Benchmarks log all time highs; Sensex ends near 26,400 level

Boisterous benchmarks once again showcased an enthusiastic performance, by rallying over a percentage point. Markets, after a flat opening, gained ground and started moving northward afterward 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 their hunt for fundamentally strong stocks. Frontline indices not only extended their rally for fifth straight session but also recorded their all time closing high, settling comfortably above their crucial 7,850 (Nifty) and 26,350 (Sensex) bastions as investors took to hefty across the board buying.

Sentiments remained up-beat on report that foreign institutional investors were net buyers in equities to the tune of Rs 1,714 crore in the previous three sessions, as per provisional data on the stock exchange. Some support also came with Prime Minister Narendra Modi’s Independence speech in which he presented government’s business-friendly side and invited global businesses to make India their manufacturing base. On the economic front, whole-sale price inflation dipped to a five month low of 5.19% in July mainly on account of decline in prices of some food articles, vegetables and protein rich items. It was at 5.43% last month and 5.84% in July 2013.

Rally in European markets too supported the sentiments with CAC, DAX and FTSE were trading in the green in early deals after Russia said that ‘certain progress’ was reached on all issues discussed at Ukraine crisis talks in Berlin between the two countries' foreign ministers and their counterparts from Germany and France. Asian markets ended mixed as investors look for clues on how the government will balance market liberalization with steps to maintain stability.

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. Meanwhile, Banking stocks remained on buyers’ radar as investors anticipated a rate cut after WPI eased to a five month low. Stocks related to Infrastructure too edged higher after Centre said it is ready to invite bids for Dholera investment region in Gujarat in the next three months and for integrated industrial townships in Greater Noida and Vikram Udyogpuri in Madhya Pradesh along the Delhi-Mumbai Industrial Corridor. Textile shares too traded jubilantly as foreign direct investment (FDI) of $199 billion was made in India’s textile sector in the financial year 2013-14. Additionally, shares of oil and gas, including oil marketing companies were trading higher by up to 4% on the bourses due to decline in Brent crude oil price.

The NSE’s 50-share broadly followed index Nifty rose by over eighty points and ended above the psychological 7,850 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex rose by around two hundred and ninety points to finish near the psychological 26,400 mark. Broader markets traded with traction and ended the session with a gain of around two percentage point. The market breadth remained in favour of advances, as there were 1930 shares on the gaining side against 1003 shares on the losing side while 98 shares remain unchanged.

Finally, the BSE Sensex surged by 287.73 points or 1.10%, to 26390.96, while the CNX Nifty soared by 82.55 points or 1.06% to 7,874.25.

The BSE Sensex touched a high and a low of 26413.11 and 26075.28, respectively. The BSE Mid cap index was up by 1.80%, while the Small cap index gained 2.27%.

The top gainers on the Sensex were ONGC up by 5.33%, Cipla up by 4.85%, Axis Bank up by 4.29%, BHEL up by 4.00% and Tata Motors up by 3.98%. While ITC down by 1.68%, Infosys down by 1.26%, HDFC down by 1.04%, TCS down by 0.40% and Hero MotoCorp down by 0.06% were the top losers in the index.

On the BSE Sectoral front, PSU up by 2.83%, Oil & Gas up by 2.64%, Bankex up by 2.36%, Capital Goods up by 2.33% and Infrastructure up by 1.87% were the top gainers, while FMCG down by 0.44% and IT down by 0.41% were the only losers in the space.

Meanwhile, Finance ministry has stated that it is presently considering a package of tax and non-tax incentives to revive special economic zones (SEZs) in the country and final decision on this is likely to be taken soon. Over the past few years, investors have lost confidence in SEZs as the government has withdrawn the tax incentives available to SEZ developers and the units there in. Out of the 566 formally approved SEZs, there are only 185 SEZs currently operating in the country.

According to the original provisions of the Special Economic Zones Act, 2005 and Rules, 2006, SEZ developers and units were exempted from Minimum Alternate Tax (MAT). However, the government during budget 2011-12 imposed 18.5 per cent MAT on the book profits on SEZ developers and units. The imposition of Minimum Alternate Tax (MAT) and Dividend Distribution Tax (DDT) has dented the investor sentiments. 

It has become imperative to revive the SEZ to provide an impetus to manufacturing sector, which has registered near zero growth in last two financial years.  SEZs contribute about 30 per cent to India’s exports and provide employment to around 15 lakh workers. Exports from these zones increased from Rs 22,840 crore in 2005-06 to Rs 4.94 lakh crore in 2013-14.

The CNX Nifty touched a high and low of 7,880.50 and 7,779.20 respectively.

The top gainers of the Nifty were BPCL up by 5.42%, Cipla up by 5.05%, ONGC up by 4.80%, Axis Bank up by 4.78% and Tata Motors up by 4.22%. On the other hand, ITC down by 1.86%, Infosys down by 1.51%, HDFC down by 1.09%, HCL Technologies down by 1.04% and TCS down by 0.75% were the top losers.

Most of the European markets were trading in green, France's CAC 40 was up by 1.03% and United Kingdom's FTSE 100 was up by 0.06%, while Germany's DAX was down by 1.44%.