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 around half a percent. 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 26,000 (Sensex) and 7,700 (Nifty) bastions. Earlier, markets made a somber start as sentiment took a hit for the worse post market heavyweight, L&T scrips cracked over 7% on lower than expected Q1 numbers. The biggest engineering and construction firm of the country reported more than double Net Profit for the June quarter, but profitability of core businesses like engineering, power, material handling and heavy engineering showed pressure on margins.

However, sentiments took U-turn in last hour of trade as market-participants opted to take positions in beaten down but fundamentally strong stocks. Investors also turned optimistic after National Council of Applied Economic Research (NCAER) said that India’s GDP will expand at 5.2-5.7 percent this fiscal, with manufacturing sector showing signs of nascent recovery. Sentiments also remained up-beat after Indian Meteorological Department (IMD) said that the monsoon in the country is likely to remain strong till August 15. IMD has forecasted heavy rainfall in many parts of the country except northwest India in the next 48 hours.

Positive cues from regional counters too supported the sentiments with most of the Asian markets ended in the green ahead of key US economic data and the two-day US FOMC meet which ends today. Japanese shares gained for the fourth straight session to end with marginal gains as better-than-expected corporate earnings helped offset sluggish industrial data. However, European counterparts made a sluggish opening and were trading weak in early deals as the US and the European Union imposed fresh sanctions against Russia.

Back home, the Indian rupee was trading marginally higher at 60.11 compared to the previous close of Rs 60.12 tracking gains in the domestic stock markets. However, upside gains were capped because of month-end dollar demand from crude oil importers. Rally in telecom stocks too aided sentiments. Stocks like Reliance Communication, Idea Cellular, Bharti Airtel all edged higher on report that foreign direct investment in the telecom sector grew to $1.5 billion in the first two-months of the 2014-15 fiscal. Stocks related to textile sector too remained on buyers’ radar, as an expert panel constituted by the government has submitted the draft of the new National Textiles Policy, which aims to achieve $ 300 billion exports by 2024-25.

The NSE’s 50-share broadly followed index Nifty ended higher by over forty points to end near its psychological 7,800 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex edged higher by around hundred points to end near the psychological 26,100 mark. However, the broader markets ended mixed as the BSE Mid-cap index performed in line with the benchmark indices up nearly 0.4% while the Small-cap index ended flat with a negative bias. The market breadth remained in favour of decliners, as there were 1390 shares on the gaining side against 1490 shares on the losing side while 127 shares remain unchanged.

Finally, the BSE Sensex gained 96.19 points or 0.37%, to 26087.42, while the CNX Nifty surged by 42.70 points or 0.55%, to 7,791.40.

The BSE Sensex touched a high and a low of 26113.48 and 25850.04, respectively. The BSE Mid cap index was up by 0.35%, while Small cap index lost 0.02%.

The top gainers on the Sensex were Bharti Airtel up by 5.26%, Hero MotoCorp up by 2.69%, ICICI Bank up by 2.62%, Hindalco Inds up by 2.53% and Dr Reddys Lab up by 2.01%. On the flip side, the key losers were L&T down by 7.32%, Tata Power down by 1.53%, Wipro down by 0.85%, SBI down by 0.78% and Tata Steel down by 0.48%.

On the BSE sectoral front, Infrastructure up by 1.62%, Bankex up by 1.57%, Consumer Durables up by 1.47%, Healthcare up by 1.35% and Realty up by 0.82% were the top gainers, while Capital Goods down by 4.68% and IT down by 0.25% were the only losers in the space.

Meanwhile, in a proposal that comes against the backdrop of spiraling bad loans in the banking system, RBI has suggested to watchdog Securities and Exchange Board of India (SEBI) to bar ‘wilful’ defaulters from raising funds through capital market. Further, to facilitate such restrictions on entities found to have ‘wilfully’ defaulted on bank loans, the Reserve Bank is exploring ways to share details of these defaulters with SEBI on a real time basis, against the  practice of reporting such entities on quarterly basis.

According to RBI, sharing details on real time basis could better equip SEBI and other agencies would ensure that wilful defaulters identified by banks do not have an opening to raise further funds from gullible investors through the securities market.

However, final decision on this matter, which first needs to be discussed by SEBI internally, is pending and would be finalized, taking into account the provisions in various sets of existing regulations and the views of all stakeholders.

Uptill now, banks have been advised to examine all cases of wilful defaults of Rs 1 crore and above for filing of suits as well as consider criminal action wherever instances of cheating/fraud by the defaulting borrowers have been detected, according to RBI. The gross NPAs or bad loans of the domestic banking system were at 4.4 per cent of gross advances.

The CNX Nifty touched a high and low of 7,798.70 and 7,707.60 respectively.

The major gainers of the Nifty were Lupin up by 5.48%, Bharti Airtel up by 5.47%, PNB up by 4.38%, DLF up by 3.27% and Kotak Mahindra Bank up by 3.14%. On the flip side, the key losers were Larsen & Toubro down by 7.01%, Jindal Steel & Power down by 1.83%, Tata Power Company down by 1.63%, Tech Mahindra down by 1.55% and United Spirits down by 1.44%.

European markets were trading in red; UK’s FTSE 100 was down by 0.03%, Germany’s DAX was down by 0.03% and France’s CAC 40 was down by 0.23%.

The Asian markets concluded Wednesday’s trade mostly in green, ahead of a rate announcement from the Federal Reserve. The Federal Reserve will later conclude a policy meeting announcing fresh cuts to its monthly bond-buying program and deliver an upbeat take on the US economy. Jakarta Stock Exchange was closed today on account of ‘National Leave’ holiday. China's regional economies enjoyed a revival in growth in the second quarter, data from provincial governments showed. Of the 30 regions and provinces that released their local gross domestic product (GDP) data, 23 reported first-half economic growth accelerated from the first quarter. About three-quarters posted growth that was higher than the national average of 7.4% in the first six months. Japan’s industrial production fell to a seasonally adjusted -3.3%, from 0.7% in the preceding month. South Korean industrial production rose to a seasonally adjusted annual rate of 2.9%, from -2.8% in the preceding month whose figure was revised down from -2.7%. Thai Industrial Production fell to a seasonally adjusted -6.6%, from -4.1% in the preceding month.