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Sensex Finishes Marginally Higher; Realty & Power Stocks Gain the Most
Thu, 31 Aug Closing

Indian share markets recovered marginally in the afternoon session ahead of the expiry of futures and options contracts later in the day.

At the closing bell, the BSE Sensex closed higher by 84 points and the NSE Nifty finished up 34 points. The S&P BSE Mid Cap finished up by 0.2% while & S&P BSE Small Cap too finished up by 0.8%. Realty stocks and power stocks witnessed majority of the buying activity. Pharma stocks and bank stocks finished in red.

Biocon Ltd share price fell 2% after the company said the US Food and Drug Administration (USFDA) will take 3 months more to review the application for a biosimilar version of Roche Holding AG's breast cancer drug Herceptin filed by partner Mylan NV.

Asian stock markets finished mixed as of the most recent closing prices. The Nikkei 225 gained 0.72%, while the Hang Seng & the Shanghai Composite fell 0.44% and 0.08% respectively. European markets are higher today with shares in London leading the region. The FTSE 100 is up 0.62% while Germany's DAX is up 0.61% and France's CAC 40 is up 0.40%.

The rupee was trading at Rs 64.01 against the US$ in the afternoon session. Oil prices were trading at US$ 46.14 at the time of writing.

DCB bank share price finished down by 3.1% after it was reported that the bank is under Reserve Bank of India lens as US fines Pakistan based Habib Bank. Aga Khan Foundation for Economic Development (AKFED), owns 51% stake in Habib Bank that in turn holds 14.22% in DCB Bank. Aga Khan, the promoter of AKFED, is based in France and has a network of financial enterprises globally.

In another development, global credit rating agency, Moody's Investors Service has said that its outlook on India's banking system is stable amid improved prospects for asset quality.

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Moody's further said that though the indicators like net new nonperforming loan formation and problem loan ratios suggest a bottoming of the credit cycle, deteriorating asset quality in agriculture, and micro, small- and medium-sized enterprise (MSME) portfolios pose risks.

Even as banks are accused of playing safe by deploying funds in government securities instead of advancing credit to industry, recent developments signal towards their waning risk aversion. As per RBI data, the incremental credit-deposit ratio crossed 100 in July 2017 for the first time since 2011.

At the same time, the incremental investment-deposit ratio has been on a steady decline. This shows that as huge deposits garnered by public sector banks post notebandi are stabilising, lending is slowly gaining traction.

Slow Credit Growth Impairs Core Income Driver for Banks

For the same reason, public sector banks like State Bank of India, Bank of Baroda and Punjab National Bank recently cut savings rate by 0.5% as they shift focus towards lending.

Energy stocks finished on a firm note with MRPL share price and Chennai Petroleum share price leading the gains. As per an article in The Economic Times, ONGC will soon seek shareholders' approval to raise a debt of Rs 250 billion to fund the planned acquisition of HPCL.

ONGC would need Rs 377.5 billion to pay for government's 51.1% stake in HPCL at current market prices. As per the reports, ONGC plans to use a mix of internal resources and debt to fund the deal. It has a cash reserve of about Rs 130 billion. This would be ONGC's maiden borrowing in more than a decade.

ONGC share price finished the day down by 1% on the BSE.

In news from the steel sector, the domestic rating agency, ICRA in its latest report has said that steel prices in the domestic market staged a smart recovery, taking cues from the buoyancy in global steel prices despite a moderate demand growth of 4.4% in the first four months of the financial year of 2017-18.

It also said that since June 2017, global steel prices have registered a sharp recovery, mainly driven by the Chinese government's supply-side reforms to reduce domestic steel over-capacity, a steadily declining trend in Chinese steel exports on the back of resilient Chinese domestic steel demand.

Apart from structural factors like closure of excess capacity, it believes that up-fronting of production and purchases ahead of a planned winter shutdown in China is also a factor leading to the buoyancy in steel production and prices witnessed since June 2017. Therefore, it noted that continuity of this price momentum hinges upon the sustainability of demand from the steel intensive real-estate and infrastructure sectors in China.

Further, it explained that a steadily rising export volume has enabled domestic steel mills to register a healthy annualised production growth of 7% and a capacity utilisation of around 81% during the period from April to July of FY18.

Steel stocks finished on a mixed note with SAIL share price and JSW Steel share price leading the losses.

And here's a note from Profit Hunter:

The Nifty 50 Index ends its August expiry today. Let's have a look how the index performed during the expiry.

The index traded on a weak note during the expiry. It witnessed buying during the first week of the expiry to hit a life high of 10,137. But the buying was temporary as the index slipped sharply during mid-expiry. The index then recovered some of its losses and traded in a range of 9,750-9,900 for the rest of the expiry. Finally, it ended the expiry with a cut of 1%.

In our previous rollover report, we mentioned the bulls were gradually existing their positions. This was suggested by low rolls and low absolute open interest (OI). Technically as well the index seemed overheated and was trading at the channel's resistance line. All of this suggested a strong correction in the Nifty. And the index did correct to the 9,685 level - down from 10,020.

Although the index recovered a bit, it wasn't able to cross the 10,000 mark.

So will the bulls be able reclaim the 10,000 mark in the September series or will the correction continue even further? Watch out for our rollover report in the Market Notes section of tomorrow's Profit Hunter newsletter.

Nifty 50 Index Ends August Expiry 1% Down
Nifty 50 Index Ends August Expiry 1% Down 

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Mar 16, 2018 (Close)