Sensex, Nifty trade with small gains; Europe opens higher

Benchmark indices bounced back and were trading with minor gains in afternoon trade. At 13:27 IST, the barometer index, the S&P BSE Sensex, rose 29.60 points or 0.08% at 39,115.63. The Nifty 50 index added 24.15 points or 0.21% at 24.15 . Trading was volatile due to expiry of weekly index options on the NSE.

Rising COVID-19 cases, introduction of new margin requirement in the cash segment from 1st September and geo-political tensions between India-China capped gains.

The broader market was trading firm. The S&P BSE Mid-Cap index rose 0.70% while the S&P BSE Small-Cap index gained 0.85%. Both these indices have risen 3% in three sessions.

The market breadth was positive. On the BSE, 1427 shares rose and 1081 shares fell. A total of 170 shares were unchanged.

The Sebi's new margin rules came into effect from 1 September 2020. As per the new rule, it is mandatory for brokers to collect margins from investors upfront for any purchase or sale of shares. Failing to do so will attract a penalty. Sebi has introduced these measures to safeguard the interest of all investors.

Economy:

The IHS Markit India Services PMI rose sharply to 41.8 in August 2020 from 34.2 in July 2020. The index reached highest level since March, before the escalation of the global COVID-19 pandemic. Nevertheless, the reading is below the 50 which is a neutral value, indicating a continued decline in business activity.

Commenting on the latest survey results, Shreeya Patel, Economist at IHS Markit, said: "August highlights another month of challenging operating conditions in the Indian services sector. Sustained periods of closure and ongoing lockdown restrictions in both domestic and foreign markets have weighed heavily on the health of the industry. Output and new work continue to fall at solid rates, while restrictions meant that firms were often unable to complete projects. Backlogs of work accumulated to the greatest extent in almost 15 years of data collection. That said, the survey showed signs of a potential recovery. Business sentiment was neutral after being negative in the previous three months and employment fell at the softest pace since March. Additionally, there were efforts to protect profit margins, firms raised their selling prices to pass on higher expenses to customers and recover lost revenues after a period of closure."

COVID-19 Update:

Total COVID-19 confirmed cases worldwide stood at 25,938,122 with 861,679 deaths. India reported 8,15,538 active cases of COVID-19 infection and 67,376 deaths while 29,70,492 patients have been discharged, according to the data from the Ministry of Health and Family Welfare, Government of India.

Meanwhile, India continued to report one of the lowest COVID Case Fatality Rates (CFR) when compared to several other countries. While the global CFR stands at 3.3% as on date, the comparative figure for India is 1.76%, an official update noted today. The deaths per million population in India is one of the lowest in the world. While the global average is 110 deaths /million population, India is reporting 48 deaths /million population. The comparative figure for Brazil and the UK is 12 and 13 times higher, respectively.

Stocks in Spotlight:

Bharti Infratel (up 7.83%), Titan Company (up 4.95%), Eicher Motors (up 4%), UPL (up 3.93%) and Tech Mahindra (up 2.80%) were the top gainers.

Bharti Airtel (down 1.90%), ICICI Bank (down 1.76%), NTPC (down 1.57%), Shree Cement (down 1.47%) and ONGC (down 1.46%) were the top losers.

IndusInd Bank fell 1.37% to Rs 631.95. The bank has approved the allotment of 4.76 crore shares at Rs 524 per share on a preferential basis, for an aggregate consideration of Rs 2495.79 crore. Route One Offshore Master Fund was allotted 1.06 crore shares, Route One Fund I, L.P. was allotted 71.59 lakh shares, ICICI Prudential Life Insurance Company was allotted 1.62 crore shares, Tata Investment Corporation was allotted 57.25 lakh shares and AIA Company was allotted 78.30 lakh shares. Consequently, the issued, subscribed and paid-up equity share capital of the bank stands increased from the present level of Rs 693.56 crore to Rs 741.19 crore.

Coal India (CIL) lost 1.47% to Rs 134.30. The coal major's consolidated net profit tumbled 55.1% to Rs 2,079.60 crore on 26.8% decline in net sales to Rs 17,007.10 crore in Q1 FY21 over Q1 FY20. CIL's raw coal production declined 11.6% to 121.04 million tonne in Q1 June 2020 over Q1 June 2019. Coal offtake tumbled 21.55% to 120.42 million tonne during the period under review. The average realization declined 6.6% to Rs 1,415.49 per ton in Q1 June 2020 from Rs 1,515.50 per ton in Q1 June 2019.

TCS rose 1.99% to Rs 2,310 after the IT major said it bagged a deal from ABB Information Systems for transforming its tech hosting infrastructure and cloud service management. The Swiss technology company identified TCS as its service partner as part of the organisation's efforts to rationalise its IT operations.

Vedanta declined 1.83% to Rs 128.70. The company's parent Vedanta Resources on Wednesday (2 September) said the book value of the equity share of its Indian subsidiary as per the delisting regulations is Rs 89.38 per share. The book value has been extracted from from the audited consolidated financial statements of the Vedanta.

Global Markets:

European shares rose across the board on Thursday, ahead of the release of Euro Area Markit Purchasing Managers' Index (PMI) today.

Asian stocks were trading mixed as investors reacted to regional economic data releases.

China's Caixin/Markit services Purchasing Managing Index (PMI) came in at 54.0, compared with 54.1 in July.

Meanwhile, the final Jibun Bank Japan Services Purchasing Managers' Index (PMI) inched down to a seasonally adjusted 45.0 in August from 45.4 in the previous month, pressured by weakening new business and business expectations.

US stock market rose sharply on Wednesday, continuing a strong start to September for the market as traders took profits out of high-flying names like Apple and Tesla and snapped up shares in more beaten-down parts of the market. Both the S&P 500 and Nasdaq hit record highs, with the Nasdaq topping 12,000 for the first time.

The Dow Jones Industrial Average advanced 454.84 points, or 1.6%, to close at 29,100.50. It was the Dow's first close above 29,000 since February. The S&P 500 gained 1.5% to end the day at 3,580.84 while the Nasdaq Composite was higher by 1% at 12,056.44.

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