Benchmarks continue firm trade in late morning session

After getting a gap-up start, benchmark equity indices continued to trade in fine fettle in late morning deals on sustained buying activities by both funds and retail investors. Sentiments turned bullish after India's economic growth rate improved to two-and-half year high of 5.7 per cent in the April-June quarter. Since the last time growth was above 5 per cent in 2012, there is reason to hope that things are really improving with the investment cycle and the economy. However, cautious sentiment may prevail as the Supreme Court will decide the fate of coal blocks and announcement of current account deficit data this week. At present, Sensex and Nifty were trading above the crucial 26,800 and 8,000 levels respectively, with gains of over 0.65%. Apart from blue chips, broader indices too equally participated in the rally with both mid cap and small cap indices trading up by over a percent.

All the sectoral indices led by consumer durables, capital goods and banking, were trading in positive zone with gains up to 1.97 percent. In scrip specific development, Wockhdardt has rallied as much as 5% after the company received Qualified Infectious Disease Product (QIDP) status from the US Food and Drug Administration (FDA) for two of its drugs, WCK 771 and WCK 2349. Besides, Bajaj Electricals surged nearly 4% after the company's engineering and project business unit bagged four new orders aggregating to Rs 602.12 crore. On the flip side, Sun Pharma and BHEL were witnessing some profit booking.

On global front, Asian stock markets rose on the back of another record high on Wall Street and expectations of stimulus in China after its manufacturing growth slowed. Besides, some participants looked ahead to this week's US employment figures and a meeting of Europe's central bank for signs of stimulus steps. Back home, the Indian rupee recovered by three paise to 60.47 against the US dollar in early trade on sustained foreign capital inflows amid the country's economic growth rate improving to two-and-half year high in the April-June quarter. The market breadth on BSE was positive, out of 2288 stocks traded, 1520 stocks advanced, while 682 stocks declined on the BSE. 

The BSE Sensex is currently trading at 26813.67 up by 175.56 points or 0.66% after trading in a range of 26854.08 and 26732.39. There were 25 stocks advancing against 5 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.02%, while Small cap index gained 1.07%.

The gaining sectoral indices on the BSE were Capital Goods up by 1.97%, Consumer Durables up by 1.73%, PSU up by 1.29%, Metal up by 1.26% and Power was up by 1.22%, while there were no losers on the BSE sectoral space.

The top gainers on the Sensex were Larsen & Toubro up by 2.67%, Hero MotoCorp up by 2.52%, Maruti Suzuki up by 2.27%, Tata Power up by 2.19% and GAIL India up by 2.18%. On the flip side, Sun Pharma Industries down by 1.33%, Tata Motors down by 0.95%, HDFC down by 0.03%, Infosys down by 0.03% and BHEL down by 0.02% were the top losers.

Meanwhile, signaling a turnaround for the economy, India’s economy expanded at its fastest pace in more than two years by 5.7% during the April-June quarter of current fiscal as compared to 4.7 percent growth recorded in same quarter last year. The Q1 GDP growth has been driven by sharp turnaround in manufacturing coupled with strong performance by mining and construction sector.

The manufacturing sector, which accounts for about 15% of the economy, grew by 3.5% in April-June, fastest in nine quarters as compared to a contraction of 1.4% in the previous quarter and a decline of 1.2% in the year-ago period. Electricity output grew by 10.2 per cent as compared to 3.8 per cent in same quarter this year. Construction sector grew by 4.8 percent in Q1FY15 as compared to 1.1 percent in Q1FY14.

Agriculture sector output grew 3.8 percent in April-June this year, slightly lower than 4 percent growth in same quarter last year.  Among the major components of the services economy, communication, trade and hotels have recorded growth higher than the previous year. Trade, hotels, transport and communication grew 2.8 percent as compared to 1.6 per cent in Q1 FY14.

Investments seem to have rebounded with investment activity rising at solid pace and reassured consumers have begun to spend again, indicating the worst slowdown in the last decade may finally be over. Gross fixed capital formation registering a 7% growth in the first quarter, against a 2.8% contraction in the same quarter last year. This is the highest growth in two years. Capital goods output, a broad gauge of investment activity, grew 13.9% in April-June, compared to a contraction of 3.7% in the same period of the previous year, suggesting that companies are adding new capacities. Improved sentiment, the renewed policy thrust and a pickup in consumer demand are likely to drive investments in future.

The CNX Nifty is currently trading at 8,009.05 up by 54.70 points or 0.69% after trading in a range of 8,022.70 and 7,984.00. There were 43 stocks advancing against 7 declining on the index.

The top gainers on Nifty were Larsen & Toubro up by 2.80%, Hero MotoCorp up by 2.70%, Tata Power up by 2.54%, GAIL India up by 2.38% and Hindalco Industries up by 2.15%. On the flip side, Sun Pharma Industries down by 1.35%, Tata Motors down by 1.02%, IDFC down by 1.01%, DLF down by 0.31% and Infosys down by 0.22% were the top losers.

Asian markets were trading mostly in the green; Hang Seng spurted by 0.24%, Jakarta Composite rose by 0.67%, Nikkei 225 surged by 0.26%, Taiwan Weighted gained by 0.90% and Shanghai Composite was up by 0.47%. On the flip side, KOSPI Index dropped by 0.09%, FTSE Bursa Malaysia KLCI declined by 0.51% and Straits Times was down 0.44%.