Markets escalate to day’s high; Nifty trades above 8,000 level

Going from strength to strength, local equity markets have now escalated to day’s high point after Reserve Bank of India (RBI), in its fourth bimonthly monetary policy review, as widely expected, kept its key policy repo rate unchanged at 8%. Sentiment also got a boost after RBI, in its policy rationale and stance retained growth projection for current fiscal at 5.5% and said that immediate target in containing the consumer price index (CPI) inflation at 8% by January 2015, looked achievable. At day’s high point, both Sensex and Nifty, clinching gains of over 3 /4 of a percent, were trading past the psychologically crucial 26,750 and 8,000 levels respectively. Meanwhile, broader indices also were trading higher with gains in the range of 0.80%-0.95%.

In yet another positive trigger for the market, European shares got off to a positive start, led by shares of Royal Bank of Scotland after the UK lender cut provisions for bad loans. Shares of RBS surged 4.3% after the group said it will release 800 million pounds ($1.3 billion) from provisions it had set aside to cover losses on bad loans after an improvement in the economy, especially in Ireland. However, Asian pacific shares were mostly lower on Tuesday after Wall Street's losses overnight and pro-democracy protests in Hong Kong, a major financial center, added to worries about political risk.

Closer home, all the sectoral indices on BSE were holding into positive territory, however stocks from Information Technology and Technology counters were the only exceptions. On the flip side, maximum demand was witnessed by stocks from Consumer Durables, Healthcare and Capital Goods counters. The overall market breadth on BSE was in the favour of advances which thumped declines in the ratio of 1621:948; while 102 shares remained unchanged.

The BSE Sensex is currently trading at 26799.16, up by 202.05 points or 0.76% after trading in a range of 26547.44 and 26836.48. There were 26 stocks advancing against 4 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 0.94%.

The gaining sectoral indices on the BSE were Consumer Durables up by 2.48%, Healthcare up by 1.63%, Capital Goods up by 1.59% and Auto up by 1.19% Metal up by 0.92% while, IT down by 0.17%, TECK down by 0.03% were the losing indices on BSE.

The top gainers on the Sensex were HDFC up by 2.82%, Sun Pharma Inds. up by 2.53%, Sesa Sterlite up by 2.02%, Larsen & Toubro up by 1.88% and Maruti Suzuki up by 1.77%. On the flip side, Axis Bank down by 0.52%, TCS down by 0.48%, Infosys down by 0.24% and Mahindra & Mahindra down by 0.10% were the top losers.

Meanwhile, reiterating its tough stance over food-grain stockpile issue, Prime Minister Narendra Modi has made it clear that agreement on food security and trade facilitation will have to go hand-in-hand. Notably, these comments came a little ahead of PM’s meet with US President Barack Obama.

It was India’s tough stand on this issue, which had led to collapse of the WTO Geneva talks on July 31 as the country stood pat too seek a permanent solution for food-grain stockpile issue, which the government felt was essential for unhindered implementation of the country's food security programme. The country decided not to ratify WTO's Trade Facilitation Agreement (TFA), which is dear to the developed world, without any concrete movement to its public food stock-holding issue for food security purposes.

The problem occurred when the country asked the WTO to modify the norms for calculating agri-subsidies in order to procure food-grains from farmers at minimum support price and sell that to poor at cheaper rates without violating norms that attracted penalty in the WTO. The current WTO norms limit the value of food subsidies at 10% of the total value of food-grain production. However, the support is calculated at the prices that are over two decades old. Nevertheless, reports suggest that the implementation of food security programme would breach 10% cap and may lead to imposition of hefty penalties if a member country drags India to the WTO

The CNX Nifty is currently trading at 8017.95, up by 59.05 points or 0.74% after trading in a range of 7943.75 and 8026.40. There were 40 stocks advancing against 9 stocks declining on the index.

The top gainers on Nifty were HDFC up by 2.75%, Zee Entertainment up by 2.47%, Sun Pharma Industries up by 2.45%, Kotak Mahindra Bank up by 2.15% and BPCL up by 1.99%. On the flip side, Power Grid Corporation down by 1.11%, DLF down by 0.88%, Ultratech Cement down by 0.64%, Tech Mahindra down by 0.51% and Axis Bank down by 0.43% were the top losers.

Asian markets were trading mixed; with Jakarta Composite up by 0.79 points or 0.02% to 5,142.80; Taiwan Weighted up by 6.16 points or 0.07% to 8,966.92; Shanghai Composite up by 6.24 points or 0.26% to 2,363.95 and FTSE Bursa Malaysia KLCI up by 6.83 points or 0.37% to 1,853.17.

On the flip side, Hang Seng declined 222.48 points or 0.96% to 23,006.73; Nikkei 225 down by 137.12 points or 0.84% to 16,173.52; Straits Times down by 21.42 points or 0.65% to 3,268.30 and KOSPI Index slid by 6.51 points or 0.32% to 2,020.09.

European markets got off to a positive start; with UK’s FTSE 100 gaining by 1.33 points or 0.02% to 6,647.93; Germany’s DAX rising by 12.81 points or 0.14% to 9,435.72 and France’s CAC advancing by 22.19 points or 0.51% to 4,380.26.