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 continued buying activities by both funds and retail investors. Sentiment on the street improved the Finance Minister Arun Jaitley’s statement that the credibility of Indian economy has been partly restored and the momentum must be sustained over the next two years to win over and provide comfort to world investors. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 651.31 crore on June 22, 2015. Furthermore, the India Meteorological Department (IMD) in its daily monsoon update stated that the southwest monsoon has further advanced into some more parts of Gujarat region, Madhya Pradesh, most parts of Chhattisgarh and Jharkhand and some parts of Bihar. At present, Sensex and Nifty were trading above the crucial 27,850 and 8,350 levels respectively, with gains of over 0.45%. The broader markets outperformed benchmark indices as investors turned their focus on fundamentally sound mid-cap and small-cap stocks as valuations in some large-cap stocks seem stretched after recent rally.

On global front, Asian markets were trading mostly in the green, bolstered by hopes that Greece's latest budget proposals would stave off a debt default and lead to a deal with lenders later this week. Further, the US markets ended with good gains in last session, recovering the losses suffered on Friday, with Nasdaq finishing the session at a new record closing high. Back home, Indian rupee was lower by 10 paise in early trade, after four days of rise, at 63.62 against the US currency due to the US dollar’s gain against other currencies overseas.

Back on street, stocks from Metal, PSU and Capital Goods counters were supporting the markets’ uptrend, while those from IT and Teck counters were adding to the underlying cautious undertone. Further, banking shares mainly public sector undertakings (PSU) were trading higher after the Finance Secretary Rajiv Mehrishi said that the Indian government intends to provide $ 9 billion (about Rs 57,000 crore) to public sector banks towards recapitalisation over the next two fiscal to meet global risk norms and for growth. In scrip specific development, shares of Venus Remedies have rallied after the company announced the issue of equity shares to the company promoters on a preferential basis. Furthermore, shares of Aurobindo Pharma have gained on receiving final approvals from the US Food & Drug Administration (USFDA) to manufacture and market Azithromycin for Injection USP, 500mg /vial.

The market breadth on BSE was positive, out of 2053 stocks traded, 1299 stocks advanced, while 656 stocks declined on the BSE. 

The BSE Sensex is currently trading at 27872.63, up by 142.42 points or 0.51% after trading in a range of 27666.59 and 27882.66. There were 22 stocks advancing against 8 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.73%, while Small cap index added 0.72%.

The top gaining sectoral indices on the BSE were Metal up by 2.04%, PSU up by 1.65%, Capital Goods up by 1.59%, Oil & Gas up by 1.20% and Realty up by 0.99%, while IT down by 0.47% and TECK down by 0.21% were the only losing indices on BSE.

The top gainers on the Sensex were Coal India up by 3.15%, Hindalco up by 2.40%, Bharti Airtel up by 1.99%, Cipla up by 1.89% and Larsen & Toubro up by 1.85%. On the flip side, Infosys down by 1.40%, Lupin down by 1.16%, Hero MotoCorp down by 0.99%, GAIL India down by 0.82% and TCS down by 0.22% were the top losers.

Meanwhile, the global ratings agency Fitch, who had recently affirmed India at BBB-/Stable rating, has said that government’s reform initiatives have unlocked Indian “economy's dynamism” but weak public finances continue to remain a strain on any rating upgrade.

Fitch in its Asia-Pacific Sovereign Overview 2Q'15 report adding that measures to strengthen the revenue base remain lacking has said that “Government reforms have helped to unlock the economy's dynamism. However, weak public finances continue to constrain the ratings.

In April, the ratings agency had retained India's credit outlook at 'stable' and said although dynamism was back in the economy, translation of reforms into higher growth would depend upon actual implementation.

The Indian government aims to limit fiscal deficit to 3 per cent of the GDP by 2016-17, while on the other hand, it is also taking steps to maximise revenue collection by various measures. For indirect tax collection, it has taken additional measures including the Central Excise increase on diesel and petrol, increase in clean energy cess, and the withdrawal of exemptions for motor vehicles and consumer durables.

The CNX Nifty is currently trading at 8393.95, up by 40.85 points or 0.49% after trading in a range of 8334.95 and 8398.45. There were 36 stocks advancing against 14 stocks declining on the index.

The top gainers on Nifty were PNB up by 4.24%, Coal India up by 3.11%, Bank of Baroda up by 3.01%, Hindalco up by 2.19% and BPCL up by 2.11%. On the flip side, Infosys down by 1.50%, Hero MotoCorp down by 1.10%, Lupin down by 0.99%, Tata Power down by 0.87% and GAIL India down by 0.85% were the top losers.

Asian markets were trading mostly in the green, Straits Times gained 0.51%, KOSPI Index was higher by 1.22%, Taiwan Weighted added 0.66%, Hang Seng increased by 0.35% and Nikkei 225 surged by 1.52%. On the other hand, Shanghai Composite declined by 2.44%, Jakarta Composite decreased 0.06% and FTSE Bursa Malaysia KLCI was marginally down by 0.01%.