Benchmarks stage an enthusiastic performance on Monday

Indian equity benchmarks staged an enthusiastic performance on Monday, by rallying around a percentage point and breaking lots of psychological levels in their northward rally. 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 as investors continued hunt for fundamentally strong but oversold stocks. Sentiments remained jubilant on report that overseas investors have invested $6 billion into the Indian securities market in July 2014 taking their overall net inflows since the beginning of 2014 to more than $26 billion, driven by an investment-friendly government at the Centre.

Rally in software and technology counters too aided the sentiments on the back of upbeat US economic data as they earn most of their revenues from exports to the US. Meanwhile, investors keenly awaiting the Reserve Bank of India (RBI) monetary policy meeting scheduled for August 5th to get further clues about futures policy rate moves. Though, RBI is expected to keep status-quo on the interest rates.

Buying got intensified in last leg of trade after European markets edged higher in early deals after Portugal prevented the collapse of one of its biggest banks. Lisbon announced a near 5 billion-euro rescue of the country’s largest listed bank Banco Espirito Santo, preventing its collapse and potential contagion across the continent's banking sector. Asian markets too ended the session mostly in the green.

Back home, there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too equally participated in the rally. Frontline indices managed to settle near intraday high levels with Sensex surpassing its crucial 25,700 bastion and Nifty ended above its crucial 7,650 mark. Meanwhile, auto shares remained on buyers’ radar on the back of upbeat sales growth in the month of July. TVS Motor recorded 32% increase in total sales registering 2,03,092 units in the month of July 2014, while Bajaj Auto registered a 13% rise in total sales to 3,19,292 units in July 2014 against 2,81,327 units in July 2013.

Moreover, oil marketing companies stocks, like HPCL, BPCL and IOC rallied on hopes that under-recoveries would be wiped off over next two-three months after government raised diesel prices by 50 paise from Friday. Additionally, Tyre manufacturers, like Apollo Tyres, Ceat, JK Tyre, and Goodyear, hogged much of the limelight as traders lapped up stocks following pick-up in July auto sales and as companies reported better results following slump in rubber prices. On the flip side, sugar stocks turned sour in today’s trade after reports suggested of battle between Uttar Pradesh government and the state’s sugar mill likely intensifying further as the deadline set by the latter for corrective action expired on July 31.    

The NSE’s 50-share broadly followed index Nifty rose by over eighty points and ended above the psychological 7,650 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex rose by over two hundred and forty points to finish above the psychological 25,700 mark. Broader markets traded with traction and ended the session with a gain of around a percentage point. The market breadth remained in favour of advances, as there were 1,810 shares on the gaining side against 1,108 shares on the losing side while 106 shares remain unchanged.

Finally, the BSE Sensex surged by 242.32 points or 0.95%, to 25723.16, while the CNX Nifty soared by 81.05 points or 1.07%, to 7,683.65.

The BSE Sensex touched a high and a low of 25754.42 and 25531.38, respectively. The BSE Mid cap index was up by 0.90%, while Small cap index gained 1.10%.

The top gainers on the Sensex were Infosys up by 3.66%, Hindalco Inds up by 3.12%, SSLT up by 2.44%, Wipro up by 2.42% and Maruti Suzuki up by 2.40%. On the flip side, the key losers were Sun Pharma down by 0.98%, HDFC down by 0.81%, Bharti Airtel down by 0.71%, Cipla down by 0.35% and HDFC Bank down by 0.26%.

On the BSE sectoral front, Consumer Durables up by 3.20%, IT up by 2.08%, Power up by 1.73 %, Teck up by 1.73% and Capital Goods up by 1.57% were the top gainers, while Healthcare down by 0.10% was the only loser in the space.

Meanwhile, the government is likely to finalize policy on utilisation of surplus coal from captive mines by the next month. The government has prepared a draft and has been circulated to various ministries/departments for obtaining their comments. The move came after reports of sale of surplus coal by some private parties in open market against norms of captive coal block use.

According to the Coal Mines (Nationalisation) Act, 1973, there is no provision of sale of coal from the coal blocks allotted for captive use. The government can take appropriate action against the allocattee company including de-allocation of the block that violates norms of the use of surplus coal. Recently, the government came to know about the sale of coal in open market from Takli Jena Bellora (South Part) coal block allocated to private firm Central Collieries Company for captive use. Earlier, in the backdrop of the govt's proposed surplus coal policy, Power Ministry has also asked private firms to return excess fuel mined from captive blocks to state-run Coal India.

Coal is dominant fuel used for power production in the country. Coal-fired plants account for 59% of India's installed electricity capacity. In order to enhance the domestic coal production, government has been allocating coal mines to private players. Indian domestic coal demand is presently around 35 percent higher than domestic supply, resulting into a high deficit of which a huge part is being met by costly imports from Indonesia, South Africa and Australia.

 The CNX Nifty touched a high and low of 7,694.80 and 7,622.05 respectively.

The major gainers of the Nifty were BPCL up by 4.70%, Hindalco Industries up by 4.40%, Infosys up by 3.56%, NMDC up by 3.36% and Jindal Steel & Power up by 3.29%. On the flip side, the key losers were HDFC down by 0.91%, Sun Pharmaceuticals Industries down by 0.88%, Bharti Airtel down by 0.50%, Cipla down by 0.40% and HDFC Bank down by 0.30%.

European markets were trading in green; UK’s FTSE 100 was up by 0.48%, Germany’s DAX was up by 0.24% and France’s CAC 40 was up by 0.76%.

The Asian markets concluded Monday’s trade mostly in green, with a gauge of regional equities rebounding after last week’s decline. A report last week showed China’s manufacturing expanded in July at the fastest pace in more than two years, signaling a pickup in economic growth is strengthening amid government support policies. However, growth in China’s services sector retreated slightly in July, an indication that buoyant growth among Chinese factories has yet to fully filter through to the services industry. The official Purchasing Managers’ Index (PMI) for the non-manufacturing sector slowed to 54.2 in July from June’s 55. The survey showed a sub-index for business expectations rose to 63.9 last month from June’s 62.9.

The People’s Bank of China warned that the country’s credit and money supply have increased rapidly and indicated that it will refrain from broader monetary easing to support growth. The PBOC stated in its second-quarter monetary policy report on August 1 that the total debt level has been rising relatively quickly. Japan’s Monetary Base rose to 42.7%, from 42.6% in the preceding month. Thai CPI fell to a seasonally adjusted annual rate of 2.16%, from 2.35% in the preceding month.