Markets continue to trade in green on gains in blue chip stocks

Indian equity benchmarks were trading in green territory in afternoon session supported by gains in FMCG, IT and teck stocks. Despite poor macro-economic data such as weaker industrial output, increase in retail inflation, investors were seen piling up position in frontline blue chip stocks as encouraging Q1 corporate earnings as well as renewed FII buying interest along with positive global cues supported the markets sentiments. Furthermore, investors sentiments also got some support after global rating agency Moody’s estimated that the country’s GDP will grow by 5 percent this year and accelerate further in 2015. Further government’s statement that discussions with the state governments on Goods and Service Tax (GST) are in the final stages and the government will soon implement GST also added to optimistic sentiments. However, markets gains remained capped amid selling witnessed in rate sensitive stocks such as realty, capital goods and banking as increase in July retail inflation to 7.96% impeded the hopes of policy rate cut in next RBI’s monetary policy review. Broader indices were under pressure with both mid cap and small cap indices trading down by over 0.80%.

Shares of NMDC were up nearly 3% at Rs 178 after the state-owned company reported better-than-expected earnings for Q1FY15 driven by higher revenue. Sun Pharmaceutical Industries has moved higher by 2% to Rs 801 after reporting a better-than-expected consolidated net profit at Rs 1,391 crore for Q1FY15 on back of higher sales. On the other hand, Prakash Industries has tanked almost 20% to Rs 65, extending its previous day’s 4% fall, after rating agency CARE downgraded the company’s credit rating to ‘BB+’ from 'BBB+'.

On global front, Asian equity indices were trading mixed with Shanghai Composite down by 0.41% and Nikkei 225 up by 0.20%. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 7,700 and 25,500 levels respectively. The market breadth on BSE was negative, out of 2,563 stocks traded, 883 stocks advanced, while 1,606 stocks declined on the BSE.

The BSE Sensex is currently trading at 25926.57, up by 45.80 points or 0.18% after trading in a range of 25850.51 and 25972.62. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.89%, while Small cap index down by 0.94%.

The gaining sectoral indices on the BSE were FMCG up by 1.63%, IT up by 1.09%, TECK up by 0.69%, Oil & Gas up by 0.61%. On the flip side, Realty down by 2.77%, Capital Goods down by 2.36%, Power down by 1.66%, Consumer Durables down by 1.14% and Infra down by 0.81% were the losing indices on BSE.

The top gainers on the Sensex were ITC up by 2.12%, Hindustan Unilever up by 2.10%, TCS up by 1.57%, Sun Pharma up by 1.39% and Wipro up by 0.88%. On the flip side, BHEL down by 7.31%, Larsen & Toubro down by 2.13%, Tata Power down by 2.03%, Hindalco down by 1.97% and Axis Bank down by 1.34% were the top losers.

Meanwhile, despite the revival of monsoon recently, the Indian Meteorological Department (IMD) downgraded the rain forecast for monsoon season to 87 percent of the Long Period Average (LPA) from 93 percent but ruled out any possibility of drought. The downgrade was done due to shortage of rain during June, which was 43 percent of the LPA.

The IMD notified that there is 68 percent probability for the season rainfall over the country as a whole to be deficient (less than 90 percent of LPA). The probability for below normal rainfall (90-96 per cent of LPA) is 24 per cent. IMD further stated that Northwest India is likely to be worst hit this year and is expected to receive 76 percent of rainfall, while Central India is expected to receive 89 percent, the Southern peninsula 87 percent and Northeast India is likely to receive 93 percent of the rainfall.

Secretary of Minister of State for Earth Science Shailesh Nayak has stated that monsoon picked up in July to 90 percent of rainfall and for the second half of August and September, it is expected to increase to 95 per cent. Despite this, the shortfall in June was too much to match the prediction.

Poor monsoon can impact Indian economic growth as the agriculture sector, which comprises around 15 percent of the GDP, is mainly depended upon the monsoon rains. Around 55 percent 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.

The CNX Nifty is currently trading at 7742.55, up by 15.50 points or 0.20% after trading in a range of 7711.80 and 7757.10. There were 23 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were BPCL up by 2.66%, HCL Tech. up by 2.44%, NMDC up by 2.31%, Hindustan Unilever up by 2.23% and ITC up by 2.15%. On the flip side, BHEL down by 6.98%, Bank Of Baroda down by 2.92%, DLF down by 2.72%, Tata Power down by 2.57% and Hindalco down by 2.08% were the top losers.

Asian equity indices were trading mixed; Straits Times Index down by 0.25% to 3,295.30, Hang Seng down by 0.20% to 24,639.50 and Shanghai Composite down by 0.41% to 2,212.07. While, Nikkei 225 up by 0.20% to 15,160.10,  Taiwan Weighted up by 0.74% to 9,231.31 and Jakarta Stock Price Index up by 0.05% to 5,134.97