Benchmarks extend gains; trade near intra-day high level

Indian equity benchmarks extended early gains to continue firm trade in late morning session, hovering near intra-day high level amid a rally in Realty, Consumer Durables and Capital Goods stocks. Sentiment on the street improved due to the US Federal Reserve’s decision to keep interest rates near zero for a considerable time. Besides, markets were also enthusiastic about China's President Xi Jinping’s visit in India. The companies from these two countries signed 24 contracts worth nearly $4 billion. The agreements are across a range of sectors, including aircraft leasing and financing, telecom, chemicals, wind power components, cotton yarn and fabric, synthetic fibre and seafood. Some support also came in as Reserve Bank of India has allowed companies to issue equity shares to a resident outside India against any type of fund subject to certain conditions.  At present, Sensex and Nifty were trading above the crucial 26,850 and 8,050 levels respectively, with gains of over 0.25%. Apart from blue chips, broader indices too equally participated in the gain with both mid cap and small cap indices trading up by over a percentage point.

In scrip specific development, shares of Sun Pharmaceutical Industries were trading higher after the company has entered into a licensing agreement with Merck & Co Inc for investigational therapeutic antibody candidate, Tildrakizumab to be used for treatment of plaque psoriasis, a skin ailment. Besides, 8K Miles Software Services rose after Sundaram BNP Paribas Mutual Fund bought nearly two percentage points stake in the company through open market.

On global front, Asian shares rose after the Federal Reserve's monetary policy announcement. Though, the trade remained volatile but traders seemed pleased that the Fed reiterated its pledge to keep interest rates low for a 'considerable time'. Back home, Indian rupee fell by 25 paise to 61.17 against the US currency in early trade due to dollar's gains against other currencies overseas. The market breadth on BSE was positive, out of 2420 stocks traded, 1800 stocks advanced, while 547547 stocks declined on the BSE. 

The BSE Sensex is currently trading at 26867.93 up by 236.64 points or 0.89% after trading in a range of 26895.07 and 26503.08. There were 27 stocks advancing against 3 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.45%, while Small cap index gained 2.23%.

The gaining sectoral indices on the BSE were Realty up by 2.69%, Consumer Durables up by 2.13%, Capital Goods up by 1.63%, Oil & Gas up by 1.48% and PSU up by 1.39%, while there were no losing indices on BSE.

The top gainers on the Sensex were Hero MotoCorp up by 2.40%, Sun Pharma up by 2.04%, Hindalco up by 1.81%, Dr. Reddys Lab up by 1.75% and Larsen & Toubro up by 1.75%. On the flip side, Infosys down by 1.43%, Mahindra & Mahindra down by 0.90% and Hindustan Unilever down by 0.63% were the only losers.

Meanwhile, A four-member panel of secretaries appointed by the government has submitted the much awaited report on a new gas pricing mechanism, which prescribes lower rate than the price approved by the previous United Progressive Alliance (UPA) government. Though contents of the report have not been disclosed, report suggests that price increase may be around 50%.

Most of the domestically produced gas is currently sold at a price of $4.2 per million metric Btu. However, even an increase of $2 per mmBtu, will lead to a hike in CNG (Compressed Natural Gas) price for automobiles, could be politically challenging decision during the time of state polls. The government had earlier decided to announce the gas price decision by September end, but the same is expected to be put on hold until completion of assembly polls in Maharashtra and Haryana in mid-October.

Originally, the Rangarajan formula, approved by the UPA government, was to be implemented from April 1 but was deferred by three months as general elections were announced. The NDA government on June 25 postponed its implementation by a further three months pending a comprehensive review. It was only in August, the government constituted a committee comprising of secretaries of power, fertilizer and expenditure with additional secretary in the oil ministry as its member secretary, to make amendments to a formula notified in January that doubled the gas price to $8.4 per million British thermal units (Btu).

The four member panel has reportedly managed to strike a balance between demands for a market linked rate by gas producers to make marginal and deep-sea fields economically viable, and consumers in the power and fertiliser sector, who have said they cannot afford any rate higher than $5.

The CNX Nifty is currently trading at 8,054.70 up by 79.20 points or 0.99% after trading in a range of 8,058.50 and 7,939.70. There were 46 stocks advancing against 4 declining on the index.

The top gainers on Nifty were Jindal Steel & Power up by 3.07%, Hero MotoCorp up by 2.75%, DLF up by 2.40%, BPCL up by 2.39% and Sun Pharma up by 2.09%. On the flip side, Infosys down by 1.54%, Mahindra & Mahindra down by 0.70%, United Spirits down by 0.68% and Hindustan Unilever down by 0.62% were the only losers.

Asian markets were trading mostly in the green; Straits Times was surged 0.15%, Nikkei 225 jumped by 1.24%, Jakarta Composite gained 0.43%, Shanghai Composite added by 0.50% and Taiwan Weighted was up by 0.25%. On the flip side FTSE Bursa Malaysia KLCI dipped by 0.27%, Hang Seng declined by 0.69% and KOSPI Index was down by 0.79%.