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 on the back of value-buying by funds in select blue-chip stocks after recent losses amid a firming trend in other Asian markets, following weekend gains on US markets. At present, Sensex and Nifty were trading above the crucial 27,700 and 8,400 levels respectively, with gains of over a percentage point. Apart from blue chips, broader indices too equally participated in the gain with both mid cap and small cap indices trading up by over 1.30%. Sentiments got a boost with the reports that government is looking at a slew of measures including liberalising FDI norms for NRIs and manufacturing firms to sell products through e-commerce portals. Some support also came as the Reserve Bank of India (RBI) has proposed to lower the ceiling on how much a bank can lend to a single corporate group, in a move to curb risks in the banking sector at a time when bad loans are on the rise. However, some inventors would keep a close eye on oil prices amid rise in geopolitical tensions in West Asia as Saudi Arabia launched military operations in Yemen. Traders also remained cautious as the global ratings agency Standard and Poor's has said that capital spending in India is likely to take 12 more months to start recovering as private companies have adopted a ‘Wait-And-See’ approach.

On global front, Asian markets were mostly higher as investors digested Fed chief Janet Yellen's comments signaling U.S. interest rates were expected to rise sometime this year but when they did they would do so gradually. However, some traders keep a wary eye on Greece and its talks with international creditors where the parties are struggling to come up with a list of acceptable reforms. Back home, Indian rupee fell by 17 paise to 62.58 against the US dollar due to rise in the American currency’s value against other global currencies amid month-end demand for the dollar from importers.

Back on street, all the sectoral indices were trading in the positive territory with BSE Capital Goods index leading the rally up 1.87% followed by FMCG, Infrastructure and Power indices trading higher over a percentage point. Meanwhile, shares of defence equipment and manufacturers were rallied on reports that the government sanctioned a Rs 5113 crore project to develop a next-generation Airborne Warning and Control System (AWACS). In scrip specific development, Shares of Grasim Industries have gained on entering into retailing women garments. In this regard, the company’s subsidiary, Birla Cellulose has launched the garment brand Liva, which will be available at 1,000 outlets across 50 cities. Furthermore, Hinduja Global Solutions rose on acquiring majority of stake in Colibrium Partners LLC and Colibrium Direct LLC (Colibrium).

The market breadth on BSE was positive, out of 2146 stocks traded, 1649 stocks advanced, while 442 stocks declined on the BSE. 

The BSE Sensex is currently trading at 27770.52, up by 311.88 points or 1.14% after trading in a range of 27624.76 and 27779.87. There were 23 stocks advancing against 7 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.37%, while Small cap index up by 2.38%.

The top gaining sectoral indices on the BSE were Capital Goods up by 1.87%, FMCG up by 1.67%, INFRA up by 1.56%, Power up by 1.03% and Bankex up by 0.94%, while there were no losers on the sectoral space.

The top gainers on the Sensex were Bharti Airtel up by 3.85%, HDFC up by 2.83%, ITC up by 2.27%, Cipla up by 2.08% and Mahindra & Mahindra up by 1.93%. On the flip side, Hindalco down by 1.76%, GAIL India down by 0.88%, Tata Power down by 0.80%, Tata Motors down by 0.50% and Reliance Industries down by 0.34% were the top losers.

Meanwhile, the global ratings agency Standard and Poor's (S&P) in its latest report has said that capital spending in India is likely to take 12 more months to start recovering as private companies have adopted a ‘Wait-And-See’ approach. The report has said that although India’s economic growth, according to revised GDP numbers based on a new methodology, is strong, and we expect further improvement. However, top Indian corporates are not planning to increase their investments yet. We believe capital spending by top Indian corporates will further decline by 10-15 per cent in fiscal 2016 from its peak in fiscal 2014.

The report has reasoned that companies are “yet to materially benefit” from the government reforms or from an improvement in the Indian economy, it said, adding that the interest rates were high until last year and the global economic environment is also not rosy.

The S&P has said that it expects government-owned companies and Reliance Industries to lead capital spending before a broader-based pick-up occurs. Reliance Industries has embarked on a large capital spending programme of about USD 30 billion over three years, mainly on refining, petrochemical, and the telecom sector. It further added that it expects Tata Motors to increase capital spending, but it is mostly because of the planned expenditure by its Jaguar Land Rover business. It also said that while over the past two years, the Indian private sector generally has taken a back seat in capital spending, public sector has continued with its heightened pace of capital expenditure.

The report has also said that capital expenditure peaked in fiscal 2014 at Rs 3.7 lakh crore for the top 100 Indian companies and it would decline over the next two years. corporates in capital-intensive sectors are mostly focusing on improving profitability and lowering leverage rather than looking at new projects.

The CNX Nifty is currently trading at 8427.30, up by 85.90 points or 1.03% after trading in a range of 8380.75 and 8428.75. There were 36 stocks advancing against 14 stocks declining on the index.

The top gainers on Nifty were Idea Cellular up by 4.35%, Bharti Airtel up by 3.80%, BPCL up by 2.99%, Asian Paints up by 2.87% and HDFC up by 2.80%. On the flip side, Tech Mahindra down by 2.21%, Hindalco down by 2.02%, Cairn India down by 1.25%, Bank of Baroda down by 0.99% and GAIL India down by 0.98% were the top losers.

Asian markets were trading mostly in the green; KOSPI Index gained 0.46%, FTSE Bursa Malaysia KLCI added 0.52%, Taiwan Weighted advanced 0.35%, Jakarta Composite surged 0.94%, Shanghai Composite soared 1.77%, Nikkei 225 jumped 0.73% and Hang Seng was up by 1.53%. On the flip side, Straits Times was down by 0.01%.