Markets trade near record high levels; good institutional flows aid

Markets were trading in vicinity of their all time high levels on Tuesday on good institutional flows, both domestic and foreign, while gains in Asian shares also were aiding sentiment. Overseas investors bought cash shares worth Rs 4.73 billion ($77.84 million) on Monday, provisional exchange data shows. They also bought equity derivatives worth 15.12 billion rupees, as per the data. Meanwhile, domestic institutional investors bought cash shares worth 4.90 billion rupees in the previous session. Going from strength to strength, benchmarks were trading near their intra-day’s high, with Sensex trading past the psychological 26,400 and Nifty flirting with psychologically crucial 7900 level, with gains of around two tenths of a percent. Broader indices outperforming peers were trading with gains of over three fourth of a percent.

On the global front, Asian stocks followed Wall Street higher on Tuesday, 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, gains at Dalal Street were led by stocks belonging from Metal, Auto and Capital Goods counters. Additionally, Oil Marketing Companies stocks too were gaining a lot of traction after global brokerage upgraded the targets of stocks, citing better days ahead for these companies in absence of any under-recoveries once the fuel gets completely de-regulated with the last hike in September. On the flip side, stocks from IT, Consumer Durables and Technology counters witnessing brutal thrashing, were restricting further upside of the markets. The overall market breadth on BSE was in the favour of advances which thumped declines in the ratio of 1409:1068; while 98 shares remained unchanged.

The BSE Sensex is currently trading at 26440.21, up by 49.25 points or 0.19% after trading in a range of 26414.25 and 26530.67. There were 22 stocks advancing against 8 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.89%, while Small cap index up by 0.90%.

The gaining sectoral indices on the BSE were Metal up by 1.10%, Auto up by 1.08%, Capital Goods up by 0.90%, PSU up by 0.66% and Bankex up by 0.62% while, IT down by 0.29%, Consumer Durables down by 0.27% and TECK down by 0.08% were the losing indices on BSE.

The top gainers on the Sensex were Sesa Sterlite up by 2.86%, Dr. Reddys Lab up by 2.20%, Mahindra & Mahindra up by 1.66%, Tata Motors up by 1.41% and Axis Bank up by 1.36%.

On the flip side, TCS down by 1.51%, HDFC down by 1.29%, Sun Pharma Inds. down by 1.20%, ITC down by 0.43% and HDFC Bank down by 0.27% were the top losers.

Meanwhile, buoyant over the gradually growing India’s overseas shipments, 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. The FIEO President Rafeeque Ahmed has stated that global trade scenario is improving with positive development in the US, EU and emerging economies and in coming months exports should reflect these developments.

However, the FIEO President has stated that single digit growth in exports in July was lower than expected and sectors like gems and jewellery, electronics, cotton textiles continue to be cause for concern as their negative growth is pulling down overall exports growth. After registering double-digit growth for two consecutive months, India's merchandise exports grew by 7.33% to $27.73 billion in July from $25.84 billion in the same month of previous year. However, exports rose for the fourth straight month in July, benefiting from a stronger global economy and further depreciation in rupee value.

Petroleum products exports and engineering exports, each representing around 20% share in country's total imports, rose by 28.1% and 23.9% in July over same period last year. Furthermore, textile and pharma exports grew by 13.3% and 10.78% in July from a year earlier. However, gems and jewellery exports contracted by 17.42% y-o-y to $2.9 billion in July due to harsh government’s norms like high customs duty at 10% on precious metals imports and existing 80/20 rule under which 20% of all gold imports by importers has to be re-exported. During April-July’FY15, the value of India’s overseas shipments increased by 8.62% to $107.84 billion from $99.28 billion in the same period of previous financial year.

The CNX Nifty is currently trading at 7896.60, up by 22.35 points or 0.28% after trading in a range of 7881.15 and 7918.55. There were 37 stocks advancing against 13 stocks declining on the index.

The top gainers on Nifty were BPCL up by 3.47%, Sesa Sterlite up by 2.46%, United Spirits up by 2.27%, Dr. Reddys Lab up by 2.18% and Indusind Bank up by 1.75%. On the flip side, TCS down by 1.70%, Sun Pharma Industries down by 1.31%, HDFC down by 1.25%, Power Grid Corporation down by 0.52% and DLF down by 0.45% were the top losers.

Asian markets were trading mostly in green; Straits Times rose by 2.48 points or 0.07% to 3,315.26; FTSE Bursa Malaysia KLCI added 8.08 points or 0.43% to 1,869.83; Jakarta Composite gained 8.55 points or 0.17% to 5,165.31; KOSPI Index advanced 16.7 points or 0.81% to 2,069.83; Taiwan Weighted increased 101.63 points or 1.11% to 9,242.94; Nikkei 225 surged by 128.79 points or 0.84% to 15,451.39. On the flip side, Shanghai Composite down by 9.1 points or 0.41% to 2,230.37 and Hang Seng lost 6.52 points or 0.03% to 24,948.94 were the top losers.