Markets gain for fifth consecutive session; log fresh record high levels

Extending their jubilation for fifth day in a row, Indian equity benchmarks logged fresh record highs on Wednesday, which took Sensex and Nifty past their crucial 27,100 and 8,100 levels, respectively. Markets traded in the green throughout the session, though some volatility witnessed in late trade but overall the mood remained up-beat on the back of strong global cues. Meanwhile, traders also took a heart from the report which suggested foreign portfolio investors (FPIs) bought shares worth a net Rs 672.81 crore on September 2, 2014.

Sentiments also remained upbeat with current account deficit narrowing sharply to 1.7 per cent of GDP in the Apr-June quarter of 2014-15 compared to 4.8 per cent of GDP in the same quarter of 2013-14. On the macro-front, Indian services activity expanded at its weakest rate in three months in August as firms' order books filled up at a slower pace, which led to HSBC Services Purchasing Managers' Index (PMI), compiled by Markit, fall to 50.6 in August from 52.2 in July.

Global cues too remained supportive with European markets were trading higher in early deals on report that Ukraine’s President has reached an agreement with Russia over a ceasefire in eastern Ukraine’s Donbass region. Asian markets too ended mostly in the green on Wednesday as faster growth in China’s service industries and good U.S. manufacturing data boosted optimism about the world’s biggest economies. Chinese non-manufacturing purchasing managers’ index for August rose to 54.4, from a six-month low of 54.2 in July.

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. Appreciation in Indian rupee too supported the sentiments. The partially convertible rupee was trading at 60.47 per dollar at the time of equity market closing against the Tuesday’s close of 60.69 on the Interbank Foreign Exchange.

Meanwhile, technology and software stocks remained on buyers’ radar on the back of firm U.S. manufacturing activity data, while shares of state-owned oil marketing companies too gained after Brent crude prices hit 16-month lows. Additionally, Telecom stocks too rang loud, led by gains of Bharti Airtel shares after the company signed an agreement to acquire over 2.7 million subscribers of yuMobile.

The NSE’s 50-share broadly followed index Nifty rose by over thirty points and ended above the psychological 8,100 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex rose by over one hundred and twenty points to finish above the psychological 27,100 mark. Broader markets traded with traction and ended the session with a gain of around a half a percent. The market breadth remained in favour of decliners, as there were 1494 shares on the gaining side against 1529 shares on the losing side while 112 shares remain unchanged.

Finally, the BSE Sensex surged by 120.55 points or 0.45%, to 27139.94, while the CNX Nifty gained 31.55 points or 0.39% to 8,114.60.

The BSE Sensex touched a high and a low of 27225.85 and 27067.02, respectively. The BSE Mid cap index was up by 0.85%, while the Small cap index gained 0.39%.

The top gainers on the Sensex were Infosys up by 3.41%, Coal India up by 3.40%, Wipro up by 3.00%, Bharti Airtel up by 2.87% and TCS up by 2.45%. On the flip side, GAIL India down by 1.93%, ITC down by 1.65%, ONGC down by 1.48%, Bajaj Auto down by 1.28% and BHEL down by 0.96% were the top losers in the index.

On the BSE Sectoral front, IT up by 2.50%, TECK up by 2.21%, Realty up by 2.15%, Metal up by 1.16% and Capital Goods up by 0.80% were the top gainers, while FMCG down by 0.59%, Bankex down by 0.12% and Power down by 0.06% were the only losers in the space.

Meanwhile, concerned over the rising cases of willful defaulters, Finance Ministry has asked the Reserve Bank of India (RBI) to tighten lending norms to prevent borrowers from opening multiple current accounts outside their consortium banks. Currently, there has been a spate of defaults taking place in banking system and majority of them are on account of economic recession but there is small proportion of cases where defaults are intentional.

Ministry is of the view that defaulting borrowers are indulged in diversion of funds by opening of multiple current accounts outside the members of the consortium. Finance Ministry has suggested the central bank to tighten the norms and monitoring system so that such activities could be prevented. Ministry had also ordered limited forensic audit of some non-performing accounts of public sector banks to find out whether there were any irregularities in sanction of loans.

Banking is the most dominant segment of the country’s financial sector and plays an imperative role in the economic development of the country. Increasing NPAs have become a major concern for industry adversely impacting the profit margin of banks. Gross NPAs of public sector banks increased to Rs 2,27,264 crore at the end of March 2014. Five key sectors include infrastructure, textiles, iron and steel, mining and aviation services contributed significantly to the level of stressed advances.

The CNX Nifty touched a high and low of 8,141.90 and 8,092.25 respectively.

The top gainers of the Nifty were Coal India up by 3.96%, Infosys up by 3.22%, Bharti Airtel up by 3.17%, Wipro up by 2.75% and TCS up by 2.56%. On the other hand, GAIL (India) down by 2.25%, ONGC down by 1.72%, IDFC down by 1.57%, BHEL down by 1.50% and Bajaj Auto down by 1.47% were the top losers.

European markets were trading in green, France's CAC 40 was up by 0.11%, Germany's DAX was up by 1.31% and United Kingdom's FTSE 100 was up by 0.76%.

Asian markets ended mostly in green on Wednesday, as reports showing faster growth in China’s service industries and US manufacturing boosted optimism in the world’s biggest economies. An official China non-manufacturing purchasing managers’ index for August rose to 54.4, from a six-month low of 54.2 in July. A similar gauge by HSBC Holdings Plc and Markit Economics posted its highest reading since March 2013. The rebound in services bolstered optimism China’s government is succeeding in shifting its economy away from exports and investment toward domestic consumption. Indonesia government raised Rp 15 trillion ($1.3 billion) from the sale of treasury bonds and bills, reflecting the growing confidence of foreign investors in the nation’s economy. Confidence in Indonesia’s economy has improved after President-elect Joko Widodo secured his victory in the July 9 presidential election. South Korean CPI rose to 0.2%, from 0.1% in the preceding month.