Benchmarks extend gains; trade near intra-day high

Indian equity benchmarks extended early gains to continue firm trade in late morning session, hovering near intra-day high level led by rally in Realty, Capital Goods and Metal stocks. Continuing optimism about reforms oriented decisions by the new government that is attracting strong foreign fund flows along with Friday's record high closing in the US market took sensex and nifty to new all-time peaks. At present, Sensex and Nifty were trading above the crucial 25,600 and 7,600 levels respectively, with gains of over 0.80%.  Apart from blue chips, broader indices too equally participated in the rally with both mid cap and small cap indices trading up by over 1.00%.In scrip specific development, IDBI Bank was rallying on fund raising reports, while JSW Steel was rising after reporting 5.4 percent growth in crude steel production in May 2014. Moreover, shares of Nectar Lifesciences surged as investors were excited about the report that the company’s promoters are planning to sell their 44.35 percent share. On the other hand, Hindustan Motors declined; there was a report that it has issued 'termination notices' to the some 250 odd managerial staff of its Uttarpara unit as part of a managerial restructuring plan.

On global front, Asian stocks touched their highest levels in nearly three years on Monday, basking in the glow of a record close on Wall Street after bright US jobs data pointed to improving economic momentum. Back home, traders were seen piling positions in Realty, Capital Goods and power stocks, while selling was witnessed in Oil & Gas sector stocks. The market breadth on BSE was positive, out of 2525 stocks traded, 1918 stocks advanced, while 537 stocks declined on the BSE.

The BSE Sensex is currently trading at 25604.76 up by 208.30 points or 0.82% after trading in a range of 25615.31 and 25496.84. There were 25 stocks advancing against 5 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.24%, while Small cap index gained 1.60%.

The gaining sectoral indices on the BSE were Realty up by 2.79%, Capital Goods up by 2.41%, India Infrastructure Index up by 1.81%, Metal up by 1.79% and Power up by 1.74%. On the flip side, Oil & Gas down by 0.19% was the only losing Index on BSE.   

The top gainers on the Sensex were Tata Power up by 3.47%, Coal India up by 3.34%, L&T up by 3.06%, Hero MotoCorp up by 2.22% and Tata Motors up by 1.84%. On the flip side, ONGC down by 1.94%, NTPC down by 0.70%, Hindustan Unilever down by 0.69%, Infosys down by 0.46% and Mahindra & Mahindra down by 0.31%.

Meanwhile, Foreign Direct Investment (FDI) in India’s services sector has declined by 54 percent to $2.22 billion during the financial year 14 as compared to $4.83 billion in the previous fiscal mainly due to the low foreign investment in hotel and tourism industries. Indian services sector, which includes banking, insurance, outsourcing, R&D, courier and technology testing, represents around 60% share of the country’s GDP.

Overall foreign inflows into the country increased by 8 percent to $24.29 in the FY14 form $22.42 billion recorded in the FY13. Sectors that received highest inflows during FY14 include automobiles ($1.51 billion), telecommunications ($1.3 billion), pharmaceuticals ($1.27 billion) and construction development ($1.22 billion). Country wise, maximum FDI during the reported period was received from Singapore with $5.98 billion followed by Mauritius ($4.85 billion), UK ($3.21 billion) and Netherlands ($2.27 billion).

FDI is considered crucial for economic development of a country. India's economic growth stayed below 5 percent for the second year in a row at 4.7 percent during FY14. In order to attract maximum FDI into the country, the government has been liberalizing the foreign investment policy. The government has relaxed FDI norms in around 12 sectors which include telecom, tea, pension and petroleum and natural gas among others. Now, it has started exercise for allowing foreign investments in e-commerce, railways and defence sectors. Furthermore, India would require around $1 trillion in the 12th five year plan (2012-2017) to overhaul its infrastructure sector such as ports, airports and highways to boost growth.

The CNX Nifty is currently trading at 7,649.70 up by 66.30 points or 0.87 % after trading in a range of 7,656.70 and 7,580.25. There were 41 stocks advancing against 9 declining on the index.

The top gainers of the Nifty were Grasim up by 7.33%, UltraTech Cement up by 4.88%, ACC up by 4.60%, Ambuja Cements up by 4.55% and Power Grid up by 3.71%. On the flip side, ONGC down by 2.27%, BPCL down by 1.41%, Hindustan Unilever down by 1.15%, NTPC down by 0.88% and M&M down by 0.67% were the major losers on the index.

Most of the Asian equity indices were trading in green; Nikkei 225 gained 0.42%, Hang Seng strengthened by 0.72%, Straits Times climbed 0.07%, Shanghai Composite soared 0.41%. On the flip side, KOSPI Index slipped 0.15% and Jakarta Composite was down by 0.57%.