Benchmarks come off day’s high; yet continue to remain firmly in positive terrain

Although off day’s high, benchmark equity indices continued to trade firmly with solid gains of over half a percent as market-participants continued to shop for fundamentally strong stocks available at lucrative valuations after previous session’s sharp sell-off, which was mainly on account of global rout. Both, Sensex and Nifty, despite coming off day’s high level, were holding above the crucial 25,500 and 7,650 levels respectively, while broader indices also participating into the rally were trading with gains in the range of 0.50%-0.85%.

Supportive regional counterparts after a sixth month of healthy employment growth in the U.S. that somewhat eclipsed concerns over geopolitical tensions, mainly led to recovery of Indian equity markets. While, positive start of European counterparts is expected to further fuel this rally.

Back home, Sectorally, Consumer Durable, Information Technology and Auto counters were the major pillars of markets’ strength, while healthcare counter was the only spoil sport among the rest. Gains of IT pivotal was led Infosys stocks, which  rallied over 3% after brokerages maintained a buy rating on the stocks, while upwardly revising its price targets. Meanwhile, Auto stocks were in top gear after reporting their July sales number. While, hopes that RBI may strikes a less hawkish tone in its monetary policy review on August 5, also fuelled the rate sensitive stocks. The overall market breadth on BSE is in the favour of advances which thumped declines in the ratio of 1389:497; while 24 shares remained unchanged.

The BSE Sensex is currently trading at 25611.07, up by 130.23 points or 0.51% after trading in a range of 25531.38 and 25688.21. There were 22 stocks advancing against 8 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.52%, while Small cap index up by 0.84%.

The gaining sectoral indices on the BSE were Consumer Durables up by 2.34%, IT up by 1.83%, TECK up by 1.50%, Auto up by 0.95%, Capital Goods up by 0.90%.

The top gainers on the Sensex were Infosys up by 2.94%, Bajaj Auto up by 1.98%, Wipro up by 1.80%, Mahindra & Mahindra up by 1.49% and Hindalco up by 1.38%. On the flip side, HDFC down by 1.90%, Sun Pharma Inds. down by 1.03%, Coal India down by 0.96%, Bharti Airtel down by 0.92% and Cipla down by 0.78% were the top losers.

Meanwhile, amid continuing geo-political tensions in the Gulf and the other Middle Eastern countries, Finance Ministry has made it clear that it cannot lower its guard on the external front and ease gold import curbs as developments in Iraq and other countries can have adverse implications on the country's Current Account Deficit (CAD) situation. Revenue Secretary Shaktikanta Das has stated that though CAD problem has been contained, India needs to be very cautious as global uncertainties in gulf countries can push up oil prices inflating the import bill, adding to pressure on the CAD. .

The current account deficit (CAD) narrowed to $32.4 billion (1.7% of GDP) in FY14 as compared to $87.8 billion (4.7% of GDP) in FY13 mainly driven by the lower gold imports. Gold and silver imports fell by 40.02% to $33.46 billion in FY14 due to the stern Government’s norms like high customs duty of 10% and existing 80/20 rule under which 20% of all gold imports by importers has to be re-exported.

Gold is the second largest import item for India after crude oil and is mainly utilised to meet the demand of jewellery industry. Over the past few months, gems and jewellery industry has been demanding the government to lower curbs on gold imports as these restriction has been adversely impacting the revenue of the industry players. Indian gems and jewellery industry account for around 13% of the country total exports. During FY14, India’s gems and jewellery exports declined by 8.82% to $39.52 billion from a year earlier due to prevailing restrictions.  

The CNX Nifty is currently trading at 7653.45, up by 50.85 points or 0.67% after trading in a range of 7622.05 and 7671.70. There were 40 stocks advancing against 10 stocks declining on the index.

The top gainers on Nifty were Infosys up by 2.98%, HCL Tech. up by 2.97%, United Spirits up by 2.65%, NMDC up by 2.47% and BPCL up by 2.45%. On the flip side, HDFC down by 1.89%, DLF down by 1.17%, Sun Pharma Industries down by 1.07%, Bharti Airtel down by 0.96% and Coal India down by 0.92% were the top losers.

Asian markets were trading into positive territory; Jakarta Composite rose by 0.87 points or 0.02% to 5,089.68; KOSPI Index inched up 7.32 points or 0.35% to 2,080.42; FTSE Bursa Malaysia KLCI added 8.11 points or 0.44% to 1,871.45; Shanghai Composite rallied by 32.18 points or 1.47% to 2,217.48; Taiwan Weighted advanced by 63.68 points or 0.69% to 9,330.19; Hang Seng gained 114.95 points or 0.47% to 24,647.38. On the flip side, Nikkei 225 lost 48.61 points or 0.31% to 15,474.50 and Straits Times slid 23.02 points or 0.69% to 3,321.40.

European markets got off to a positive start; with France’s CAC rising by 14.96 points or 0.36% to 4,217.74; UK’s FTSE 100 advancing by 17.56 points or 0.26% to 6,696.74 and Germany’s DAX gaining by 197.4 points or 2.1% to 9,210.08.