Markets stage splendid performance; Sensex recaptures 28,000 mark

Boisterous benchmarks showcased an enthusiastic performance on Wednesday, by rallying over one percentage point amid strong global cues coupled with positive macro economic data. Sentiments remained up-beat since start as key bourses opened with decent gains and there appeared not even an iota of profit booking in the session as the benchmarks managed to fervently gain from strength to strength as investors continued hunt for fundamentally strong stocks. Frontline indices not only ended the session nearly two and a half months high levels but also recaptured their crucial 8,450 (Nifty) and 28,000 (Sensex) bastions as investors took to hefty across the board buying.

Traders’ confidence got some boost from report that Growth in production in the eight key infrastructure sectors hit a six-month high of 4.4% in May, after two consecutive months of decline, indicating a recovery in industrial activity. The index of these eight core sectors grew 3.8% in the corresponding month last year. Some support also came with revenue secretary’s statement that the preparatory arrangements are in place to implement Goods and Services Tax from April 2016. Investors shrugged off weak purchasing managers’ index (PMI) data. Growth in the country’s manufacturing activities slowed down at 51.3 points in June from 52.6 points in May as new business orders were not as forthcoming. Meanwhile, Indian corporate leaders have urged Prime Minister Narendra Modi to take steps to further reduce the cost of capital to help boost manufacturing in the country and generate consumer demand.

Global cues too remained supportive with European counters were trading in green in early deals as Greece is ready to accept most conditions from its international creditors in order to reach a deal over its debt crisis. Asian markets ended mostly in green led by Japanese Nikkei which edged higher by around half a percent after Bank of Japan’s latest survey of manufacturers showed an improvement in the three months to June.

Back home, there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too participated strongly in the rally. Buying in banking counter too aided sentiments after the Government's plan of a comprehensive package raised hopes of faster recapitalisation. Stocks related to Auto pack remained on buyers’ radar post June auto sales numbers. Maruti Suzuki has registered a rise of 1.8% in its total car sales (Domestic + Export) for the month of June 2015 at 1,14,756 units, as against 1,12,773 units in June 2014. Additionally, PSU oil marketing companies remained in limelight after price of petrol was cut by Rs 0.31 a litre, while that of diesel was cut by Rs 0.71 a litre on the back of declining international oil prices.

The NSE’s 50-share broadly followed index Nifty gained over eighty points to end above its psychological 8,450 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged by over two hundred and forty points to end above its crucial 28,000 mark. The broader markets too traded jubilantly throughout the session and ended the session with a gain of around one and a half percentage points. The market breadth remained in favour of advances, as there were 1,889 shares on the gaining side against 877 shares on the losing side while 116 shares remain unchanged.

Finally, the BSE Sensex surged by 240.04 points or 0.86% to 28020.87, while the CNX Nifty soared by 84.55 points or 1.01% to 8453.05.

The BSE Sensex touched a high and a low 28099.25 and 27799.91, respectively. The BSE Mid cap index was up by 1.30%, while Small cap index up by 1.45%.

The top gaining sectoral indices on the BSE were Capital Goods up by 1.69%, Power up by 1.64%, Bankex up by 1.63%, PSU up by 1.53% and Realty up by 1.48%, while FMCG down by 0.36% was the only losing index on BSE.

The top gainers on the Sensex were BHEL up by 3.67%, Axis Bank up by 3.60%, Cipla up by 2.75%, Tata Motors up by 2.36% and SBI up by 1.83%. On the flip side, Lupin down by 0.48%, Bajaj Auto down by 0.48%, ITC down by 0.41%, GAIL India down by 0.40% and Hero MotoCorp down by 0.33% were the top losers.

Meanwhile, the global credit rating agency, Moody’s has red flagged the subdued rural economy as a 'credit negative' for India's sovereign rating and said that there are growing concerns about risk of policy stagnation and 'some disappointment' has emerged over the pace of reforms under the Modi government.

The rating agency however in its latest 'Inside India' report, said the consensus view on India's economic growth prospects is relatively optimistic and in line with Moody's baseline forecast of 7.5 percent expansion in current fiscal. It further said that the forecast represents the highest projection amongst G20 economies, and provides a key pillar of support for the Baa3 sovereign rating and positive outlook. Moody's said 'the multi-party, federal democracy in India underpins a gradual pace of policy implementation' and many of the policies are positive for India's institutional strength.

The agency has said it expects India's weakened rural economy to remain subdued through this fiscal, particularly if the risk of below-average monsoon rainfall materialises. In its latest poll almost half of the poll respondents identified sluggish reform momentum as the greatest risk to India's macroeconomic story. The rural income growth in India has been stuck in the mid-to-low single digits in so far this year, well off the more than 20% rates clocked in 2011. Moody's further believes the slower rural income growth is partly the result of increased fiscal restraint by the central government, which is unlikely to change in the coming quarters.

Talking about the corporate, Moody’s said that the plans to cut the country's corporate tax rate to 25% from the existing 30% over the next four years will be 'credit positive' for all Indian corporates insofar as it will reduce their tax expenses and increase their competitiveness over the medium term. Moody's further said India's pro-cyclical industries will benefit from improving credit conditions through the current fiscal, while the country's LNG import book was credit positive for companies like GAIL.

The CNX Nifty touched a high and low 8,481.60 and 8,370.15 respectively.

The top gainers on Nifty were Bank of Baroda up by 4.23%, BHEL up by 4.07%, Axis Bank up by 3.70% , Ambuja Cement up by 3.31% and Cipla up by 3.25%. On the flip side, Zee Entertainment down by 0.92%, Lupin down by 0.48%, Bajaj Auto down by 0.46%, GAIL India down by 0.39% and ITC down by 0.34% were the top losers.

European Markets were trading in the green; UK's FTSE was up by 1.34%, Germany’s DAX was up by 2.04% and France’s CAC was up by 2.44%.

Asian markets closed mostly in green on Wednesday, while Chinese stocks tumbled in late trade, as margin traders unwound positions for a seventh straight day and data showed economic growth remaining sluggish. Hong Kong stock exchange was closed on account of ‘Special Administrative Region Establishment Day’. Growth in China’s services sector picked up in June while big Japanese companies planned to ramp up spending at the fastest pace in a decade, offering hope that prospects are improving for Asia’s largest economies despite sluggish factory growth. The data fueled expectations that the wobbly global economy may start leveling out in the second half of the year, but the outlook remains murky, with fears that Greece’s debt crisis could splinter the euro zone and worries about whether China can avoid a stock market crash keeping investors on edge.

China’s official Purchasing Managers' Index (PMI) stood at 50.2 in June, unchanged from the previous month’s reading. A separate manufacturing index compiled by HSBC Holdings Plc and Markit Economics was at 49.4. Japan’s Tankan manufacturing index rose to a seasonally adjusted 15, from 12 in the preceding quarter. Indonesian Inflation rose to a seasonally adjusted 7.26%, from 7.15% in the preceding month. South Korean Trade Balance rose to a seasonally adjusted 10.20 billion, from 6.30 billion in the preceding quarter.