Markets continue to trade firm in afternoon session

Indian equity benchmarks were trading near intra-day high level in the afternoon session on back of buying witnessed in frontline blue chip stocks. Further the gain in metal, capital goods and power stocks provided strength to domestic benchmarks. Firm global cues coupled with the optimisms that the government will announce reform measures in coming budget 2014-15 to economic growth has enthused the markets to extend their gains. Most of the sectoral indices were trading in green while a mild weakness in IT and teck stocks was visible. Sentiment got a boost after Finance Minister Arun Jaitley stated that union budget 2014-15 will not indulge in mindless populism and the government would take bold decisions and pursue path of fiscal prudence to revive economy. Metal stocks were on buyer's radar supported by report of faster growth in the Chinese manufacturing sector. Buying was broad based with both mid cap and small cap indices trading up by over 0.75%. However, selling was witnessed in sugar stocks as food Ministry pitched for approval to end the subsidy for raw sugar exports one year earlier stating that benefit of subsidy for export of raw sugar has been availed only to few sugar mills.

Larsen and Toubro (L&T) stock was trading higher by 1.5% to Rs 1,752 after the company said it has won new orders worth of Rs 2,002 crore across various business segments in June 2014. Mphasis’s stock has surged around 10% to Rs 463 on reports that Hewlett-Packard (HP) is planning to sell its stake in the Bangalore-based information technology services company.

On global front, Asian equity indices were trading in green with Nikkei 225 up by 0.21% and Taiwan Weighted up by 0.46%. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 7,600 and 25,500 levels respectively. The market breadth on BSE was positive, out of 2,718 stocks traded, 1,665 stocks advanced, while 955 stocks declined on the BSE. The BSE Sensex is currently trading at 25,729.03 up by 212.68 points or 0.83% after trading in a range of 25,789.42 and 25,660.16. 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 0.78%, while Small cap index up by 0.88%.

The gaining sectoral indices on the BSE were Metal up by 1.52%, Capital Goods up by 1.27%, Power up by 1.21%, Consumer Durables up by 1.12% and Realty up by 1.13%. On the flip side, IT down by 0.15% and Teck down by 0.04% were the losing indices on BSE.    

The top gainers on the Sensex were SSLT up by 2.68%, Coal India up by 1.88%, HDFC up by 1.75%, L&T up by 1.54% and Sun Pharma up by 1.52%. On the flip side, Infosys down by 0.42%, Tata Motors down by 0.30%, Hindalco Inds down by 0.20%, M&M down by 0.10% and Gail India down by 0.05% were the top losers on the BSE. Meanwhile, Global rating agency Fitch has stated that India's economic growth will accelerate to 5.5 percent in the FY15. Fitch also revised the growth rate upward to 6.5% in FY16 from 6% projected earlier.

The rating agency noted that latest policy announcements by new government signal a strong intention to pursue reforms. However, Fitch added that budget 2014-15 will give more indications on the government's policy intention, while implementation of the measures will clarify the level to which growth can be boosted.

Fitch mentioned below normal monsoon as the single biggest concern for growth forecast of 5.5 percent for FY15. The rating agency mentioned that although weak monsoon is likely to hit already-high food inflation, recent government announcements on reforms in agriculture produce markets and food distribution fronts will help to cap rising retail inflation. Retail inflation recorded at 8.28% y-o-y in May as against 8.59% in April.

Meanwhile, Fitch highlighted the need for bold reforms to boost economic growth. The agency stated that measure related to fiscal consolidation, farms productivity gains through reforms and the elimination of infrastructure bottleneck are likely to provide impetus to economy.

The CNX Nifty is currently trading at 7,695.10 up by 60.40 points or 0.79% after trading in a range of 7,711.50 and 7,677.30. There were 43 stocks advancing against 7 declining on the index.

The top gainers of the Nifty were SSLT up by 2.85%, Coal India up by 2.04%, Sun Pharma up by 1.63%, Maruti Suzuki up by 1.56% and DLF up by 1.50%. On the flip side, HCL Tech down by 1.14%, Infosys down by 0.54%, Gail down by 0.39%, Tech Mahindra down by 0.36% and Tata Motors down by 0.32% were the major losers on the index.

Asian equity indices were trading in green; Nikkei 225 up by 0.21% to 15,358.15, Taiwan Weighted up by 0.46% to 9,484.96, Shanghai Composite up by 0.24% to 2,055.26, Straits Times up by 0.48% to 3,258.05 and Hand Seng up by 1.17% to 23,461.41. While, Jakarta Stock Index down by 0.03% to 4,883.69,