Markets trade firmly in green; in-line with expectation July WPI fail to cast any impact

Going from strength to strength, local barometer gauges were trading firmly in green, with gains of around half a percent, which lifted both Sensex and Nifty above psychologically crucial 26,000 and 7,750 levels respectively. Release of in-line with expectation July WPI which eased further to 5.19% from its three months low figure of 5.48% in June, broadly have turned out to be non-event as it failed to cast any significant impact for markets. Meanwhile, broader indices also imitating similar upbeat mood, were trading higher in the range of 0.40%-0.60%.

Markets right from start of trade, in-line with most of emerging markets were trading higher after a flood of soft economic data led investors to wager on a ceaseless fountain of stimulus from major central banks. An economic contraction in Japan, a shock fall in Chinese loans, a surprisingly dovish turn by the Bank of England and a sluggish reading on U.S. retail sales all combined to make any tightening in policy seem a very distant prospect.

On BSE, most of the sectoral indices on BSE were trading into positive territory; stocks from Technology counter were the only exceptions that were trading down in dumps. On the flip side, stocks from Consumer Durables, Capital Goods and Banking counters were the top gainers of the session. Gains of banking pivotal were led by stocks of HDFC Bank, which rallied close to 2% on buzz of plan to hike foreign investments limit to 74%. Meanwhile, insurance related stocks, like Max India and Exide Industries, were in limelight after Finance minister underscored a parliament panel would examine bill to raise foreign investment limit to 49 pct in insurance sector. The overall market breadth on BSE was in the favour of advances which thumped declines in the ratio of 1127:757; while 14 shares remained unchanged.

The BSE Sensex is currently trading at 26031.91, up by 112.96 points or 0.44% after trading in a range of 25945.35 and 26071.52. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.60%, while Small cap index up by 0.41%.

The gaining sectoral indices on the BSE were Consumer Durables up by 0.92%, Capital Goods up by 0.83%, Bankex up by 0.82%, Metal up by 0.75%, Oil & Gas up by 0.55% while, TECK down by 0.04% were the losing indices on BSE.

The top gainers on the Sensex were GAIL India up by 2.33%, Sesa Sterlite up by 2.28%, Tata Motors up by 2.13%, HDFC Bank up by 1.93% and ICICI Bank up by 1.36%. On the flip side, Hero MotoCorp down by 2.76%, HDFC down by 1.67%, Bharti Airtel down by 1.26%, Wipro down by 0.64% and Tata Steel down by 0.60% were the top losers.

Meanwhile, top mobile carriers such as Vodafone, Idea Cellular, Bharti Airtel and Reliance Communications will have to cough up more on Capex (capital expenditure) in the wake of the 10% duty on telecom products proposed in the Budget 2014. According to the industry body, COAI, the duty imposed on telecom products that fall outside the WTO pact will result in added Capex burden of Rs 1,000 crore for the GSM Industry, further affecting the already upset financial health of the sector.

The budget 2014-15 proposed imposing 10% duty on telecom products not covered under Information Technology Agreement (ITA) 1 of WTO to boost domestic production of telecom products. According to the pact signed by the country in March 1997, the country should allow duty free import of products falling under eight categories covering telecom, computers and semiconductors like mobile phones and electronic chips.

Further, COAI has also highlighted that policy on import of equipment could adversely affect the performance of the networks, eventually resulting in poor quality of services for consumers. It though acknowledged that the move would boost the domestic manufacturing sector, but felt that this could have been done in phased manner wherein the required infrastructure and manufacturing capacity is facilitated, instead of discouraging imports through such rigid measures. Besides, the association also expressed disappointment on the issue of retrospective tax amendment since its member; Vodafone is embroiled in Rs 20,000 crore tax dispute with government due to retrospective tax amendment introduced by UPA government.

Nevertheless, the industry body appreciated government’s proposal for allocation of Rs 1,000 crore for the solar power and setting up of National Rural Internet and Technology Mission.

 The CNX Nifty is currently trading at 7764.75, up by 25.20 points or 0.33% after trading in a range of 7739.10 and 7781.00. There were 35 stocks advancing against 15 stocks declining on the index.

The top gainers on Nifty were Sesa Sterlite up by 2.06%, GAIL India up by 2.04%, Tata Motors up by 1.96%, HDFC Bank up by 1.91% and Grasim Industries up by 1.39%. On the flip side, Hero MotoCorp down by 2.89%, HDFC down by 2.03%, HCL Tech. down by 1.66%, Bharti Airtel down by 1.25% and Kotak Mahindra Bank down by 0.92% were the top losers.

Asian markets were trading mixed; FTSE Bursa Malaysia KLCI gained 0.14 points or 0.01% to 1,858.18; Straits Times rose 0.5 points or 0.02% to 3,301.91; KOSPI Index inched up 0.86 points or 0.04% to 2,063.22; Nikkei 225 surged by 100.94 points or 0.66% to 15,314.57. On the flip side, Hang Seng declined by 32.99 points or 0.13% to 24,857.35; Jakarta Composite shed 21.4 points or 0.41% to 5,146.87; Shanghai Composite edged lower by 4.53 points or 0.2% to 2,218.35 and Taiwan Weighted decreased 0.7 points or 0.01% to 9,230.61.

European markets got off to a positive start; with UK’s FTSE 100 rising by 24.26 points or 0.37% to 6,656.68; France’s CAC gaining by 32.63 points or 0.78% to 4,194.79 and  Germany’s DAX advancing by 129.41 points or 1.43% to 9,198.88