Benchmarks log fresh all time closing high; Nifty surpasses 7,900 mark

Scaling new all time closing high, Indian equity benchmarks ended the Friday’s session in the green amid upbeat US data and positive annual report from Reserve Bank of India (RBI). Sentiments remained up-beat with the Reserve Bank of India (RBI) stating that the Indian economic growth is poised for a take-off amid signs of economic reforms, fiscal consolidation and projected improvement in investments. The central bank has forecasted the gross domestic product (GDP) to grow around 5.5% in 2014-15 after two painful years of sub-5% growth. Besides, statements from Finance Secretary, Arvind Mayaram, of linking diesel prices to markets and government soon doing away with diesel subsidy, also buoyed the sentiment of Indian equity markets.

However, gains remained capped on report that the southwest monsoon is continuing its weak run. For the week ended Thursday, it was 25 per cent below normal. According to a real-time assessment by the department of agriculture, there are chances of an agriculture drought in about 35 districts across the country. Maharashtra accounted for the highest number of these (10), followed by Gujarat (9) and Uttar Pradesh (6).

On the global front, European markets made a negative start as investors awaited a meeting of central bankers that might shed light on the timing of U.S. interest rate hikes. However, Asian counters ended mostly higher after a record day on Wall Street powered by upbeat data that added to evidence the world's biggest economy is gaining strength.

Back home, some support came on report that foreign direct investment (FDI) in India increased by 34 percent to $1.92 billion in the month of June 2014 as compared to $1.44 billion in the same month of previous year. During the first quarter of FY15, FDI jumped by 34 percent to $7.23 billion from $5.39 billion recorded in the corresponding period of the previous fiscal. Moreover, appreciation in Indian rupee too supported the sentiments. The rupee was trading at 60.52/53 at the time of equity markets closing as compared to Thursday’s close of 60.67/68.

Rally in software and technology too aided the sentiments, cheered by strong US economic data, which showed that home re-sales rose to a 10-month high in July, factory activity in the mid-Atlantic region hit its highest level since March 2011 in August, and a gauge of future economic activity grew solidly last month. PSU bank’s stocks too remained on buyers’ radar for second day in a row, after finance minister Arun Jaitley underscored that government was taking steps to professionalize the management of PSU banks and help them strengthen their risk management system. Additionally, sugar stocks rallied in trade today after the government decided to increase import duty on the sweetener from 15%to 25% to provide some relief the industry, which owes Rs 15,000 crore to sugarcane growers and has been demanding an increase of 40%.

The NSE’s 50-share broadly followed index Nifty rose by over twenty points to end above the psychological 7,900 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex rose by around sixty points to finish above the psychological 26,400 mark. Broader markets ended flat with positive bias. However, the market breadth remained in favour of decliners, as there were 1465 shares on the gaining side against 1547 shares on the losing side while 117 shares remain unchanged.

Finally, the BSE Sensex gained 59.44 points or 0.23%, to 26419.55, while the CNX Nifty added 22.10 points or 0.28% to 7,913.20.

The BSE Sensex touched a high and a low of 26508.27 and 26383.16, respectively. The BSE Mid cap index was up by 0.22%, while the Small cap index remained unchanged.

The top gainers on the Sensex were Hindalco up by 2.36%, SBI up by 2.26%, HDFC Bank up by 1.80%, Infosys up by 1.65% and TCS up by 1.22%. While Coal India down by 2.04%, HDFC down by 1.91%, Bharti Airtel down by 1.59%, Hero MotoCorp down by 1.04% and Hindustan Unilever down by 0.82% were the top losers in the index.

On the BSE Sectoral front, IT up by 1.63%, Bankex up by 1.03%, TECK up by 0.97%, Capital Goods up by 0.16% and Metal up by 0.14% were the top gainers, while Realty down by 0.82%, Infrastructure down by 0.74%, FMCG down by 0.51%, Power down by 0.35% and PSU down by 0.18% were the top losers in the space.

Meanwhile, Foreign direct investment (FDI) in India increased by 34 percent to $1.92 billion in the month of June 2014 as compared to $1.44 billion in the same month of previous year. During the first quarter of FY15, FDI jumped by 34 percent to $7.23 billion from $5.39 billion recorded in the corresponding period of the previous fiscal.  

The sectors that received highest inflows during April-June in this fiscal include telecommunications ($2 billion), services ($738 million), pharmaceuticals ($680 million) and construction ($ 281 million). Country wise, maximum FDI during the reported period was received form Mauritius at $2.61 billion, followed by Singapore ($ 1.18 billion), the UK ($567 million), Japan ($695 million) and the US ($249 million).

FDI is considered crucial for India, which requires around $1 trillion in the 12th five year plan (2012-2017) to overhaul its infrastructure sector such as ports, airports and highways to boost growth. Meanwhile, in order to attract maximum FDI into the country, the government has been liberalizing the foreign investment policy. The government has relaxed FDI norms in around 12 sectors which include telecom, tea, pension and petroleum and natural gas among others.

Recently, the government has raised the foreign investment limit to 49 percent in defence manufacturing and also relaxed the policy in railway and construction sector.  During FY14, FDI inflows in India rose by 8% to $24.29 billion as against $22.42 billion in FY13.

The CNX Nifty touched a high and low of 7,929.05 and 7,900.05 respectively.

The top gainers of the Nifty were Tech Mahindra up by 3.70%, HCL Technologies up by 2.47%, State Bank of India up by 2.37%, Hindalco Industries up by 2.28% and Bank of Baroda up by 2.05%. On the other hand, BPCL down by 2.01%, Coal India down by 1.84%, HDFC down by 1.82%, Bharti Airtel down by 1.55% and Power Grid Corporation of India down by 1.47% were the top losers.

The European markets were trading in red, France's CAC 40 was down by 1.26%, Germany's DAX was down by 1.08% and United Kingdom's FTSE 100 was down by 0.43%.

Asian markets ended mostly in green on Friday, with the benchmark indices capping a two-week advance, after reports from US housing to manufacturing showed the world’s largest economy is strengthening. China’s manufacturing activity hit a three-month low in August, raising the case for fresh policy steps to keep growth on track, while a poll showed Japan’s economic recovery is likely to be modest despite a small acceleration in the factory sector. Bank Indonesia will not loosen its monetary policy until the current account deficit narrows to 2.5% of gross domestic product, a level unlikely to be reached until after next year. Bank Indonesia governor Agus Martowardojo stated that the main focus of the central bank next year would be to narrow the current account deficit, which reached 4.27% in the second quarter. In Hong Kong, overall consumer prices rose 4% year-on-year in July, up on June’s 3.6% increase. Netting out the effects of all Government one-off relief measures, the underlying inflation rate was 3.3%, compared to 3.4% in June. Year-on-year increases were recorded for electricity, gas and water, alcohol and tobacco, housing, meals bought away from home, food, transport, and clothing and footwear.