Benchmarks continue firm trade in late morning session

Indian equity benchmarks continued to trade firm in late morning session on revival of buying by funds and retail investors after positive macro economic data. Besides, a firming trend on other Asian markets following overnight gains on the US bourses after better-than-forecast earnings from Citigroup buoyed sentiments. Most of the sectoral indices were trading in green while a mild weakness in FMCG stocks was visible. Sentiment got a boost after retail inflation dipped to a 30-month low of 7.31 per cent in June and WPI index slid to a four-month low of 5.43 per cent, raising hopes of a rate cut by the RBI at its policy review next month. However, gains remained capped on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 558.25 crore on July 14, 2014.

Strong buying was seen in rate sensitive banking and realty stocks after wholesale and retail inflation fell more than expected for the month of June. In scrip specific development, Tata Sponge Iron has surged after reporting over two-fold jump in standalone net profit at Rs 44 crore for the first quarter ended June 30, 2014. Moreover, Advani Hotels and Resorts has hit the upper circuit for second day in a row, up 20% at Rs 60.70 on the NSE on reports that ITC Hotels could be close to acquiring the Ramada Caravela Beach Resort.

On global front, Asian stocks rose, with the regional index headed for a one-week high, as the Bank of Japan kept the monetary policy stable before Federal Reserve Chair Janet Yellen addresses US lawmakers. Back home, the market breadth on BSE was positive, out of 2122 stocks traded, 1469 stocks advanced, while 597 stocks declined on the BSE.

The BSE Sensex is currently trading at 25212.34 up by 205.36 points or 0.82% after trading in a range of 25236.66 and 25100.14. There were 22 stocks advancing against 8 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.59%, while Small cap index gained 1.76%.

The gaining sectoral indices on the BSE were Capital Goods up by 1.99%, Consumer Durables up by 1.97%, PSU up by 1.80%, India Infrastructure Index up by 1.69% and Bankex up by 1.13%. On the flip side, FMCG down by 0.15% was the only losing Index on BSE.    

The top gainers on the Sensex were ICICI Bank up by 3.03%, Gail India up by 2.61%, L&T up by 2.26%, BHEL up by 2.14% and ONGC up by 1.94%. On the flip side, Dr Reddys Lab down by 1.52%, ITC down by 0.74%, Cipla down by 0.72%, SSLT down by 0.66% and TCS down by 0.28% were the top losers on the BSE.

Meanwhile, in yet another encouraging development after four month low headline inflation numbers, provisional annual inflation rate based on all India general Consumer Price Index (CPI) (Combined) softened to 29 month low of 7.31% in June, as compared to 8.28% in May and 9.87% during the same month previous year. The figure was lower than street expectation of around 7.45% for the month under review.

CPI numbers of June 2014 for Rural, Urban and Combined stood at 142.3, 139.4 and 141.0 respectively. The corresponding provisional inflation rates for rural and urban areas for June 2014 stood at 7.72% and 6.82% as compared to 7.55% and 8.28% respectively in the previous month. 

Meanwhile, newly introduced Consumer Food Price Indices (CFPI) for rural, urban and combined stood at 145.2, 144.3 and 144.9 respectively for June 2014. Further, the provisional annual inflation rate based on all India CFPI (combined) for the month of June, 2014 on point to point basis (June 2014 over June 2013) also eased at 7.97% as compared to 9.56% (final) for previous month of May 2014. While, the corresponding provisional inflation rates for rural and urban areas for June 2014 stood at 8.68% and 6.57% respectively as compared to 10.27% and 7.98 % respectively in May ,2014.

Food prices for consumers rose at 7.90% in last month from a year earlier, lower than May’s 9.40% rise.  The Provisional annual inflation rates of June 2014 for Rural and Urban in respect of ‘food and beverages’ stood at 8.54% and 6.65% compared to 10.04% and 7.89% respectively in May, 2014. Additionally, Provisional annual inflation rates (Combined) for Fuel and light; Clothing, bedding and footwear stood at 4.58% and 8.65% respectively for the month under review. 

In further encouraging sign, Core inflation too came down 7.4% as compared to 7.74% in May. Thus, the latest data, which clearly indicates for worst now being behind us, is likely to add to the cheer for new Prime Minister Narendra Modi, which has listed fighting inflation, particularly food inflation, as his topmost priority. However, the assumption of  rate cut by RBI on latest set of data, could run into trouble on prevailing concerns about poor monsoon, which could significantly hit food inflation, with turmoil in Iraq has also increasing the possibility of risk of rising food and fuel prices.

The CNX Nifty is currently trading at 7,514.40 up by 60.25 points or 0.81% after trading in a range of 7,524.20 and 7,490.55. There were 43 stocks advancing against 7 declining on the index.

The top gainers of the Nifty were ICICI Bank up by 3.09%, GAIL up by 2.62%, NMDC up by 2.59%, L&T up by 2.25% and BHEL up by 2.05%. On the flip side, Dr. Reddy's Laboratories down by 1.56%, Asian Paint down by 1.29%, ITC down by 0.77%, Cipla down by 0.73% and SSLT down by 0.42% were the top losers on the index.

Asian markets were trading mostly in the green; Nikkei 225 soared 0.71%, Hang Seng increased by 0.50%, KOSPI Index gained 0.99%, Jakarta Composite added 0.49%, FTSE Bursa Malaysia KLCI rose by 0.09%, Taiwan Weighted was up by 0.61% and Shanghai Composite was up by 0.06%. On the flip side, Straits Times Index down by 0.04%.