Benchmarks snap five-day losing streak; Nifty regains 7,500 mark

Snapping five-day losing streak, Indian equity benchmarks ended the volatile day of trade with a gain of around a percentage point with frontline gauges recapturing their crucial 25,200 (Sensex) and 7,500 (Nifty) levels, led by buying in rate sensitive shares on hopes that easing inflation may give central bank the much needed comfort to cut key policy rates. After a gap up opening, barometer gauges trimmed most of their gains in afternoon trade tracking weak opening in European counters but hefty buying in last leg of trade help markets to end near intraday high levels.

Sentiments remained up-beat since morning after Consumer Price Index (CPI) eased more than expected at 7.31% in June as compared to 8.28% in May. Earlier, Wholesale Price based Inflation (WPI) too fell to a five-month low of 5.53% in June following export curbs by the government on certain commodities. Some support also came after rating agency Moody’s said that the Budget 2014-15 has outlined steps to support faster economic growth, but absence of detailed implementation plan makes it modestly credit positive for India.

Supportive cues from US markets provided the much needed support to local markets initially, while upbeat earnings numbers and some news on the merger-and-acquisition front lifted the markets higher. Positive closing in Asian markets too supported the sentiments, led by the Japanese market which ended with a gain of over half a percent ahead of the Bank of Japan’s monetary policy announcement. However, European markets made a disappointing start and were trading in the red terrain, as fears of contagion from the trouble in the Portuguese banking sector spread to Italy and Spain.

Back home, there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too equally participated in the rally. On the currency front, the Indian rupee trimmed early losses and was trading marginally lower at Rs 60.12 against the US dollar compared to the previous close of Rs 60.07 as gains in domestic equities aided sentiment.

Meanwhile, metal and mining stocks remained on buyers’ radar ahead of Chinese gross domestic product (GDP) data for the second quarter due to be released on July 16. Besides, steel stocks gained across the board as significant thrust on improving as higher outlay for housing, road, port, urban and rural housing and infrastructure development Union Budget 2014-15 would help improve steel consumption. On the flip side, select stocks from pharma sector remained under pressure with National Pharmaceutical Pricing Authority’s (NPPA) move to bring 108 formulation packs of 50 diabetes and cardiovascular medicines under price control.

The NSE’s 50-share broadly followed index Nifty rose by over seventy points and ended above the psychological 7,500 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex rose by over two hundred and twenty points to finish above the psychological 25,200 mark. Broader markets traded with traction and ended the session with a gain of over two percentage point. The market breadth remained in favor of advances, as there were 1,843 shares on the gaining side against 1,078 shares on the losing side while 104 shares remain unchanged.

Finally, the BSE Sensex surged by 221.67 points or 0.89%, to 25228.65, while the CNX Nifty soared by 72.50 points or 0.97%, to 7,526.65.

The BSE Sensex touched a high and a low of 25254.48 and 25020.32, respectively. The BSE Mid cap index was up by 1.93%, while Small cap index gained 2.21%.

The top gainers on the Sensex were SBI up by 4.47%, BHEL up by 4.31%, ICICI Bank up by 3.40%, Tata Steel up by 2.91% and Axis Bank up by 2.78%. On the flip side, the key losers were Dr Reddys Lab down by 1.99%, Hero MotoCorp down by 1.74%, NTPC down by 1.42%, TCS down by 1.18% and SSLT down by 1.17%.

On the BSE sectoral front, Consumer Durables up by 2.82%, Bankex up by 2.76%, PSU up by 2.31%, Capital Goods up by 2.23% and Realty up by 2.15% were the top gainers, while FMCG down by 0.31% and IT down by 0.17% were the only losers in the space.

Meanwhile, with an aim to enhance India’s apparel exports, the Apparel Exports Promotion Council (AEPC) has asked the government to expedite finalization of India-EU Free Trade Agreement (FTA) to enable better market access for Indian exporters. India's total apparel exports stood at $15.7 billion in 2013.

Over the past few years, India’s exports to FTA countries have increased significantly after signing of the FTA/PTA (Preferential Trade) agreements and these markets now account for around 12% share in India's clothing exports. The AEPC recommended the government to expedite the process of India-EU FTA finalization as India's competitors like Bangladesh, Vietnam and Cambodia, having FTA with European nations, are enhancing their market shares in these markets. 

Exports have remained a core feature of India’s textile industry and 'readymade garments' is the largest export segment, accounting for a considerable 40 percent of total textile exports. India’s textile exports accounted around $40 billion in the FY14 and are likely to touch $50 billion mark in the current fiscal. In order to enhance the global competitiveness of textile industry, the government is presently preparing a new National Textiles Policy, which aims to formulate a stable and fibre neutral raw materials guidelines to benefit the entire value chain and to address modernization and mechanization needs of the textile industry

The CNX Nifty touched a high and low of 7,534.90 and 7,459.15 respectively.

The major gainers of the Nifty were State Bank of India up 4.34%, BHEL up by 4.23%, Bank of Baroda up by 4.00%, NMDC up by 3.54% and DLF up by 3.53%. On the flip side, the key losers were Dr. Reddy's Laboratories down by 1.86%, Asian Paints down by 1.61%, Hero MotoCorp down by 1.49%, NTPC down by 1.42% and TCS down by 1.04%.

European markets were trading in red; UK’s FTSE 100 down by 0.18%, Germany’s DAX down by 0.41% and France’s CAC 40 was down by 0.35%.

The Asian markets concluded Tuesday’s trade in green, as investors awaited testimony from Federal Reserve Chair Janet Yellen later in the trading day. Malaysian Stock Exchange was closed today on account of ‘Malaysia - Nuzul Al-Quran’ holiday. China’s stocks rose for a third day after the nation’s broader measure of credit topped estimates, overshadowing concern new share sales will divert funds from existing equities. Beijing stepped up efforts to re-energize China’s economy in June and avert a sharper slowdown, pumping more money into the system and pressing banks to extend more loans. Chinese banks, which are used by Beijing as a policy tool, made a much stronger-than expected 1.08 trillion yuan ($173.9 billion) of new yuan loans in June, nearly 20% more than market expectations. Broad M2 money supply jumped 14.7% last month from a year earlier - the highest in 10 months.

The Bank of Japan board decided by a unanimous vote to leave the bank’s policy target unchanged as expected at its two-day monthly meeting, maintaining its medium-term recovery scenario as the drag from the April sales tax hike is easing. The BoJ will continue to increase its purchases of Japanese government bonds at an annual pace of about 50 trillion yen. The central bank also trimmed its growth forecast to 1% for the current financial year ending in March, compared with the previous forecast of a 1.1% expansion. Singaporean Retail Sales rose to a seasonally adjusted -6.0%, from -9.0% in the preceding month.