Benchmarks end near day’s high; bulls wake-up in late trade

Wednesday’s session turned out to be a fabulous day of trade for the Indian equity markets, where frontline gauges garnered gains of over a percentage point. Hectic buying activity which took place during last leg of trade mainly drove the markets higher, with frontline gauges ending at intraday high levels, recapturing their crucial 25,500 (Sensex) and 7,600 (Nifty) bastions. Earlier, markets made a gap-up opening but investors booked some of their profits in noon deals after June trade deficit hit an 11-month high. However, India’s exports in June rose 10.22 percent from a year earlier, helped by a pick-up in external demand and a weak currency.

Overall, sentiments remained up-beat after India’s services exports in May rose by 8.8 percent to $13.9 billion. Import of services during the month, however, rose in double-digit of 15 percent to $8.03 billion. Sentiments also were buttressed after reports suggested Met officials expect steady rains for the rest of July, particularly in the parched regions of central and northwest India, which should somewhat ease worries over inflation, water scarcity and a sub-par kharif crop.

Buying got intensified in last leg of trade after European counters made a firm opening, supported by reassurance that the U.S. Federal Reserve is in no hurry to raise interest rates. Asian markets ended mostly in the green after China reported economic growth figures that were slightly stronger than markets had expected. The world’s second largest economy expanded at a 7.5 percent annual pace in the second quarter, just beating the street expectation of 7.4 percent.

Back home, Rally in shares of real estate and infrastructure companies too aided the sentiments after the Reserve Bank of India (RBI) said banks would not have to maintain cash reserve ratio (CRR) or statutory liquidity ratio (SLR) and will not have to meet priority-sector lending targets for funds raised through bonds for extending credit to these sectors. Metal and mining stocks gained for the third day in a row after the latest data showed that China's GDP growth accelerated to 7.5% in Q2 June 2014, from 7.4% in Q1 March 2014. Banking stocks rallied for yet another session on rate cut hopes. Moreover, better than expected Q1 numbers from Kotak Mahindra Bank and Federal Bank too supported the up-move in banking stocks. Kotak Mahindra Bank has reported 6.70% rise in its net profit at Rs 429.80 crore for the quarter as compared to Rs 402.82 crore for the same quarter in the previous year, while Federal Bank’s net profit for the quarter rose by 91.40% at Rs 202.23 crore as compared to Rs 105.66 crore for the quarter ended June 30, 2013.

The NSE’s 50-share broadly followed index Nifty ended higher by around a hundred points to end above its psychological 7,600 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex edged higher by over three hundred and twenty points to regain the psychological 25,500 mark. The broader markets also traded in-line with benchmarks and ended the session with a gain of around one and a half percent. The market breadth remained in favour of advances, as there were 1,990 shares on the gaining side against 952 shares on the losing side while 103 shares remain unchanged.

Finally, the BSE Sensex surged by 321.07 points or 1.27%, to 25549.72, while the CNX Nifty soared by 97.75 points or 1.30%, to 7,624.40.

The BSE Sensex touched a high and a low of 25602.78 and 25246.75, respectively. The BSE Mid cap index was up by 1.34%, while Small cap index gained 2.04%.

The top gainers on the Sensex were ICICI Bank up by 4.70%, Hindalco Inds up by 4.19%, Axis Bank up by 3.57%, Tata Steel up by 3.13% and SSLT up by 2.97%. On the flip side, the key losers were Gail India down by 0.96%, Bajaj Auto down by 0.85%, Wipro down by 0.34%, Cipla down by 0.27% and Dr Reddys Lab down by 0.21%.

On the BSE sectoral front, Realty up by 4.28%, Bankex up by 2.50%, Metal up by 2.20%, Capital Goods up by 1.51% and Infrastructure up by 1.49% were the top gainers, while there were no losers in the space.

Meanwhile, in order to streamline the foreign investment regime, the Department of Industrial Policy and Promotion (DIPP) has proposed to introduce a composite cap which will include FDI, FII and other instruments in various sectors including agriculture, tea, mining, broadcasting, media and banking among others. The DIPP, in its draft cabinet note, has noted that under the present structure, a change in the FII/FPI investments can lead to change in control and ownership of a company.

Seeking to bring clarity in overseas investments norms, the DIPP has stated that the proposal if accepted by Union Cabinet would help in improving ease of doing business in India. The move would help in removing ambiguity on application of sectoral caps, conditional ties and approval requirements in different sectors and bring simplification in the foreign investment policy. Further, the proposal would also provide Indian firms and investors an option of category of investments between FDI, FPI (FII, Qualified Foreign Investors), NRI and Foreign Venture Capital Investor. FDI into the country increased by 8 percent to $24.29 in the FY14 form $22.42 billion recorded in the FY13.

 The CNX Nifty touched a high and low of 7,640.10 and 7,532.45 respectively.

The major gainers of the Nifty were IDFC up 8.93%, DLF up by 6.12%, ICICI Bank up by 5.05%, Hindalco Industries up by 4.69% and Axis Bank up by 4.01%. On the flip side, the key losers were Bajaj Auto down by 0.86%, Asian Paints down by 0.43%, HDFC down by 0.12%, UltraTech Cement down by 0.09% and GAIL (India) down by 0.04%.

European markets were trading in green; UK’s FTSE 100 up by 0.92%, Germany’s DAX up by 1.15% and France’s CAC 40 was up by 1.38%.

The Asian markets concluded Wednesday’s trade mostly in green, after China reported the world’s second-largest economy grew in line with the government’s target. China’s stocks fell for the first time in four days as concern that new share sales will divert funds from existing equities overshadowed data showing economic growth topped estimates and June home sales surged. China’s economic growth accelerated for the first time in three quarters after the government sped up spending and freed up more money for loans to counter a property slump. Gross domestic product rose 7.5% in the April-June period from a year earlier, compared with the 7.4% median estimate. June industrial production and first-half fixed-asset investment exceeded projections.

China’s home sales rose 33% in June from the previous month as price cuts by developers lured buyers. The value of homes sold climbed to 591.2 billion yuan ($95 billion) last month from 446.1 billion yuan in May. That was the biggest monthly gain this year. The value of sales in the first six months fell 9.2% to 2.56 trillion yuan from a year earlier. Industrial production in China rose 9.2% in June from a year earlier, topping the 9% median estimate and 8.8% in May. Retail sales increased 12.4% from a year earlier, compared with the 12.5% median estimate. Fixed-asset investment excluding rural households increased 17.3% in the first half from a year earlier.