Benchmarks scale new highs; Sensex Surpasses 26,400 mark

Indian equity benchmarks scaled yet another lifetime closing high levels on Tuesday amid firm global cues. Domestic gauges traded in tight band throughout the session and ended with marginal gains, extending their northward journey for sixth straight session. Though, markets threatened to slip below neutral line for couple of times, but each the attempt was reciprocated with recovery. Sentiments remained up-beat with the report that India has touched the top spot in consumer confidence among the 60 countries measured in Nielsen’s Global Survey of Consumer Confidence and Spending Intentions in the second quarter (April-June) of 2014. Some support also came after the Federation of Indian Export Organisations (FIEO) has stated that India’s exports can surpass the $350-billion target for 2014-15 fiscal as growth in the manufacturing sector is expected to pick up pace.

Global cues too remained supportive with European counters making a firm start where CAC, DAX and FTSE were trading with a gain of around half a percent on easing investor concerns over the unrest in east Ukraine and Iraq. Asian markets too rallied tracking firm cues from Wall Street amidst hopes of some easing of tensions in the Ukraine crisis. Foreign ministers from Russia, Ukraine, Germany, and France gathered in Berlin over the weekend to discuss talks for a ceasefire or a political solution, and Russia’s Foreign Ministry said on Monday that a 'certain progress' was achieved during the talks.

Back home, sentiments also remained up-beat on report that domestic institutions were net buyers to the tune of Rs 490 crore while foreign institutional investors were net buyers to the tune of Rs 473 crore on Monday, as per provisional stock exchange data. Meanwhile, the Indian rupee firmed up against the US dollar on the back of dollar inflows after domestic stock markets surged to record highs. Forex markets were closed for trading on Friday and Monday for holidays. The Indian rupee was trading tad higher at Rs 60.71 at the time of equity markets closing as compared to Thursday’s close of Rs 60.76.

Meanwhile, auto stocks remained on buyers’ radar on the back of encouraging sales growth in July. Auto sales in India rose for the second straight month, according to July sales data released by individual auto makers, suggesting that a recovery may have begun to take hold in the sector after a two-year slump. Textile stocks, namely Weslpun Corp, Grasim Industries and Arvind, etc were in demand for yet another session on the back of expectations of better profitability, following good export demand after the country attracted $198.86 million foreign capital in textile sector during April-March 2013-14, which is 91.41% from $103.89 million of FDI attracted during the same period of previous year. Additionally, Shares of oil and gas companies continued their upward march for a fifth day in a row after Brent crude price fell to its lowest level since June 2013 as supply risks ease.

The NSE’s 50-share broadly followed index Nifty rose by over twenty points and ended near the psychological 7,900 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex rose by around thirty points to finish above the psychological 26,400 mark. Broader markets traded with traction and ended the session with a gain of over a percentage point. The market breadth remained in favour of advances, as there were 1693 shares on the gaining side against 1266 shares on the losing side while 102 shares remain unchanged.

Finally, the BSE Sensex added 29.71 points or 0.11%, to 26420.67, while the CNX Nifty gained 23.25 points or 0.30% to 7,897.50.

The BSE Sensex touched a high and a low of 26530.67 and 26387.84, respectively. The BSE Mid cap index was up by 1.10%, while the Small cap index gained 1.21%.

The top gainers on the Sensex were Mahindra & Mahindra up by 3.67%, Tata Motors up by 2.95%, BHEL up by 2.80%, Bajaj Auto up by 2.46% and Dr Reddys Lab up by 1.85%. While HDFC down by 2.48%, TCS down by 1.93%, HDFC Bank down by 0.98%, Hindalco Inds down by 0.80% and Hindustan Unilever down by 0.76% were the top losers in the index.

On the BSE Sectoral front, Auto up by 2.25%, Realty up by 1.63%, Power up by 1.25%, Capital Goods up by 1.11% and PSU up by 1.00% were the top gainers, while IT down by 0.57% and Teck down by 0.36% were the only losers in the space.

Meanwhile, in order to provide relief to domestic producers, the Government has imposed safeguard duty on the import of seamless pipes and tubes, which are used in equipment for oil exploration, power generation, and bearing industry among others. Safeguard and anti-dumping duty are imposed to revitalize domestic industry from excessive or cheap import. Decision to impose safeguard duty has been taken after a petition filed by the domestic producers against the high imports from china and other countries. The domestic produces also stated that despite increase in the price of raw materials, importers were bringing their product at cheaper price, which is affecting the domestic industry.

The move is likely to provide benefit to domestic seamless pipes and tubes produces like Jindal Saw and ISMT. While, Indian firms like BHEL, ONGC and Oil India are among the largest consumers of such products. Country’s total demand of seamless pipes and tubes stood at around 5,84,098 tonnes in FY13 out of which 64% of India total demand was met through the imports.   The Central Board of Excise and Custom (CBEC) notified that safeguard duty will be imposed at the rate of 20 percent in the first year (August 13, 2014-August 12, 2015), 10 per cent in the second year (August 13, 2015-August 12, 2016) and at the rate of 5 percent in the third year (August 13, 2016-February 12, 2017). This will not be applicable on imports from developing countries such as Indonesia, Malaysia, Thailand and South Africa, besides others.

The CNX Nifty touched a high and low of 7,918.55 and 7,881.15 respectively.

The top gainers of the Nifty were BPCL up by 3.93%, Mahindra & Mahindra up by 3.77%, Tata Motors up by 3.33%, Bajaj Auto up by 3.30% and IndusInd Bank up by 3.23%. On the other hand, HDFC down by 2.49%, TCS down by 1.99%, Hindalco Industries down by 1.02%, Sun Pharmaceuticals Industries down by 1.00% and HDFC Bank down by 0.99% were the top losers.

The European markets were trading in green, France's CAC 40 was up by 0.40%, Germany's DAX was up by 0.89% and United Kingdom's FTSE 100 was up by 0.38%.

Asian equity indices ended in green on Tuesday, after confidence in the US housing industry climbed to the highest level in seven months and tensions eased over global political conflicts. Hong Kong shares climbed to a six-year high. South Korea sold the least inflation-linked bonds since November after the government and central bank lowered their consumer-price gain forecasts. Malaysia’s $312 billion economy expanded 6.4% in the three months through June, the fastest pace in six quarters. That was more than the 5.8% median forecast and sent the ringgit to a nine-month high against the US dollar. Singapore’s growth is trailing at 2.4%. The currency, which is used as the city-state’s key monetary policy tool, climbed 0.5% versus the greenback in the past three months, ranking it fifth among the 31 exchange rates and behind the ringgit’s 1.8% gain. The Philippines priced 140 billion pesos ($3.2 billion) of 10-year bonds in its first debt exchange in three years, allowing the nation to cut interest payments and set the stage for sustained economic growth.