Markets get a relief rally; benchmarks end near highs of the day

Markets finally got the much needed relief rally on Monday, with benchmarks not only reclaiming their crucial psychological levels but ending near the highs of the day. The trade which had turned sluggish by the mid of the day on domestic economic growth concern, suddenly got a new life after Euro zone leaders clinched a deal with Greece. Developments in Greece have been dictating stock moves worldwide since April. Greek Prime Minister Alexis Tsipras achieved a settlement with his European creditors over the reforms needed to start formal negotiations over a third bailout program, after almost 17 hours of talks in Brussels and suggestion of temporary Grexit has been removed from final agreement, though Greek parliament will have to legislate on number of reforms. Sensex came very close to the crucial 28000 mark, while Nifty too posted nearly a triple digit rally, with across the board buying. Earlier, the markets made a good start taking cues from the regional peers, but the trade turned cautious and once dragged the markets into red on concern of disappointing IIP data, which grew 2.7 per cent in May, lower than the downwardly revised 3.36 per cent growth recorded in April. Also there was expectation of some uptick in the CPI inflation numbers slated to be announced later in the day. Also, the Markit survey stated that private sector business sentiment has fallen to its lowest level since October 2009 as firms expect a subdued order flow in the next 12 months and job creation is likely to be moderate. It also said that although Indian companies foresee further job creation in the coming 12 months, confidence level has dipped below the worldwide trend. 

On the global front, the major Asian markets ended in green after China’s benchmark surged for a third straight day, on hopes that measures taken by Beijing to prevent a full-blown market crash have worked. Shanghai Composite has rebounded 14 percent over the past three days. There was some good news from economy front too, the trade data exceeded estimates. Exports rose 2.1 percent in June, while imports dropped 6.7 percent for a trade surplus of 284.2 billion yuan. Later the European markets too made a jubilant start after an agreement was reached at a summit on Greece’s crisis.

Back home, the domestic markets also got some support with Finance Minister Arun Jaitley expressing his confidence on the country’s economic growth and stating that tax revenues are expected to be higher this year while improving macroeconomic fundamentals and ongoing reforms make 8-10 per cent growth “eminently achievable”. There was some good news from the revenue collection too, as the Indirect tax revenues grew 37.5 per cent to nearly Rs 1.54 lakh crore in the first quarter of the current fiscal, powered by a robust show in excise collections. In the late trade markets got and additional boost with Revenue Secretary Rajiv Mehrishi’s statement that the market condition was conducive for the government’s disinvestment. Other than capital goods, the gains were spread across the street with most of the sectoral indices on the BSE posting gains in excess of a percent. IT and tech stocks were the major gainers on hopes of order inflows from Europe after eurozone leaders approved a bailout package for Greece. The oil and gas sector too was in jubilant mood after the international oil prices declined on hopes of supply glut with Iran reaching a nuclear deal. The rupee weakness also supported them. The PSU oil marketing companies too moved higher, despite the report that the government will cap subsidy it will pay on kerosene at Rs. 12 per litre. Currently, oil companies sell kerosene at a loss of about Rs. 18 per litre.

The NSE’s 50-share broadly followed index Nifty surged by almost 100 points and ended above the psychological 8,450 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex gaining around 300 points finished near to crucial level of 28,000 mark. Broader markets remained strong since beginning and ended the session with a gain of around one and a quarter of a percent. The market breadth remained in favour of advances, as there were 1,789 shares on the gaining side against 1,005 shares on the losing side while 126 shares remain unchanged.

Finally, the BSE Sensex soared by 299.79 points or 1.08 % to 27961.19, while the CNX Nifty ended higher by 99.10 points or 1.19% to 8459.65.

The BSE Sensex touched a high and a low 28005.17 and 27635.06, respectively. The BSE Mid cap index was up by 1.44%, while Small cap index gained 1.27%.

The top gaining sectoral indices on the BSE were IT up by 1.71%, TECK up by 1.65%, Auto up by 1.60%, Healthcare up by 1.28%, and Oil & Gas up by 1.27%, while Capital Goods down by 0.19% was the only losing index on BSE.

The top gainers on the Sensex were GAIL India up by 3.55%, HDFC up by 3.19%, Maruti Suzuki up by 2.56%, NTPC up by 2.50% and Wipro up by 2.08%. On the flip side, ONGC down by 1.02% and Larsen & Toubro down by 0.75% were the two losers.

Meanwhile, finance minister Arun Jaitley has expressed his confidence on the country’s higher economic growth and said that tax revenues are expected to be higher this year while improving macroeconomic fundamentals and ongoing reforms make 8-10 per cent growth “eminently achievable”.

FM elaborated that with the ongoing reform process, proposed GST, increased infrastructure investment and emphasis on smart cities, India can very much achieve 8-10 per cent GDP growth. “When all these initiatives get onto the field, then our aspiration to cross that 8 per cent level and get on to the 8-10 per cent growth target is not something which is completely out of sight, but is something which may be imminently achievable.”  He emphasized that “We need higher growth on one hand and we need to flag the concerns of the economy in those sections where the benefits of that growth process must reach first.” “And I can tell you that this is only the beginning... I am full confident that with the economy likely to move up in the next few years, resources will be available...

Jaitley added that the government is working on a new agriculture insurance scheme to ensure farmers are not left at the mercy of rains, even as he hoped 'rain gods will be kinder this year' and help check the prices of pulses and other food products. He said the government has taken a number of initiatives, including the recently announced Rs 50,000 crore programme for a national irrigation.

Finance Minister also promised more sustainable measures for the farm sector so that the farmers are not left to the mercy of rain gods and said hopefully, in the near future, a viable and vibrant insurance scheme will be in place for farmers.

The CNX Nifty touched a high and low 8,471.65 and 8,355.40 respectively.

The top gainers on Nifty were HCL Tech up by 3.88%, BPCL up by 3.59%, IndusInd Bank up by 3.58%, Zee Entertainment up by 3.50% and Gail up by 3.08%. On the flip side, ONGC down by 0.99%, Larsen & Toubro down by 0.84% and Bank of Baroda down by 0.13% were the only losers.

European Markets were trading in the green; UK's FTSE was up by 0.58%, Germany’s DAX was up by 1.29% and France’s CAC was up by 1.78%.

Asian markets closed in green on Monday, tracking another rally in China and following news Greece has finally struck a bailout reform deal with creditors that keeps it in the euro zone. China’s exports picked up unexpectedly in June but imports tumbled again, reinforcing expectations that the government may further loosen policy to lift the Chinese economy after a recent stock market rout. However, imports slid much less than forecasted, leading some to see a silver lining in the latest data. China’s June exports rose 2.8% from a year earlier, while imports fell by 6.1%.That left the country with a trade surplus of $46.54 billion for the month compared to $59.49 billion in the preceding month. Japan’s industrial production fell to a seasonally adjusted -2.1%, from -2.2% in the preceding month while Japanese tertiary industry activity index fell to a seasonally adjusted -0.7%, from -0.2% in the preceding month.