Benchmarks stage smart recovery; Nifty regains 8,500 mark

Shrugging off feeble global cues, Indian equity benchmarks staged a smart recovery in second half of trade and ended the session with a gain of around half a percent on Monday, supported by short-covering in beaten down but fundamentally strong stocks. Earlier, markets made gap down opening and extended their downfall to touch intraday lows with result of Greek voters rejecting more austerity demands from creditors, fuelled fears that the country will crash out of the Eurozone and has weighed heavily on the equity markets across the globe, triggering selling by participants. Sentiments also remained dampened on report that the Goods and Services Tax (GST) Bill is unlikely to be taken up in the coming monsoon session of Parliament, as the Congress members on the joint parliamentary panel on GST are likely to submit dissent notes against the panel’s report to be submitted on July 17.

The indices even went on to test important psychological 27,800 (Sensex) and 8,400 (Nifty) levels, but the key gauges got solid support around those intraday low levels as they convalesced from thereon. Sentiments turned up-beat with World Bank’s saying that India’s economy has crossed the $2-trillion mark in 2014 and currently stands at $2.067 trillion. While it took 60 years to reach $1-trillion mark, in just 7 years it added one trillion to its economy, which has doubled in size since the financial crisis hit the country in 2008.

On the global front, European counters were trading in red in early deals with CAC, DAX and FTSE were trading with a cut of around a percentage point. Asian markets ended mostly in red after a Greek vote against austerity measures endangered its future in the single currency and raised the risk of a full-blown crisis in the euro zone.

Back home, there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too equally participated in the rally. Frontline indices managed to settle near intraday high levels with Sensex and Nifty recapturing their crucial 8,500 (Nifty) and 28,200 (Sensex) levels, highest after April 17. The PSU oil marketing companies viz. BPCL, HPCL and IOC remained on buyers’ radar after oil prices slumped, with Brent crude slipping below $60 a barrel for the first time since April.

The banking stocks which looked under pressure in early trade too made a good recovery, despite the global rating agency Fitch stated that challenges for state-owned banks remain despite improving macro picture, with continued pressure on asset quality and weak capital. It also said that there were few indications of a meaningful recovery in earnings in the short-term and bad loans will add up to almost half of the equity capital of public sector banks if even a fifth of the loans they have recently restructured continue to default. On the flip side, metal stocks witnessed selling as softening commodity prices compounding worries about oversupply, after Greece rejected terms for a bailout.

The NSE’s 50-share broadly followed index Nifty rose by around forty points to regain its psychological 8,500 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged over one hundred and ten points to finish above around the psychological 28,200 mark. Broader markets too traced with traction and ended the session with a gin of around a percentage point. The market breadth remained in favour of advances, as there were 1,792 shares on the gaining side against 1,004 shares on the losing side while 146 shares remain unchanged.

Finally, the BSE Sensex surged by 115.97 points or 0.41% to 28208.76, while the CNX Nifty gained 37.25 points or 0.44% to 8522.15.

The BSE Sensex touched a high and a low 28235.31 and 27774.80, respectively. The BSE Mid cap index was up by 0.85%, while Small cap index up by 1.09%.

The top gaining sectoral indices on the BSE were Healthcare up by 1.66%, Oil & Gas up by 1.10%, Realty up by 0.74%, FMCG up by 0.66% and PSU up by 0.54%, while Consumer Durables down by 0.92%, Metal down by 0.62%, TECK down by 0.02% were the losing indices on BSE.

The top gainers on the Sensex were Dr. Reddys Lab up by 3.64%, Cipla up by 3.35%, Hero MotoCorp up by 1.34%, TCS up by 1.07% and Lupin up by 1.05%. On the flip side, Vedanta down by 4.45%, Hindalco down by 1.36%, NTPC down by 0.76%, Tata Steel down by 0.73% and Infosys down by 0.65% were the top losers.

 Meanwhile, the union cabinet has approved the first integrated national policy for developing skills and promoting entrepreneurship at a large scale with speed and quality. The government has also approved common norms for Skill Development Schemes being implemented by the Centre as well as an institutional framework for the National Skill Development Mission.

The National Policy for Skill Development and Entrepreneurship 2015 has four thrust areas, addressing key obstacles to skilling, including low aspirational value, lack of integration with formal education, lack of focus on outcomes, low quality of training infrastructure and trainers.The policy seeks to align supply and demand for skills by bridging existing skill gaps, promoting industry engagement, operationalising a quality assurance framework, leverage technology and promoting greater opportunities for apprenticeship training. In the entrepreneurship domain, the policy seeks to educate and equip potential entrepreneurs, both within and outside the formal education system. It also seeks to connect entrepreneurs to mentors, incubators and credit markets, foster innovation and entrepreneurial culture, improve ease of doing business and promote a focus on social entrepreneurship.

Finance Minister Arun Jaitley has said that the policy aims to align supply with demand, bridging existing skill gaps, promoting industry engagement, operationalise a quality assurance framework, leveraging technology and promoting apprenticeship to tackle the identified issues.The CNX Nifty touched a high and low 8,533.15 and 8,386.15 respectively.

The top gainers on Nifty were Cipla up by 3.67%, Dr. Reddys Lab up by 3.65%, BPCL up by 3.34%, Grasim Industries up by 1.86% and Asian Paints up by 1.72%. On the flip side, Vedanta down by 3.09%, NMDC down by 1.1.91%, Tech Mahindra down by 1.66%, Hindalco down by 1.45% and Power Grid down by 1.17% were the top losers.

European Markets were trading in the red; UK's FTSE was down by 0.41%, Germany’s DAX was down by 1.10% and France’s CAC was down by 1.25%.

Asian markets closed mostly in red on Monday, after Greek results while Shanghai Composite index rebounded from last week’s heavy losses after regulators and the securities industry intervened to prop up the markets. Bank Indonesia has cut its loan growth forecast for the year following slow loan demand in the first six months. The central bank stated that the country’s credit growth may not reach 15 to 17 percent, but 11 to 13 percent for the whole year. The central bank’s board of governors is set to meet on July 14. Lenders in Indonesia have disbursed Rp 3,792.8 trillion ($284.64 billion) in loans for the year up to May, an increase of 10.3 percent from the same period a year before. Foreign exchange bank deposits in South Korea fell for a second month in June, central bank data showed, as some public institutions dipped into their deposits for payments, including import fees. Total deposits edged down $80 million to $64.7 billion as of the end of June, the Bank of Korea stated, bringing the overall amount to the lowest since March this year.  Fitch Ratings stated that Japan’s public debt burden is likely to remain high under a new fiscal framework approved last month as the government’s structural reforms will not boost economic growth and tax revenue significantly. Japan’s Monetary Base fell to 34.2%, compared to 35.6% in the preceding month.