Benchmarks end with modest gains; Sensex recaptures 25,900 mark

Key domestic benchmarks managed to keep their head above water on Wednesday with Sensex recapturing its crucial 25,900 mark, while Nifty ended near its crucial 7,750 mark. Buying in last hour mainly prevented a down day of trade at Dalal Street as markets for couple of times surrendered to selling pressure, though only to bounce back in green. Overall, sentiments remained up-beat after global rating agency Moody’s estimated that the country’s GDP will grow by 5 percent this year and accelerate further in 2015. Also, the Finance Ministry has said that discussions with the state governments on Goods and Service Tax (GST) are in the final stages and its implementation will help improve transparency and efficiency.

However, gains remained capped as traders stayed cautious with government downgrading rain forecast, as the India meteorological department (IMD) forecasted that the June-September monsoon, vital for kharif crops, would be 87 per cent of the long-term average, however it has ruled out drought. On economic front, the Consumer Price Index (CPI)-based inflation rose to 7.96% in July from 7.46% in June, which was an all-time low since the new series was launched in January 2011. Meanwhile, showing signs of sluggishness in the economy, growth rate of industrial production slowed to 3.4% in June, as against 5% in May, mainly due to lower output of consumer goods. The output, as measured by the Index of Industrial Production, had contracted by 1.8% in June, 2013.

Global cues remained supportive with European markets were trading in the green terrain in early deals, helped by forecast-beating results from bellwethers such as Swiss Life and Salzgitter. Asian markets too ended mostly in the green ahead of economic data from China, meanwhile the Japanese market ended higher despite report the nation’s economy contracted an annualized 6.8 percent in the three months through June.

Back home, sentiments remained optimistic on report that foreign portfolio investors (FPIs) bought shares worth a net Rs 370.83 crore on August 12, 2014, as per provisional data from the stock exchanges. Shares of state-run oil marketing companies gained on hopes that results by sector leader Oil and Natural Gas Corporation (ONGC) later in the day would exceed expectations. Hopes of lower subsidy losses as crude oil prices fell mainly aided oil retailers. On the flip side, shares of real estate and banking sectors remained under pressure after retail inflation as measured by the CPI accelerated to 7.96% in July from 7.46% in June. Therefore, RBI is likely to maintain a cautious stance in the next policy too. Capital goods counter too reeled under pressure led by 6.5% fall in BHEL after the company reported 58.42% fall in Q1 net profit.

The NSE’s 50-share broadly followed index Nifty rose by over ten points to end above the psychological 7,700 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged by around forty points to finish above its psychological 25,900 mark. Broader markets, however, struggled to get traction and ended the session with a cut of around two percent. The market breadth remained in favor of decliners, as there were 871 shares on the gaining side against 2,049 shares on the losing side while 90 shares remain unchanged.

Finally, the BSE Sensex gained 38.18 points or 0.15%, to 25918.95, while the CNX Nifty added 12.50 points or 0.16% to 7,739.55.

The BSE Sensex touched a high and a low of 25972.62 and 25791.79, respectively. The BSE Mid cap index was down by 1.71%, while the Small cap index lost 2.37%.

The top gainers on the Sensex were ITC up by 2.72%, Hindustan Unilever up by 2.49%, HDFC up by 2.26%, Sun Pharma up by 2.09% and Wipro up by 0.98%. While BHEL down by 6.57%, Coal India down by 3.18%, Hindalco Inds down by 3.04%, Tata Power down by 2.64 and SBI  down by 2.50% were the top losers in the index.

On the BSE Sectoral front, FMCG up by 2.22%, IT up by 0.76%, Healthcare up by 0.75%, Oil & Gas up by 0.17% and Teck up by 0.16% were the top gainers, while Realty down by 5.22%, Capital Goods down by 2.65%, Consumer Durables down by 2.18%, Power down by 2.17% and PSU down by 1.94% were the top losers in the space.

Meanwhile, with an aim to provide impetus to Indian industry by implementing Goods and Service Tax (GST), Minister of State for Finance Nirmala Sitharaman has stated that discussions with the state governments on it are in the final stages and the government will soon implement the proposed new indirect tax regime.

The proposed GST is one of the biggest taxation reforms in India and will replace existing state and federal levies such as excise duty, service tax and value-added tax (VAT) and will integrate State economies and boost overall growth. Under GST, the taxation burden will be divided equitably between manufacturing and services, through a lower tax rate by increasing the tax base and minimizing exemptions. The industry is awaiting its introduction, as GST would remove the cascading effect, boost revenues and aid economic growth.

At present, the government is engaged to address states’ concerns over its design and compensation for revenue loss to ensure early implementation of this singular tax reform. States are insisting that petroleum be kept out of the purview of the GST are also opposed to subsuming of entry tax within GST, especially that entry tax which is in lieu of octroi.

The CNX Nifty touched a high and low of 7,757.10 and 7,695.70 respectively.

The top gainers of the Nifty were HCL Technologies up by 2.89%, ITC up by 2.79%, Hindustan Unilever up by 2.45%, HDFC up by 2.36% and Sun Pharmaceuticals Industries up by 2.28%. On the other hand, BHEL down by 6.51%, Bank of Baroda down by 4.51%, DLF down by 4.10%, Coal India down by 3.47% and Hindalco Industries down by 3.40% were the top losers.

The European markets were trading in green, France's CAC 40 was up by 0.56%, Germany's DAX was up by 0.94% and United Kingdom's FTSE 100 was up by 0.23%.

Asian equity indices ended mostly in green on Wednesday, with the regional gauge gaining a third day, as investors weighed earnings and economic reports. Japan’s economy contracted the most since the record earthquake three years ago as consumption and investment plunged after an April sales-tax increase aimed at curbing the world’s biggest debt burden. Gross domestic product shrank an annualized 6.8% in the three months through June. Unadjusted for price changes, GDP declined 0.4%. A drop in economic output was expected after the nation’s consumption tax was increased in April to 8% from 5%. This was the first time Japan raised the consumption tax in 17 years and is an attempt by the Shinzo Abe-led government to rein in public debt by increasing government revenue.

Meanwhile, several of the Bank of Japan’s board members expressed a more cautious view on the economic outlook to reach a sustained 2% price stability target by fiscal 2015, according to minutes of the July policy meeting released. In July, the BoJ decided by a unanimous vote to leave the bank's policy target unchanged as expected, maintaining its overall economic assessment. China’s broadest measure of new credit plunged to the lowest since the global financial crisis and industrial output unexpectedly slowed, adding risks to growth as the government grapples with a property slump. Factory production rose 9% from a year earlier and fixed-asset investment growth weakened. The data spurred speculation that the government will increase stimulus, with Premier Li Keqiang’s growth target of about 7.5% this year at risk.