Day's Trades End In Red, September Series Gain 6%

The Indian markets showed volatile trades today, with a recovery in the afternoon. However, the gains could not hold their ground and the markets closed down by 0.25%. The expiry of the September series happened on a positive note, with both the benchmark indices registering over 6% gains.

Meanwhile, the Supreme Court has given a breather to the government by saying that the 2G auction was limited to the telecom sector and the natural resources of the country cannot be auctioned.

India’s largest independent and integrated credit rating agency Crisil said today that India Inc’s EBITDA margins are bottoming out and that there is limited risk of a material decline in the margins. As commodity prices are softening and the rupee is showing strength against the US dollar, the margins are likely to show growth in the coming quarter.

Earlier today, the Asian markets shown a remarkable recovery over the news that the People's Bank of China has injected USD 58 billion worth of liquidity into the markets. The indices, which had been trading negative, came back with good numbers. China’s Shanghai market was up 2.5%, the Hang Seng was up 1.1% and Nikkei also managed to close in gains.

The European stocks have shown good resistance despite strong public agitation in Spain against the austerity measures. The Spanish government is also set to announce its budget today, and the markets have shown some gains at this time.

Ahead today, the US will declare its second quarter GDP data, orders for durable goods, etc. Dow Jones Futures is currently showing gains of 0.5%, indicating a positive sentiment.

In the Indian equity markets, the FMCG and Consumer Durables indices were up by over 1% by closing. Oil & Gas and IT lost over 1% on some profit booking. The Teck, Metals, PSU, Power and Auto indices also closed negative.

Among the Sensex stocks, Tata Power notched up gains of over 6% by afternoon. However, most of the gains were erased by day's end as the stock managed to hold on to just 1.8% gains. The stock went up as the CEA’s verdict on the tariff hike case is due today. L&T was the top gainer stock today, up 2%. In the FMCG space, HUL and ITC were up over 1%. Sterlite Industries, on the other hand, was a top loser, down by 3%. Two-wheeler manufacturer Hero was also over 2% lower. Most PSU stocks in the index were in the losers list.

In other stocks, the sentiment on United Spirits is upbeat as the stock closed strongly up by 10%. It is now trading at its 52-week high, and has seen 28% price appreciation in this week alone. The shares of RCF were up 5.39% on news that it will hike the urea prices and reduce the subsidies. Max India surged over 4% as the government will most likely announce a hike in the FDI cap in the insurance sector.

The shares of Reliance Power and Adani Power surged by 2% and 3% respectively. The decision of CEA in the Tata Power case will have some impact on them as well since they are also considering hiking tariffs in their existing imported coal projects.

Overall this week, the market has been witnessing strong volatility due to the global events as well as the September series expiry. We remain positive on the market as it seems set to touch the 20000 mark by this year. Besides, many still believe that the RBI may cut the repo rate in this year itself to fuel growth. Plenty of liquidity will also act as a booster. Investors should keenly watch the Spanish budget and the US GDP data, as they will direct tomorrow’s trades.