Benchmarks reverse gears; enters into positive territory

Reversing gears, Indian equity markets have entered into positive territory in late morning deals on emergence of buying by funds and retail investors in select stocks. Sentiments got a boost with the report that Mutual fund managers pumped in over Rs 7,600 crore in equity markets in April, making it their highest net inflow in more than seven years, mainly on account of positive investor sentiment and the government’s reforms agenda.  Besides, rally in the IT stocks after US-based Cognizant reported 9.7% growth in net profit for the quarter to $382.9 million compared with the corresponding period last year too supported the market sentiments. However, gains remained capped on a private report that the level of optimism about business environment among chief financial officers in the country declined in April-June period largely owing to slower pace of reforms than initially expected and weak profit level of the corporates. Also, marketmen were eyeing the development in the parliament where the Rajya Sabha is likely to see a heated debate over the Real Estate Regulatory Authority Bill that is listed for consideration today. At present, Sensex and Nifty were trading above the crucial 27,500 and 8,300 levels respectively, with gains of over 0.10%. Further, the broader markets outperformed benchmarks with the BSE Midcap and Smallcap indices rising over 0.6 percent each.

On global front, Asian markets edged lower on Tuesday, as investors wagered Australia would become the latest country in the region to inject more policy stimulus into its economy.  Overnight, U.S. stocks finished modestly higher, following positive momentum from Europe and as earnings came in better than expected. Back home, Extending losses for the third straight session, Indian rupee declined by 14 paise to 63.56 against the US dollar in early trade due to appreciation of the American currency overseas on the back of strong economic data.

Back on street, stocks from Realty, Capital Goods and Metal counters were supporting the markets’ uptrend, while those from Power and Infrastructure counters were adding to the underlying cautious undertone. Meanwhile, shares of defence equipment and manufacturers were in focus and rallied by up to 7% on expectation of favourable regulatory changes that will accelerate investment flow into the sector.  In scrip specific development, Shares of SKS Microfinance rallied after the company reported 50% year on year (yoy) jump in its standalone net profit at Rs 40.54 crore for the quarter ended March 31, 2015 (Q4FY15).  Further, Ashapura Intimates Fashion rose after DSP Blackrock Mutual Fund bought more than 3% stake in the company for about Rs 13.75 crore via open market purchase.

 The market breadth on BSE was positive, out of 2208 stocks traded, 1251 stocks advanced, while 868 stocks declined on the BSE. 

The BSE Sensex is currently trading at 27524.65, up by 34.06 points or 0.12% after trading in a range of 27402.94 and 27603.71. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.68%, while Small cap index up by 0.60%.

The gaining sectoral indices on the BSE were Realty up by 1.27%, Capital Goods up by 1.02%, Metal up by 0.87% and Oil & Gas up by 0.83% and PSU up by 0.53% while, Power down by 0.26% and Infrastructure down by 0.26% were the losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 3.27%, ONGC up by 3.10%, TCS up by 1.97%, Vedanta up by 1.60% and Larsen & Toubro up by 1.57%. On the flip side, Bajaj Auto down by 1.85%, Bharti Airtel down by 1.67%, Cipla down by 1.59%, Coal India down by 1.39% and Mahindra & Mahindra down by 1.06% were the top losers.

Meanwhile, Finance Minister Arun Jaitley has pitched for deeper engagement of the Asian Development Bank (ADB) in development of smart cities, industrial corridors and railways for the government’s various ambitious plans like ‘Make In India’ and ‘Skill India’. The Finance Minister, observing that India is ADB's largest client, said that the partnership should now move to the next level. He further said that “In addition to supporting conventional infrastructure projects, we would like a deeper engagement on development of Smart Cities, Industrial Corridors, Rail transport and manufacturing and job creation through flagship initiatives of ‘Make in India’ and ‘Skill India’.”

Jaitley also said that ADB should aim for annual business of at least $ 20 billion by 2020. He added that ‘Twenty by Twenty’ should be our corporate goal, the Mantra. “ADB not only needs to become bigger, it also needs to become better, as a model among the MDBs (multilateral development banks).” In 2014, ADB’s total loans and grants operations were USD 13.5 billion, slightly less than the previous year.

The Finance Minister also appreciated the plan of merger of ADF (Asian Development Fund) resources with OCR (ordinary capital resources) and reforming ADB, saying it would help in promoting growth in Asian region. He said that this was critical to securing the unanimous consent of all ADF donors. To use the enhanced lending capacity, thus available, ADB has to build a strong project pipeline for implementation from 2017,

Talking about India and the present government, FM said that the country is expected to grow at 7.5-8 per cent in both 2015 and 2016. This only reaffirms India's fascinating growth prospects. The government’s goal is to place the Indian economy on a high and sustained growth trajectory through focus on infrastructure development, skills development, improving ease of doing business and economic reforms including comprehensive social safety net and fiscal discipline.

The CNX Nifty is currently trading at 8342.75, up by 10.80 points or 0.13% after trading in a range of 8299.20 and 8345.35. There were 25 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were Tata Steel up by 3.26%, ONGC up by 2.94%, Kotak Mahindra Bank up by 2.11%, TCS up by 1.93% and Vedanta up by 1.67%. On the flip side, Cairn India down by 2.05%, Bharti Airtel down by 1.76%, Zee Entertainment down by 1.71%, Cipla down by 1.65% and Bajaj Auto down by 1.57% were the top losers.

Most of the Asian equity indices were trading in the red; Hang Seng decreased by 1%, Shanghai Composite dropped 1.84%, Taiwan Weighted shed 0.29% and Straits Times was down by 0.41%. On the flip side, Jakarta Composite increased 0.29% and FTSE Bursa Malaysia KLCI was up by 0.24%.