Post Session: Quick review

In an indication that there is more steam left to the recent rally, local equity markets gained for eighth straight session on Thursday and accumulated profits of around half a percent, which lifted Sensex and Nifty to fresh record close 26,250 and 7,830 levels respectively. In the extremely volatile session of trade, benchmark equity indices slipped into negative territory for couple of times and recovered thereafter, suggesting that market-participants used every dip as opportunity to open fresh bets. Nevertheless, weather department reports which suggested of rainfall deficit reduced by 11 percentage points to 25% from 36% a week ago, also strengthened markets, besides positive global set-up that underpinned investors to go long on local equities. In the broad-based session of trade, though small-cap index managed to eke out modest gains of a quarter of a percent, Midcap index lost over two tenths of a percent.

On the global front, Asian stocks ended higher on Thursday, following upbeat Chinese manufacturing data. HSBC's preliminary China purchasing managers index, much-watched indicator of the health of Asia's largest economy, rose to 52 in July, compared with a final reading of 50.7 in June. This puts the indicator at an 18-month high and well above the neutral 50 mark. Meanwhile, European shares turned around and traded higher in mid-morning on Thursday as a business activity index showed the euro zone rebounded in July. The flash composite PMI (Purchasing Managers' Index) for the whole of the euro zone came in at 54.0, up from a six-month low of 52.8 in June, where a number above 50 signals expansion.

Closer home, sectorally, Metal, Information Technology (IT) and Fast Moving Consumer Goods (FMCG) supported market’s uptrend, while Consumer Durable (CD), Infrastructure and Power counters restricted the further upside of the markets. Meanwhile, in stock-specific activity, Insurers stocks, like Reliance Capital, Max India, Bajaj Finserv and Exide  Industries gained after the cabinet approves raising the foreign direct investment (FDI) limit in the insurance sector.

On the earnings front, ACC’s gained around a percent even as the cement maker reported a 7% fall in profit in the June quarter, as manufacturing and distribution costs continued to escalate. Company’s net profit fell to Rs.243.15 crore in the three months ended June from Rs.261.76 crore a year ago. Meanwhile, TVS Motors company slipped around 7% after the company reported lower than expected growth of 38% in for the April-June quarter net profit of Rs 72 crore. The market breadth on the BSE remained in the favour of advances; advances and declining stocks were in a ratio of 1504:1453, while 128 scrips remained unchanged. (Provisional)

The BSE Sensex gained 124.52 points or 0.48% to settle at 26271.85. The index touched a high and a low of 26292.66 and 26077.70 respectively. 21 stocks gained against 9 declines on the index. (Provisional)

The BSE Mid cap and Small cap indices ended mixed, the BSE Midcap was down by 0.20%, while the BSE Small cap index was higher by 0.25%. (Provisional) 

On the BSE sectoral front, Metal was up by 1.47%, IT up by 0.90%, FMCG up by 0.86%, TECk up by 0.64% and Bankex up by 0.44% were the top gainers, while Consumer Durables down by 0.93%, Infrastructure down by 0.40%, Power down by 0.34%, Healthcare down by 0.25% and Oil and gas down by 0.19% were the major losers in the space. (Provisional)

The top gainers on the Sensex were Hindalco up by 2.51%, Tata Steel up by 2.23%, HUL up by 1.56%, Wipro up by 1.14% and ITC was up by 1.02%. On the flip side, Gail India down by 2.17%, Hero MotoCorp down by 1.13%, Cipla down by 0.78%, Dr Reddys down by 0.73% and ICICI Bank down by 0.37% were the major losers. (Provisional)

Meanwhile, with the steady momentum in monsoon rains over the last seven days, India’s rainfall deficit reduced by 11 percentage points to 25% from 36% a week ago. The revival in monsoon rains has accelerated the planting of rice, oilseeds, pulses, cotton and coarse grains.

Over the last seven days, 40% of the country has received normal rainfall up from 20% a week ago because of the heavy rain in most regions except northern and northwestern parts. However, monsoon rainfall needs to remain strong for at least another month to minimise rural distress created by six weeks of largely dry weather across the country. The southwest monsoon covered the entire country two days after its normal date July 15.Indian Meteorological Department (IMD) has forecasted heavy rainfall in many parts of country, particularly central and western India in the next three days.

The Central Water Commission has stated that water reservoir position in the country has improved over the previous week amid heavy rainfall in northern and central India regions. In previous week, the situation in water reservoirs was worrisome as they were filled up to only 26% capacity, down sharply from 42% last year, and the 10-year average of 30%. In India, water reservoirs normally fill up rapidly in July and create a water reserve for irrigation, drinking and power generation until the following year's monsoon.

Poor monsoon can impact Indian economic growth as the agriculture sector, which comprises around 15% of the GDP, is mainly depended upon the monsoon rains. Around 55% arable land in the country depends entirely on rain for irrigation. Timely and normal monsoon is essential for rabi season (winter crops) and it also raises the water table and moisture content in the soil. Further, a poor monsoon can impact India’s exports, stoke inflation particularly food inflation and lead to lower demand for products ranging from cars to consumer goods. In 2009, India had faced worst drought in nearly four decades that forced the country to import large amount of food commodities.

India VIX, a gauge for markets short term expectation of volatility rose 0.20% at 14.72 from its previous close of 14.69 on Wednesday. (Provisional)

The CNX Nifty ended higher by 34.85 points or 0.45% to settle at 7,830.60. The index touched high and low of 7,835.65 and 7,771.65 respectively. 33 stocks ended in the green against 17 stocks ending in red. (Provisional)

The major gainers of the Nifty were Bank of Baroda up by 3.50%, Asian Paints up by 2.81%, HCL Tech up by 2.65%, Hindalco up by 2.61% and Tata Steel was up by 2.42%. On the flip side, the key losers were Cairn down by 6.68%, Gail India down by 1.95%, Power Grid down by 1.21%, Hero MotoCorp down by 1.11% and Dr Reddys down by 1.08%. (Provisional)

European markets were trading in green; UK’s FTSE 100 up by 0.02%, Germany’s DAX was up by 0.42% and France’s CAC 40 was up by 0.75%.

The Asian markets concluded Thursday’s trade mostly in green, with the benchmark indices poised to extend a six-year high, after a preliminary industry survey showed China’s manufacturing sector in solid expansion territory. Hong Kong stocks rose, with the city’s benchmark index gaining to a three-year high, as a gauge of mainland manufacturing topped analyst estimates. HSBC’s China flash manufacturing PMI for July rose to 52.0, a jump from the June reading of 50.7 which indicated that the economy is finally turning around. A sub-index measuring new orders, a gauge of demand at home and abroad, hit a 18-month high of 53.7, while the sub-index for output also rose to a 16-month high in June. The employment index also improved from May, though it was still a shade under 50, which implies that jobs are still being lost in the manufacturing sector. Japan’s trade balance fell to a seasonally adjusted -1.08T, from -0.86T in the preceding month. Hong Kong Trade Balance fell to a seasonally adjusted -43.1B, from -42.4B in the preceding month. South Korean GDP fell to a seasonally adjusted annual rate of 3.6%, from 3.9% in the preceding month.