Sensex, Nifty Recoup Losses; Consumer Durables & Energy Stocks Shine

After trading in negative territory during the noon session, Indian share markets bounced back in the afternoon session to finish marginally higher.

At the closing bell, the BSE Sensex closed higher by 88 points and the NSE Nifty finished up 53 points. The S&P BSE Mid Cap finished up by 0.7% while & S&P BSE Small Cap finished up by 0.1%.

Gains were largely seen in consumer durables stocks, energy stocks and metal stocks. Pharma stocks finished in red.

Biocon share price fell 4.9% after the US FDA issued 10 observations pointing at aseptic practices following an inspection at the company's plant in Bengaluru. Almost all constituents of the Nifty pharma index finished in red with its third straight session of decline.

Sun Pharmaceutical Industries share price dropped 1.6%, while Dr. Reddy's Laboratories Ltd share price fell 3.8%.

Asian stock markets finished mixed as of the most recent closing prices. The Hang Seng gained 0.12%, while the Nikkei 225 & the Shanghai Composite fell 0.38% and 0.33% respectively. European markets are mixed today. The DAX is up 0.23% while the FTSE 100 gains 0.09%. The CAC 40 is off 0.01%.

The rupee was trading at Rs 63.71 against the US$ in the afternoon session. Oil prices were trading at US$ 48.7 at the time of writing.

In news from economy, after the RBI cut the interest rates by 25 basis points, Finance Minister Arun Jaitley has said that lending rate of 14-15% will make India uncompetitive in the global market and industry cannot invest at such higher interest rates.

Jaitley added that Interest rates will 'slowly' become 'reasonable' and the government has taken steps to offer stable interest rates to investors so that they are not lured into chit fund schemes, which attract investors by offering a meager 1-1.5% interest rate higher than what is given by banks.

The finance minister defended the largest public-sector lender State Bank of India's decision to cut interest rate on saving accounts of less than Rs 10 million, saying the move was in sync with reduction in lending rate.

Further adding that high interest rate on savings and fixed deposits was during a time when inflation was 10-11% and sluggishness was setting in the economy. So, when the lending rate came down, so did savings account.

India's Policy Rates Compared to Asian Economies

The chart above shows how India's inflation and policy rates stand in comparison with other Asian economies. However, the central bank in its monetary policy statement expects inflation to rebound soon.

The RBI's monetary statement in June had projected quarterly average inflation in the range of 2-3.5% in the first half of fiscal 2018, and 3.5-4.5% in the second half. Now it expects inflation to be about 4% by the year end. As long as inflation follows this track, the possibilities of rate cuts during this fiscal year remain slim.

Moving on to news from oil & gas sector. Indian oil corporation (IOC) reported a 45% fall in profit for the first quarter against the same quarter a year-ago owing to drop in refining margin and inventory loss.

Net profit was Rs 45.49 billion against Rs 82.69 billion a year-ago. Revenue stood at Rs 1.29 trillion in the June FY18 quarter against Rs 1.07 trillion in the year-ago period.

The company suffered an inventory loss of Rs 20.33 billion compared with a gain of Rs 37.85 billion during the two quarters, respectively. The company also suffered a product loss of Rs 20 billion during the quarter compared with a gain of Rs 36.95 billion during the comparable period a year-ago.

Meanwhile, IOC is stepping up purchase of crude oil from the US and will tender for a second cargo this month as it looks at cheaper alternatives that have emerged due to a global supply glut. After IOC, Bharat Petroleum Corp. Ltd (BPCL) too has bought 1 million barrels of sour crude from the US for its Kochi refinery.

Buying US crude has become attractive for Indian refiners after the differential between Brent and Dubai has narrowed.

IOC share price surged 8% in today's trade.

In another development, BPCL announced diversification plans with a focus on venturing into gas business.

The company also announced plans to diversify resources for sourcing fuels as a part of its five-year plan. BPCL has set a target of a capital expenditure of Rs 1 trillion to be spent on all expansion activities including marketing and refining over the next five years.

BPCL share price finished the day up by 5.9% on the BSE.

Titan Ltd share price rose 9.3% to Rs 609 after its first quarter net profit almost doubled, helped by a significant jump in jewelry demand that more than offset subdued sales of the company's watches and eye wear segments. Net profit increased to Rs 2.37 billion in the 3 months ending 30 June 2017, from Rs 1.20 billion a year ago.

And here's a note from Profit Hunter:

Indian Oil Corporation (IOC) is the top gainer in the Nifty 50 Index. Let's have a look at its chart.

The stock bottomed out with the broader market index in February 2016. It traded in a strong uptrend to hit a life high of Rs 450 in May 2017. It corrected 19% from this high to hit a low of Rs 364 last week.

Yesterday, the stock rallied 5% with healthy volumes on expectations of good Q1FY18 results. Demand was also seen as the stock found support from the horizontal support line at 365 level. The company announced its quarterly results yesterday after market hours. And today, the stock surged 8% with good volumes. The stock has now rallied 13% in just two days.

So will the quarterly result help it hit a new life high? Let's wait and watch.

IOC Surged 13% in Two Days