Benchmarks extend northward journey for fourth straight session

Extending their northward journey to fourth straight session, Indian equity benchmarks ended higher with a gain of over half a percent on Wednesday. Markets traded with traction throughout the session, though gains remained capped as traders remained worried about the US Federal Reserve's highly anticipated monetary policy announcement later in the day. Overall, sentiments remained up-beat since beginning with Asian Development Bank president Takehiko Nakao's statement that the bank is looking to increase exposure in India, especially in infrastructure, skill development and urban services, and proposes to increase lending to the country by almost half to $12 billion by 2018.

Also, the progress in monsoon has lifted the sentiment on Dalal Street. According to India Meteorological Department (IMD), the country received 36.4 mm of rain on June 1-10, though rain for the central and northwestern parts remained a cause of concern. Traders seems to have got a boost with report that Finance Minister Arun Jaitley who embarked on a roadshow to hardsell the India growth story to investors in a bid to attract investment will hold meetings with Foreign Institutional Investors (FII) and top CEOs of American financial companies during his nine-day visit to the United States.

On the global front, European counters were trading in red ahead of the U.S. Federal Reserve's highly anticipated monetary policy announcement later in the day. However, Asian shares ended mostly in the green as Chinese shares staged a comeback, and the dollar stayed static as investors waited for clues from a Federal Reserve meeting on when US interest rates are likely to rise.

Back home, appreciation in Indian rupee too supported the sentiments. The partially convertible rupee was trading at 64.15 per dollar at the time of equity market closing against the Monday’s close of 64.24 on the Interbank Foreign Exchange on the back of selling of the US dollars by banks and the exporters. Some support also came on report that domestic institutional investors (DIIs) bought shares worth a net Rs 644.81 crore on June 16, 2015, as per provisional data.

Rally in steel shares too aided the sentiments on reports that the government has notified hike in long steel products to 7.5% from 5.5% and flat steel products to 10% from 7.5%. Import duty hike translates into hike of Rs 600 per tonne on imported steel which will ease price pressure on domestic steelmakers. FMCG shares firmed up on hopes that the monsoon which has been 13% above normal so far pan-India would boost the rural economy and help volume growth.

The NSE’s 50-share broadly followed index Nifty rose by over forty points and ended near the psychological 8,100 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged by over one hundred and forty points to finish above the psychological 26,800 mark. Broader markets too traded with traction throughout the trade and ended the session with a gain of around one and a half percentage point. The market breadth remained in favor of advances, as there were 1,715 shares on the gaining side against 938 shares on the losing side while 128 shares remain unchanged.

Finally, the BSE Sensex surged by 146.15 points or 0.55% to 26832.66, while the CNX Nifty gained 44.25 points or 0.55% to 8091.55.

The BSE Sensex touched a high and a low 26983.48 and 26728.89, respectively. The BSE Mid cap index was up by 1.44%, while Small cap index up by 1.33%.

The gaining sectoral indices on the BSE were Consumer Durables up by 2.26%,  Healthcare up by 1.62%, FMCG up by 1.46%, Capital Goods up by 1.11% and  Auto up by 0.81 while, Power down by 0.45%, Bankex down by 0.15% and PSU down by 0.02% were the losing indices on BSE.

The top gainers on the Sensex were Cipla up by 3.85%, Tata Steel up by 3.62%, Hindustan Unilever up by 3.15%, Reliance Industries up by 3.00% and Hindalco up by 2.77%. On the flip side, Vedanta down by 3.14%, BHEL down by 1.91%, Tata Power down by 1.49%, Bajaj Auto down by 0.97% and Hero MotoCorp down by 0.74% were the top losers.

Meanwhile, Textile industry body, the Cotton Textiles Export Promotion Council (TEXPROCIL) has said that removal of benefits on exports to African countries in the new foreign trade policy will affect shipments of value added products like cotton dyed and printed fabrics.

In the new Foreign Trade Policy 2015-20 all benefits on exports to African countries has been removed, seriously impacting exports of value added products like cotton dyed and printed fabrics and made-ups to African countries. Earlier, in the Foreign Trade Policy 2009-14, exports of cotton fabrics and made ups to many African countries were granted duty credit scrips at 4 percent of the Free On Board (FOB) value of exports in general and in some cases 7 percent.

TEXPROCIL chairman R K Dalmia has urged the government to include exports of value added products to African countries in the new Foreign Trade Policy 2015-20, stating that withdrawal of these benefits on exports of cotton fabrics and made ups to African countries has put the exporters into a huge dilemma.

The council had already urged the Centre to conclude FTAs with the European Union, Australia and Canada to remove trade barriers and gain market access to these markets, saying that lack of adequate focus and proper planning towards boosting exports will lead to steep decline in cotton textile exports.

The CNX Nifty touched a high and low of 8,136.85 and 8,048.95 respectively.

The top gainers on Nifty were Cipla up by 4.11%, Hindustan Unilever up by 3.36%,  Hindalco up by 3.13%, Reliance Industries up by 3.04% and Tata Steel up 2.85%,. On the flip side, Vedanta down by 3.47%, Power Grid down by 2.15%, Tata Power down by 1.96%, BHEL down by 1.81%, and Cairn India down by 1.57% were the top losers.

European Markets were trading in the red; Germany's DAX down by 0.25%, UK's FTSE down by 0.40% and France's CAC was down by 0.65%.

Asian markets closed mostly in green on Wednesday, boosted by a rally on Wall Street, while dealers await the conclusion of a US Federal Reserve policy meeting later in the day. China’s central bank will allow private equity funds into the interbank bond market for the first time as it aims to open the channels wider for companies to access capital. Indonesia’s central bank expects the economy to grow 5 percent this year, slightly slower than its previous 5.1 percent estimate. Bank Indonesia Governor Agus Martowardojo stated that banking in Southeast Asia’s largest economy remained healthy, but credit growth was slowing. Separately, the central bank expects the nation’s current account deficit at around 2.5 percent of gross domestic product in the second quarter, up from 1.8 percent in the previous quarter. South Korea’s central bank governor waved away fears of Asia’s fourth-largest economy slipping into deflation, saying annual inflation will pick up to over 1 percent towards the end of this year.