Post Session: Quick Review

Indian equity benchmarks closed volatile session in green terrain on Tuesday, with both Sensex and Nifty ending with notable gains. After a cautious start of the trading day, key indices witnessed volatility during the session, as India's economy suffered its worst slump on record in April-June, with the gross domestic product (GDP) contracting by 23.9% as the coronavirus-related lockdowns weighed on the already-declining consumer demand and investment. Adding more worries among market participants, the ministry of Commerce and Industry in its latest data has showed that the growth of eight core infrastructure industries have contracted by 9.6 percent in July 2020 as compared to same period of last year, due to decline mostly in production of steel, refinery products and cement.

However, markets managed to trade in green terrain for almost whole trading day, after India’s Manufacturing Purchasing Managers’ Index (PMI) for August has come in at 52, compared to 46 in July, signalling growth and rebound in production volumes for the first time in five months. For the first time since March, output expanded in the Indian manufacturing sector in August. Production growth was largely driven by greater client demand for Indian goods following the resumption of business operations. Sentiments were positive as the Reserve Bank of India (RBI) announced a host of steps, including term repo operations totalling Rs 1 lakh crore in mid-September in order to ease pressure on the liquidity and maintain congenial financial conditions with a view to ensuring sustainable recovery of economic growth.

On the global front, European markets were trading mostly in red despite latest data from China showed manufacturing activity in the world’s second-largest economy expanded at its fastest rate in nearly 10 years.  Asian markets ended mostly higher on Tuesday, after the manufacturing sector in China continued to expand in August, and at a faster pace, the latest survey from Caixin revealed on Tuesday with a manufacturing PMI score of 53.1. That's up from 52.8 in July, and it moves further above the boom-or-bust line of 50 that separates expansion from contraction. Individually, the sector saw the sharpest increase in output and new orders since 2011. New export work rose for the first time this year, while employment moved closer to stabilization.

The BSE Sensex ended at 38900.80, up by 272.51 points or 0.71% after trading in a range of 38542.11 and 39226.82. There were 21 stocks advancing against 9 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 1.16%, while Small cap index was up by 0.54%. (Provisional)

The top gaining sectoral indices on the BSE were Telecom up by 3.81%, Metal up by 3.35%, Power up by 2.56%, Healthcare up by 1.94% and Basic Materials up by 1.60%, while IT down by 0.93%, Oil & Gas down by 0.44% and TECK down by 0.12% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Bharti Airtel up by 6.38%, Bajaj Finance up by 4.42%, Asian Paints up by 3.93%, Tata Steel up by 3.82% and NTPC up by 3.52%. On the flip side, ONGC down by 3.29%, Axis Bank down by 2.23%, Tech Mahindra down by 1.75%, Infosys down by 1.53% and ICICI Bank down by 0.99% were the top losers. (Provisional)

Meanwhile, Indian manufacturing activity signalled growth in the month of August 2020, led by an improvement in customer demand as client businesses reopened, after lockdown restrictions eased amid the coronavirus disease 2019 (COVID-19). As per the survey report, the Nikkei India Manufacturing Purchasing Managers’ Index (PMI) - a composite single-figure indicator of manufacturing performance - jumped to 52.0 in August as against 46.0 in July.

The report further noted that output and new orders expanded at the fastest paces since February. Despite an expansion in new orders, job shedding continued in the Indian manufacturing sector. The relocation of employees following COVID-19 was often linked to the reduction in staffing numbers. The pace of contraction in workforce numbers softened from that seen in July but remained strong overall.

On the price front, higher raw material costs due to supplier shortages and transportation delays stemming from the COVID-19 pandemic, resulted in rising input prices during August. Cost burdens rose for the first time since March, with the rate of input price inflation at its highest since November 2018. Despite rising cost burdens, Indian manufacturers reported lower factory gate charges due to competitive pressures and efforts to boost sales. However, the rate of decline eased to only a fractional pace that was the weakest in the current sequence of decrease.

The CNX Nifty ended at 11470.25, up by 82.75 points or 0.73% after trading in a range of 11366.90 and 11553.55. There were 32 stocks advancing against 18 stocks declining on the index. (Provisional)

The top gainers on Nifty were Bharti Airtel up by 6.46%, JSW Steel up by 6.30%, Hindalco up by 4.75%, Bajaj Finance up by 4.47% and Asian Paints up by 4.22%. On the flip side, Bharti Infratel down by 4.91%, ONGC down by 3.17%, Axis Bank down by 2.22%, Adani Ports & SEZ down by 1.95% and Tech Mahindra down by 1.77% were the top losers. (Provisional)

European markets were trading mostly in red; UK’s FTSE 100 decreased 55.49 points or 0.93% to 5,908.08, France’s CAC decreased 0.10 points or 0% to 4,947.12. On the flip side, Germany’s DAX was up by 76.14 points or 0.59% to 13,021.52.

Asian markets ended mostly higher on Tuesday after data showing that China's manufacturing sector continued to expand in August, the Caixin/ Markit Manufacturing Purchasing Managers' Index rose to 53.1 from 52.8 in July amid the sharpest increase in production and new orders since 2011. Seoul shares ended higher as investors shrugged off surging new infections, with the country's corona virus tally surpassing 20,000 today. While, South Korea's government has proposed an 8.5 percent national budget increase for next year, signaling it would continue to step up stimulus to pull Asia's fourth-largest economy from the pandemic-induced slowdown. Japanese shares ended on a flat note, despite shares of trading companies extended a rally driven by the acquisition of a 5 percent stake by Warren Buffett's Berkshire Hathaway in each of Japan's five biggest trading houses. Japan’s factory activity contracted at the slowest pace in six months in August, the latest survey from Jibun bank revealed today with a manufacturing PMI score of 47.2, up from 45.2 in July. The unemployment rate in Japan came in at a seasonally adjusted 2.9 percent in July against 2.8 percent in June.