Markets climb to day’s high on heavy buying activities

Steadily gaining strength, local equity markets have soared to day’s high point on back of frenzied buying activities by funds and retail investors. Sentiment got a lift from June factory output data, which grew at the fastest pace since February, while output prices rose at the fastest rate in eight months, signaling further rise in inflation that is bound to vex the Reserve Bank of India (RBI), a business survey showed on Tuesday. Additionally, hike in fuel prices which lifted three public sector oil marketing companies higher, also added to optimistic sentiment. At day’s high, both Sensex and Nifty were trading little short of crucial 25,550 and 7,650 levels respectively, with gains of close to half a percent. Meanwhile, broader indices outperforming larger peers were up with gains in the range of 0.65%-1.20%.

On the global front, Asian shares were trading mixed on Tuesday as upbeat Chinese manufacturing data and expectations that U.S. monetary policy will stay loose for some time, prevented sharp slide. China's official Purchasing Managers' Index showed factory growth rose to a six-month high in June, as expected, and a similar private survey also showed strong activity, reinforcing signs of stabilisation in the economy. Additionally, European stocks climbed, after gaining for four straight quarters, as investors awaited reports on American and euro-area manufacturing.

Closer home, most of the sectoral indices on BSE were trading in positive terrain, while those from Healthcare and Oil & Gas were the only losing counters. On the flip side, stocks from Auto, Metal and Realty counters were the top gainers. While, Auto stocks jumped on reporting monthly sales numbers, metal stocks gained on upbeat Chinese data. The overall market breadth on BSE was in the favour of advances which thumped declines in the ratio of 1240:650; while 22 shares remained unchanged.

The BSE Sensex is currently trading at 25530.41, up by 116.63 points or 0.46% after trading in a range of 25466.77 and 25546.99. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.62%, while Small cap index was up by 1.19%.

The gaining sectoral indices on the BSE were Auto up by 2.70%, Metal up by 2.43%, Realty up by 1.36%, Capital Goods up by 1.25% and Infrastructure up by 0.73%. On the flip side, Healthcare down by 0.26% and Oil and Gas down by 0.22% were the only losing indices on BSE.   

The top gainers on the Sensex were Hindalco Inds up by 6.40%, Maruti Suzuki up by 4.47%, M&M up by 3.65%, Tata Motors up by 3.00% and Tata Steel up by 2.57%. On the flip side, Wipro down by 1.03%, Infosys down by 0.94%, TCS down by 0.92%, Sun Pharma down by 0.66% and HDFC Bank down by 0.65% were the top losers on the BSE.

Meanwhile, the government has hiked the import tariff on gold to $428 per 10 gram from $411 and silver to $688 per kg from $632 per kg, in line with global rates of the precious metals. Global precious metal prices such as gold have firmed up due to the escalating violence in Iraq and Ukraine that has bolstered demand for the precious metal. In London, spot gold prices had hit a two-month high of $1,325.90 per ounce last week.

Tariff value or the base price is set to determine the customs duty on the precious metal and to prevent under invoicing. The government revises import tariff value on a fortnightly basis taking into account the volatility in global metal prices.

Gold is the second largest import item for India after crude oil. The government had taken various measures like high customs duty of 10% and 80/20 rule to curb gold shipments to check country’s widening current account deficit (CAD).  Meanwhile, the government’s measures to contain the gold imports yielded results as gold and silver imports fell by 40.02% to $33.46 billion in FY14 due to these stern government’s norms. Low gold imports also helped India to contain current account deficit (CAD) at 1.7 percent of GDP or $32.4 billion in FY 14 as compared to $87.8 billion, or 4.7 percent of GDP in FY13. 

The CNX Nifty is currently trading at 7,640.60, up by 29.25 points or 0.38% after trading in a range of 7,618.15 and 7,645.10. There were 35 stocks advancing against 15 declining on the index.

The top gainers of the Nifty were Hindalco up by 6.33%, Maruti up by 4.47%, M&M up by 3.72%, Tata Motors up by 3.03% and Tata Steel up by 2.59%. On the flip side, Asian Paints down by 1.77%, BPCL down by 1.69%, Wipro down by 1.4/%, Infosys down by 1.25% and TCS down by 1.17% were the major losers on the index.

The Asian equity indices were trading mixed; Nikkei 225 up by 1.08%, Taiwan Weighted up by 0.52% and Shanghai Composite up by 0.01%. While, Hang Seng down by 0.13%, Jakarta Stock Index down by 0.08%, and Straits Times down by 0.60%.

European shares got off to a positive start; with France’s CAC 40 adding 0.31%, Germany’s DAX rising by 0.25% and United Kingdom’s FTSE 100 surging 0.26%.