Benchmarks magnify gains; Nifty above 8400 mark

Extending their early gains, Indian equity markets continued to trade with vigor on sustained buying by funds and retail investors. Besides, a firming trend overseas kept the momentum going. At present, Sensex and Nifty were trading above the crucial 27,950 and 8,400 levels respectively, with gains of over 0.60%.  Apart from blue chips, broader indices too equally participated in the rally with both mid cap and small cap indices trading up by over a percent. Sentiments got a boost after the output of eight infrastructure sectors expanded 4.4% in May, the highest growth rate in the past six months and a hardening trend in the global market despite Greece's default. 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. However, gains remained capped on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 551.38 crore on June 30, 2015.

On the global front, Asian share markets were in a guarded mood on Wednesday as Greece became the first developed economy to default on a loan with the IMF, setting the scene for another day of uneasy action. Investors are concerned that if Greece defaults on its debts the nation will eventually drop out of the euro currency, a move that could potentially set off turmoil in financial markets. Back home, Indian rupee depreciated 4 paise to 63.68 against the US dollar in early trade due to appreciation of the American currency overseas.

Back on street, all the sectoral indices were trading in the positive territory with BSE Capital Goods index leading the rally up 1.48% followed by Realty, Metal and infrastructure indices trading higher over a percentage point. In scrip specific development, shares of Maruti Suzuki India have gained after the company 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. Furthermore, MIC Electronics rose after the company has been selected to supply LED lights to municipalities in Rajasthan.

The overall market breadth on BSE is in the favour of advances which thumped declines in the ratio of 1601: 498; while 64 shares remained unchanged.

The BSE Sensex is currently trading at 27967.18, up by 186.35 points or 0.67% after trading in a range of 27799.91 and 28007.42. There were 26 stocks advancing against 4 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.20%, while Small cap index up by 1.26%.

The top gaining sectoral indices on the BSE were Capital Goods up by 1.48%, Realty up by 1.33%, Metal up by 1.09%, Infrastructure up by 1.05% and PSU up by 0.95%, while there were no losers on the sectoral space.

The top gainers on the Sensex were Larsen & Toubro up by 1.67%, Cipla up by 1.57%, Bharti Airtel up by 1.55%, Dr. Reddys Lab up by 1.51% and GAIL India up by 1.50%. On the flip side, Bajaj Auto down by 0.42%, ITC down by 0.25%, Hero MotoCorp down by 0.18% and NTPC down by 0.04% 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 is currently trading at 8430.05, up by 61.55 points or 0.74% after trading in a range of 8370.15 and 8439.55. There were 43 stocks advancing against 7 stocks declining on the index.

The top gainers on Nifty were Ambuja Cement up by 2.76%, Larsen & Toubro up by 1.79%, Cipla up by 1.74%, HCL Tech up by 1.67% and Cairn India up by 1.65%. On the flip side, Zee Entertainment down by 1.03%, NMDC down by 0.72%, Bajaj Auto down by 0.51%, Hero MotoCorp down by 0.24% and Wipro down by 0.22% were the top losers.

Asian markets were mostly trading in green; Jakarta Composite was up by 0.09%, KOSPI Index up by 1.05%, Straits Times up by 0.4%, FTSE Bursa Malaysia KLCI up by 1.79%, Nikkei 225 up by 0.32%, Taiwan Weighted up by 0.73% and Hang Seng up by 1.09%. On the flip side, Shanghai Composite was down by 0.56%.