Benchmarks extend gaining streak to sixth straight day; Sensex surpasses 26,000 mark

Extending their winning streak for the sixth day in a row, Indian equity benchmarks staged an enthusiastic performance on Tuesday, by rallying over a percentage point and breaking lots of psychological levels in their northward journey. Sentiments remained positive since beginning of the trade and there appeared not even an iota of profit booking in the session as the benchmarks managed to fervently gain from strength to strength, supported by sustained foreign capital inflows and encouraging first quarter earnings posted by blue-chip companies. Sentiments remained up-beat after Finance Minister Arun Jaitley exuded confidence that tax collection would exceed the set target during the current fiscal, however, more than positive global set-up, sharpened risk-appetite of market-participants.

Foreign institutional investors (FIIs) which have remained net buyers in the previous four sessions also aided sentiment. Investors also remained optimistic after Idea Cellular reported better-than-expected Q1 numbers. The company has reported 57.37% rise in its consolidated net profit at Rs 728.20 crore for the quarter as compared to Rs 462.71 crore for the same quarter in the previous year. Total income has increased by 15.63% at Rs 7560.99 crore for quarter under review as compared to Rs 6538.77 crore for the quarter ended June 30, 2013.

Buying got intensified in last leg of trade as European counters made a firm start with CAC, DAX and FTSE were trading with a gain of around a percent in morning deals on Tuesday, getting a lift from oil stocks and a handful of banks. Asian markets too ended mostly in the green with most of them touching a three-year peak, despite lingering concerns about crises in Ukraine and Gaza, while the yen eased against the dollar and the euro.

Back home, frontline indices managed to settle near intraday high levels with Sensex surpassing its crucial 26,000 mark, while Nifty ended near its crucial 7,750 bastion. Meanwhile, Indian rupee was trading higher at Rs 60.18 at the time of equity markets closing against the previous close of Rs 60.30 tracking weakness in the US dollar against Asian currencies.

Rally in telecom shares too aided sentiments. Stocks like Bharti Airtel, Idea Cellular and Reliance Communication edged higher after the telecom regulator authority of India (TRAI) recommended allowing sharing of all categories of airwaves held by operators, the move could help companies to reduce cost of mobile services. Meanwhile, Iron and steel stocks remained on buyers’ radar, as the government has stated that iron ore production in the country is sufficient to meet the domestic demand and steel makers are not facing any shortage of the key input.

The NSE’s 50-share broadly followed index Nifty rose by around eighty points and ended near the psychological 7,750 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex rose by over three hundred and ten points to finish above the psychological 26,000 mark. Broader markets, however, traded cautiously throughout the session and ended mixed. The market breadth was evenly divided, as there were 1,471 shares on the gaining side against 1,491 shares on the losing side while 115 shares remain unchanged.

Finally, the BSE Sensex surged by 310.63 points or 1.21%, to 26025.80, while the CNX Nifty soared by 83.65 points or 1.09%, to 7,767.85.

The BSE Sensex touched a high and a low of 26050.38 and 25780.39, respectively. The BSE Mid cap index was up by 0.11%, while Small cap index was down by 0.01%.

The top gainers on the Sensex were Bharti Airtel up by 4.81%, RIL up by 3.35%, HDFC up by 2.93%, TCS up by 2.71% and Hindalco Inds up by 2.62%. On the flip side, the key losers were Maruti Suzuki down by 1.00%, L&T down by 0.92%, Mahindra & Mahindra down by 0.51%, BHEL down by 0.32% and Axis Bank down by 0.27%.

On the BSE sectoral front, Teck up by 2.02%, IT up by 1.78%, Oil & Gas up by 1.74%, Consumer Durables up by 1.16% and Infrastructure up by 1.12% were the top gainers, while Capital Goods down by 0.69% and Power down by 0.33% were the only losers in the space.

Meanwhile, a study released by Reserve Bank of India (RBI) has underscored that economic slowdown is likely to hamper states' revenue-raising capacity, thereby, adding to their debt burden. The staff study has revealed that though the state government’s position remains to be sustainable in the long run, contingent liabilities, primarily in the form of guarantees issued by the states, pose a serious risk to state government finances.

The report which warns of the strong presence of contingent liabilities calls for a holistic assessment of debt position of states by reckoning their off-budget fiscal position, including the impact of operations of state public sector enterprises.

The study, which involves a debt sustainability analysis covering 20 states for the period 1980-81 to 2012-13, shows debt position, after deteriorating between 1997-98 and 2003-04, has witnessed significant improvement since 2004-05, largely due to favorable macroeconomic conditions as well as policy efforts by the Central and state governments. Despite this, the recent growth slowdown and volatility in the financial markets have raised fresh concerns about the financial health of states, the study points. It further notes that despite an overall improvement in debt position of the states, some states continue to show signs of fiscal stress and increasing debt burden, which on being combined with economic slowdown, could further deteriorate the debt position of these states.

The CNX Nifty touched a high and low of 7,773.85 and 7,704.80 respectively.

The major gainers of the Nifty were Bharti Airtel up 4.79%, Reliance Industries up by 3.24%, HDFC up by 2.86%, Wipro up by 2.78% and TCS up by 2.70%. On the flip side, the key losers were Maruti Suzuki India down by 1.03%, PNB down by 1.01%, Mahindra & Mahindra down by 0.98%, Larsen & Toubro down by 0.98% and Bank of Baroda down by 0.76%.

European markets were trading in green; UK’s FTSE 100 up by 0.83%, Germany’s DAX up by 0.88% and France’s CAC 40 was up by 0.87%.

The Asian markets concluded Tuesday’s trade mostly in green, with the regional benchmark index on course for its highest close in six years, as investors shrugged off geopolitical tensions in Ukraine and in the Middle East. Hong Kong’s indices rose amid speculation that government will do more to shore up economic growth. The main economic data point due this week will be preliminary manufacturing data for China on Thursday. Recent data from China, including factory numbers as well as second-quarter growth figures, have helped support the view that Asia’s largest economy has troughed after a slowdown earlier this year. A majority of Bank of Japan board members disagree with Governor Haruhiko Kuroda’s view that flooding the economy with cash is sufficient to get stable 2% gains in consumer prices. Most conclude it cannot be done without government steps to raise Japan’s growth potential. Japan’s All Industries Activity Index rose to a seasonally adjusted 0.6%, from -4.6% in the preceding month whose figure was revised down from -4.3%.