Benchmarks continue to trade in green in late morning session

Indian bourses continued to trade in green in late morning session as traders took long positions ahead of key events like Railway & Union Budget 2014 and Infosys results later in the week. In addition, June import & export data and May IIP data will also be closely tracked this week. Sentiment on the street improved after FICCI’s Business Confidence index value climbing to a 14-quarter high of 69 in the current round, up from 60.8 in the previous survey. Further, Finance minister Arun Jaitley recently expressed his discomfort about the high fiscal deficit and also the rate of inflation, and indicated populism will take a backseat in the Budget, which led to optimism that the Budget will be aimed at fiscal consolidation too added to the optimistic sentiments. However, the upside has been capped due to selling pressure among financials and oil shares. At present, Sensex and Nifty were trading above the crucial 25,950 and 7,750 levels respectively, with gains of over 0.25%. Meanwhile, Railway-related stocks were continue at their upward march and trading higher by up to 7% second day in a row ahead of the Railway Budget on July 8, 2014.

In scrip specific development, South Indian Bank has surged nearly 8% after Mohnish Pabrai, a leading US-based fund manager, has bought an over one percentage point stake in the private sector bank for Rs 64 crore from the open market.  Moreover, shares of Tata Power Company gained as much as 3 percent after the company said it has signed an option deal to sell a 5% in coal miner PT Kaltim Prima Coal (KPC) to get additional cash flow as well as to reduce its consolidated debt.

Market is expected to remain positive on hopes that the Narendra Modi-led government will announce a slew of measures to revive economic growth in its first Union Budget on July 10, 2014. On the global front, Asian stock markets were mostly lower after the extended U.S. market holiday and recent stock gains in the region. Back home, stocks from information technology (IT), Realty and Power counters were supporting the markets’ uptrend, while those from Bankex, Oil & Gas and FMCG counters were adding to the underlying cautious undertone. The market breadth on BSE was positive, out of 2451 stocks traded, 1450 stocks advanced, while 912 stocks declined on the BSE.

The BSE Sensex is currently trading at 26054.94 up by 92.88 points or 0.36% after trading in a range of 26116.73 and 26011.57. 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 0.27%, while Small cap index gained 0.55%.

The top gaining sectoral indices on the BSE were, IT up by 1.90%, TECk up by 1.56%, India Infrastructure Index up by 1.13%, Realty up by 0.86% and Power up by 0.71% while Bankex down by 0.61%, Oil & Gas down by 0.56%, FMCG down by 0.25% and PSU down by 0.17% was the losers on the sectoral index.

The top gainers on the Sensex were Tata Power up by 2.89%, Infosys up by 2.37%, TCS up by 2.03%, Dr Reddys Lab up by 1.87% and Bharti Airtel up by 1.74%. On the flip side, HDFC Bank was down by 0.95%, ONGC was down by 0.85%, Maruti Suzuki was down by 0.53%, ITC was down by 0.48% and Gail India was down by 0.45% were the top losers on the Sensex.

Meanwhile, Industry body FICCI stated that clear mandate in elections followed by a slew of announcements undertaken by the government has lifted India Inc’s confidence to 14-quarter high at 69 in current round of survey up from 60.8 in the previous survey. The survey indicated that majority of around 93 percent participants anticipating the overall economic situation to be moderately to substantially better in the coming six months.

FICCI’s survey highlighted that most of the respondents are expecting growth orientated reforms from government in forthcoming budget 2014-15, which will iron out the issues faced by the industry and investors. It added that business sentiment is improving in country as 40 percent companies said that they foresee higher investments over the next two quarters as compared to 24 percent in the last survey. Further, about 72 percent of the respondents said that they expect their order book position to recover over the next six months. However, around 74 percent of companies stated that demand situation continues to be frail as compared to 70 percent companies in the previous round.

Availability and cost of credit also seems to be improving as the FICCI’s survey highlighted that 25 percent respondents cited availability of credit as a concern area as against 40 percent last time. For budget 2014-15 wish list, participating firms expect measures such as simplification of taxes, reviewing the Direct Tax Code, early roll out of Goods & Services Tax, boost to infrastructure sector and allocation of more funds for power projects, promotion of manufacturing and MSMEs, skill development, developing ports and providing a fresh impetus to SEZs.  

The CNX Nifty is currently trading at 7,772.90 up by 21.30 points or 0.27% after trading in a range of 7,791.40 and 7,759.90. There were 28 stocks advancing against 22 declining on the index.

The top gainers of the Nifty were IDFC up by 3.88%, Tata Power up by 3.03%, Infosys up by 2.26%, TCS up by 2.14% and DLF up by 2.10%. On the flip side, Kotak Bank down by 2.11%, BPCL down by 1.92%, MCDOWELL-N down by 0.85%, ONGC down by 0.84% and Bank of Baroda down by 0.80% were the major losers on the index.

Most of the Asian equity indices were trading mostly in the red; Nikkei 225 tumbled by 0.06%, Hang Seng declined 0.22%, KOSPI Index slipped by 0.47%, Shanghai Composite dropped 0.29% and Taiwan Weighted was down by 0.07%. On the flip side, Straits Times gained 0.06%, Jakarta Composite increased by 0.98% and FTSE Bursa Malaysia KLCI was up by 0.32%.