Post Session: Quick Review

Monday proved not so good for the domestic markets, as the major bourses after a good gap-up opening, plunged on getting a disappointing WPI inflation data. There was a sign of euphoria in the early deals in Indian markets along with the regional peers after Lawrence Summers withdrew from consideration to be the next Federal Reserve chairman, paving the way for Janet Yellen, who is said to be favouring a slower reduction in US stimulus. Emerging markets have been under pressure on fear that Fed will cut its monetary stimulus next week. The domestic currency was encouraged with the report and made a strong start, supporting the equity markets too and the early jubilation in the Asian peers gave a good lead to the local markets.

The Asian markets that have been trading cautiously for last some time ahead of the FOMC meet scheduled later this week, sensed some relief with the Lawrence Summers news and surged in early deals. Though profit booking was seen there too but most of the indices snapped the session with good gains. While, the European markets too made a good start, extending their five year high, however the European Union attempts to centralize control of failing banks, stumbled under a German-led attack that may endanger efforts to restore confidence in the euro zone’s financial system.

Back home, the Indian markets that have witnessed some consolidation in last couple of sessions, once again got a fillip to move higher and soon scaled the crucial psychological levels of 5950 (Nifty) and 20000 (Sensex), though there were some intermittent profit bookings but trade remained in fine-fettle till the WPI inflation data of August was announced, which spooked the markets, taking them to the lowest point of the day. It was a one way fall with markets not getting any respite. The annual rate of inflation, based on monthly WPI, stood at 6.10% (provisional) for the month of August, 2013 (over August, 2012) as compared to 5.79% (provisional) for the previous month and 8.01% during the corresponding month of the previous year. The Wholesale Price Index for ‘All Commodities’ (Base: 2004-05 = 100) for the month of August, 2013 rose by 1.7% to 177.5 (provisional) from 175.4 (provisional) for the previous month. The rupee remained unruffled with the WPI data and despite a knee-jerk reaction stayed firm, boosting the morale of the equity markets. In the second half there was a good bit of recovery attempt that helped the markets enter the green but the volatility persisted and the market participants went only for selected bets and finally benchmark indices ended flat.  Banking was the counter that came on buyers radar along with PSU oil marketing companies, which a day ahead of their scheduled price revision hiked petrol prices on Friday by Rs 1.63 per litre excluding taxes, the seventh increase since June, on rising crude oil prices and falling rupee. Also, there was report that US and Russia reached an agreement on the issue of Syria that pulled down the international crude prices considerably. The IT stocks were the major losers apart from the healthcare stocks, while the rupee appreciation weighed on the IT stocks, the pharma or healthcare pack remained in somber mood since beginning with plunge in Ranbaxy, which lost traction after USFDA issued an import alert for drugs manufactured at its plant in Mohali. The broader markets too were on the receiving end for the day and underperformed the benchmarks with quiet a margin.

The market breadth on the BSE remained negative; advances and declining stocks were in a ratio of 1123: 1239, while 123 scrips remained unchanged. (Provisional)

The BSE Sensex gained 9.71 points or 0.05% to settle at 19742.47.The index touched a high and a low of 20086.43 and 19596.15 respectively. Among the 30-share Sensex pack, 12 stocks gained, while 18 stocks declined. (Provisional)

The BSE Mid cap and Small cap indices ended lower by 0.54% and 0.58% respectively. (Provisional)

On the BSE Sectoral front, Bankex up by 1.86%, FMCG up by 0.38%, Auto up by 0.37% and PSU up by 0.12% were the top gainers, while Health Care down by 2.47%, Realty down by 1.96%, IT down by 1.85%, Teck down by 1.24% and Metal down by 1.05% were the top losers. (Provisional)

The top gainers on the Sensex were ICICI Bank up by 3.08%, Maruti Suzuki up by 2.91%, Bharti Airtel up by 2.66%, HDFC Bank up by 2.13% and Hero MotoCorp up by 1.98%, while, BHEL down by 5.16%, Sesa Goa down by 3.83%, TCS down by 2.57%, Tata Power down by 2.24% and Tata Steel down by 1.99% were the top losers in the index. (Provisional)

Meanwhile, in order to restrict rising imports of electronic products and to boost domestic industry as well as bring down the widening current account deficit (CAD), the government is looking to raise duties on electronic items, which are not covered by the duty-free Information Technology Agreement (ITA) of the World Trade Organisation.  In the previous fiscal, Indian electronics goods exports stood at $31 billion, which was around 7 per cent of total imports. Imports of electronics items have already crossed $10 billion mark in April to July period of current fiscal, despite various measures taken by the government to promote domestic industry.

As per the commerce department, efforts are continued to identify products that are not part of the IT Agreement (ITA) but have escaped higher duties, as the government has lost track over the years of electronic items that may not be part of the pact on account of several changes in the Import-Export Classification Code for products in India after WTO’s ITA. Information Technology Agreement, signed by 29 members including India and was implemented in 1996 and all signatories of the ITA agreed to eliminate duties on identified electronic products.

Meanwhile, the government looks concerned to check imports to bring down the CAD, which widened to a record high at 4.8% in the previous fiscal. Therefore, it recently set up a sub-committee of officials from the Revenue Department, the Commerce Department and the IT Ministry to examine the present classification of electronic items, including IT products, and trace them back to the 1996 classification to arrive at what products were actually covered originally by the pact. With the completion of process, the government will decide where it can increase import duties electronic products without violating WTO rules.  India VIX, a gauge for markets short term expectation of volatility gained 1.87 % at 28.82 from its previous close of 28.29 on Friday. (Provisional)

The CNX Nifty lost 15.55 points or 0.27% to settle at 5,835.05. The index touched high and low of 5,957.25 and 5,798.15 respectively. 18 stocks advanced against 32 declining on the index. (Provisional)

The top gainers on the Nifty were BPCL up by 3.88%, IndusInd Bank up by 3.75%, Maruti Suzuki up by 3.50%, ICICI Bank up by 2.98% and Bharti Airtel up by 2.87%.

On the other hand, Ranbaxy down by 30.03%, BHEL down by 5.11%, HCL Tech down by 4.95%, UltraTech Cement down by 4.12% and Sesa Goa down by 3.94%.

The European markets were trading in green; France’s CAC 40 up by 0.88%, Germany’s DAX up by 1.20% and the United Kingdom’s FTSE 100 up by 0.66%. 

Most of the Asian markets barring Shanghai Composite concluded Monday’s trade in green after Larry Summers withdrew his name from consideration for Chairman of the Federal Reserve, allaying investor concerns about faster withdrawal of economic stimulus in the world’s biggest economy. Indonesia’s bonds advanced, driving the 10-year yield to a one-month low, and rupiah forwards gained. Nikkei 225 remained closed today on account of ‘Respect for the Aged Day’ occasion while Malaysian market - KLSE Composite remain closed today i.e. September 16, 2013 in conjunction with the Malaysia Day holiday.

China needs to do more to develop private banks and make asset securitization a standard practice as it tries to strengthen its financial system, central bank governor Zhou Xiaochuan stated. The report comes as Beijing moves to tap private capital to head off any need to bail out its banking system for a second time in as many decades, which many already see as inevitable. Besides, faced with a chorus of warnings that China risks choking on bad debts, Beijing is pushing banks to raise private capital in an effort to head off the need for a second government bailout in as many decades