Benchmarks end at all time closing high levels

Boisterous benchmarks once again showcased an enthusiastic performance, whereby domestic bourses once giving impression of a red close, bounced-back smartly, and rallied around half a percent. Frontline indices not only extended their rally for seventh straight session but also recorded their all time closing high levels, amid renewed buying interest in software and technology majors. After a gap-up opening, key indices entered into red terrain couple of time in afternoon trades as investors booked profit at higher levels, but every bout of selling pressure was reciprocated with recovery and markets managed to end the session near intraday highs.

Overall, sentiments remained up-beat on report that foreign portfolio investors (FPIs) bought shares worth a net Rs 412.03 crore on July 22, 2014, as per provisional data from the stock exchanges. Some support also came after the Reserve Bank of India (RBI) has relaxed Rs 1-lakh ceiling on loans for non-agricultural purposes against gold jewellery. Borrowers can now pledge their gold and get a higher value of loans, provided that the loan-to-value (LTV) ratio does not exceed 75% of the cost of the gold.

Buying got intensified in last leg of trade as European counters made a decent recovery after a sluggish start and CAC, DAX and FTSE were trading with a gain of around half a percent in morning deals as investors welcomed news that pro-Russian rebels had handed over the black boxes from downed flight MH17, easing concerns over the disaster. Asian markets too ended mostly in the green as there was some sense of relief among the regional indices on expectation that US Fed may not raise interest rates anytime soon given the low inflation data.

Back home, frontline indices managed to settle near all time closing high levels with Sensex surpassing its crucial 26,100 mark, while Nifty ended near its crucial 7,800 bastion, as investors took to hefty across the board buying. Appreciation in Indian rupee too aided the sentiments. The rupee was trading at 60.14/15, after hitting 60.1050, its highest since July 17 and versus the previous close of 60.24/25. However, importer dollar demand to meet month-end payment commitments capped gains in the rupee.

Meanwhile, rally in software and banking counters too supported the sentiments, boosted by positive economic data in US, the biggest outsourcing market for the Indian IT firms. Stocks related to banking space like, Bank of Baroda, Punjab National Bank, SBI and ICICI Bank edged higher, as the RBI will start announcing the names of systemically important banks (D-SIBs) by August 2015. On the flip side, PSU pivotal lost ground after Finance Minister, Arun Jaitely asserted that four public sector companies, which cannot be revived, would be shut down.

The NSE’s 50-share broadly followed index Nifty rose by around thirty points and ended near the psychological 7,800 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex rose by over one hundred and twenty points to finish above the psychological 26,100 mark. Broader markets, however, traded cautiously throughout the session and ended mixed. The market breadth remained in the favour of decliners, as there were 1,318 shares on the gaining side against 1,649 shares on the losing side while 98 shares remain unchanged.

Finally, the BSE Sensex surged by 121.53 points or 0.47%, to 26147.33, while the CNX Nifty gained 27.90 points or 0.36%, to 7,795.75.

The BSE Sensex touched a high and a low of 26188.64 and 26000.40, respectively. The BSE Mid cap index was up by 0.01%, while Small cap index was down by 0.63%.

The top gainers on the Sensex were Infosys up by 3.46%, Hindalco Inds up by 2.58%, TCS up by 2.21%, Wipro up by 1.87% and Mahindra & Mahindra up by 1.58%. On the flip side, the key losers were Tata Steel down by 1.27%, Tata Power down by 1.25%, Maruti Suzuki down by 0.94%, ONGC down by 0.91% and Axis Bank down by 0.82%.

On the BSE sectoral front, IT up by 2.24%, Teck up by 1.74%, Consumer Durables up by 0.37%, Bankex up by 0.24% and Auto up by 0.19% were the top gainers, while Metal by 0.39%, Infrastructure down by 0.34%, Healthcare down by 0.17%, Power down by 0.14% and PSU down by 0.13% were the top losers in the space.

Meanwhile, the Reserve Bank of India (RBI) has relaxed Rs 1-lakh ceiling on loans for non-agricultural purposes against gold jewellery. Borrowers can now pledge their gold and get a higher value of loans, provided that the loan-to-value (LTV) ratio does not exceed 75% of the cost of the gold.

The RBI’s notification highlighted that banks, as per their board-approved policy, may decide upon the ceiling with regard to the quantum of loans that may be granted against the pledge of gold jewellery and ornaments for non-agricultural end uses. The central bank further notified that the LTV of 75% should be maintained throughout the tenure of the loan and computed against the total outstanding in the account including accrued interest and current value of gold jewellery accepted as security/collateral.

The move is likely to monetize the household gold holdings in India by encouraging people to bring out their gold holdings. It will also protect the interest of the customers who can continue to opt for gold loans based on merits of the player rather than purely based on LTV ratios. Furthermore, this initiative may help commercial banks increase their retail secured lending portfolio.

Earlier, in December, RBI had stipulated a ceiling of Rs 1 lakh and a bullet repayment of loans clause which means payment of both the interest and the principal at one time.

The CNX Nifty touched a high and low of 7,809.20 and 7,752.90 respectively.

The major gainers of the Nifty were BPCL up 3.95%, Infosys up by 3.45%, Bank of Baroda up by 2.95%, Hindalco Industries up by 2.66% and Wipro up by 2.10%. On the flip side, the key losers were Ambuja Cements down by 3.18%, UltraTech Cement down by 2.80%, ACC down by 2.34%, IDFC down by 2.14% and Grasim Industries down by 1.77%.

European markets were trading in green; UK’s FTSE 100 up by 0.37%, Germany’s DAX up by 0.66% and France’s CAC 40 was up by 0.61%.

The Asian markets concluded Wednesday’s trade mostly in green, with the regional benchmark index extending a six-year high, as US inflation data damped concerns interest-rate increases will be brought forward. Chinese stocks rallied on speculation that government is accelerating measures to support the housing market. Indonesia’s rupiah jumped to a two-month high and stocks advanced after Joko Widodo was named the nation’s next president. Widodo, known as Jokowi, garnered 53.15% of support at the July 9 vote, while Prabowo won 46.85%. In addition to the rupiah, Asian currencies mostly pushed higher, including currencies such as the Malaysian ringgit and the Philippine peso. Chinese consumer confidence climbed to 111 points from a year ago in the second quarter, with spending continuing to grow due to increasing disposable income. The China Consumer Confidence Index has remained stable at 111 points for the third consecutive month, with the country’s shift from investment to consumption driving intentions to spend upward. In the three months, ending on June 30, Chinese consumers’ willingness to spend reached 46%, 2% points higher than in the previous quarter. Taiwanese Industrial Production rose to a seasonally adjusted annual rate of 8.63%, from 5.19% in the preceding month.