million, whichever is higher as against the existing limit of 50 percent.

The central bank said in its notification that during swap period a bank can sell dollars in multiples of a million to RBI and would have to buy the same amount of dollars at the end of the swap period. Central bank said that though the swaps would be for the entire tenor of the borrowing, the rate would be reset after every one year from the date of the swap at hundred basis points lower than the market rate prevailing on the date of reset. The concessional swap window shall be open till November 30, 2013. By adding further, RBI said that while the banks are allowed to borrow in any freely convertible currency, the swap will be available only for conversion of US dollar equivalent into rupees, which would be computed at the relevant cross rate prevailing on the date of the swap.

Further, in other amendment to overseas direct investment norms, the RBI has decided that issue of corporate guarantee on behalf of second generation will be considered under the approval route and on basis of current market conditions relating to excessive volatility in yields of government securities, the central bank has decided to increase the quantum of Held to Maturity (HTM) securities from 100 percent to 200 percent of the audited net owned fund of the bank as at end March.

India VIX, a gauge for markets short term expectation of volatility gained 1.05% at 29.75 from its previous close of 29.44 on Tuesday. (Provisional)

The CNX Nifty gained 6.90 points or 0.12% to settle at 5,903.65. The index touched high and low of 5,924.35 and 5,832.70 respectively. Out of the 50 stocks on the Nifty, 30 ended in the green, while 19 ended in the red and one stock remains unchanged.

The major gainers of the Nifty were Bank of Baroda up 8.19%, PNB up by 7.17%, DLF up by 5.84%, JP Associate up by 5.26% and Grasim up by 4.67%. The key losers were Power Grid down by 3.08%, Cairn down by 2.83%, Tata Motors down by 2.40%, ITC down by 2.04% and Hindustan Unilever down by 1.92%. (Provisional)

Most of the European markets were trading in red with, France’s CAC 40 down by 0.08% and the United Kingdom’s FTSE 100 down by 0.11%, while Germany’s DAX up by 0.35%.

Most of the Asian markets concluded Wednesday’s trade in green as the threat of US military intervention in Syria appeared to diminish. An address to the nation by President Barack Obama, broadcast early today in Asia, also gave some markets a push. Obama has asked Congress to postpone a vote on action and told Secretary of State John Kerry to meet with his Russian counterpart. The growth of new home purchases in China continued to slow down in the first eight months of this year, the National Bureau of Statistics stated. Between January and August, 3.85 trillion yuan ($628 billion) of new homes were sold across the country, up 35.7 percent year on year, compared with a 39.9 percent rise in the first seven months and a 46 percent jump in the first half of this year.

Optimism among big Japanese manufacturers in the third quarter reached the highest level in four years due to improving earnings, adding to recent evidence suggesting the economy is strong enough to withstand the blow from an expected sales tax hike. The confidence boost comes on the heels of a series of data pointing to the world’s third-largest economy steadily picking up momentum. Japanese Prime Minister Shinzo Abe ordered his government to craft measures to bolster the economy to cushion the impact of an increase in the national sales tax. Buoyed by data showing that the world’s third-biggest economy recovering briskly and a successful trip to secure the rights to host the 2020 Olympic Games, Abe wasted no time in preparing the groundwork for the April tax increase.

Indonesia sold $1.5 billion of dollar-denominated Islamic bonds at the highest yield since 2009 as it seeks to bolster its foreign-exchange reserves to support the plunging rupiah. Indonesia faces pressure to add to its most aggressive monetary-tightening cycle since 2008, underscoring a widening divergence in its growth outlook with the Philippines in a reversal of fortunes for the two economies. According to a survey, Bank Indonesia will probably raise its deposit facility rate tomorrow a fourth time this year while the Philippines will hold its benchmark at 3.5 percent the rest of the year. Indonesia’s central bank stated monthly inflation in September would ease significantly, helped by subdued domestic demand and following a spike after an average 33 per cent increase in fuel prices at the end of June.

Malaysia’s industrial production in July rose 7.6 percent from a year earlier, beating expectations to mark its fastest growth since May 2012, data from the Statistics Department showed.  A poll of 13 economists had forecast factory output grew at its fastest pace since November as export demand rose and domestic consumption remained resilient. June’s factory output was revised to 3.7 percent year-on-year from 3.3 percent previously.