Jubilation continues on Dalal Street for second straight day; Nifty regains 8,600 mark

Boisterous benchmarks once again showcased an enthusiastic performance, by rallying around a percentage point after Greek parliament approved the austerity reforms. 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 their hunt for fundamentally strong stocks. Frontline indices not only extended their rally for second straight session but also ended at their highest level since April 17, recapturing their crucial 8,600 (Nifty) and 28,400 (Sensex) bastions as investors took to hefty across the board buying.

Sentiments got bolstered after India’s trade deficit narrowed to 10.8 billion in June as compared to 11.7 billion in same month previous year. The trade deficit for April-June, 2015-16 was estimated at $ 32225.66 million which was lower than the deficit of $33083.93 million during April-June, 2014-15. However, country’s exports contracted for the seventh straight month by 15.82 percent to $22.2 billion on account of slump in global demand. Meanwhile, the Cabinet cleared a proposal to merge the limits of foreign direct and portfolio investments into composite caps to make foreign investment regime easier. The department of industrial policy and promotion (DIPP) had prepared a Cabinet note proposing a combined cap in most sectors where foreign direct investment (FDI) is allowed or where foreign institutional investors (FII) have a separate limit.

Global cues too remained supportive with European markets trading higher in early deals on speculation a Greek parliamentary vote in favor of creditor-imposed demands removes an obstacle to higher US rates. The focus now shifts to how the European Central Bank will bolster the nation’s financial system. The Asian markets ended mostly in green after Greece’s parliament endorsed the fresh set of austerity measures. The Shanghai Composite pared its early losses to end with gains of around half a percent.

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. Rally in rate sensitive stocks too aided the sentiments on hopes of a rate cut on the back of narrowing trade deficit data. Banking shares remained on buyers’ radar after the Cabinet cleared a proposal to merge the limits of foreign direct and portfolio investments into composite caps to make foreign investment regime easier. Additionally, shares of public sector oil marketing companies remained in limelight on softening global crude oil prices.

The NSE’s 50-share broadly followed index Nifty rose by over eighty points and ended above the psychological 8,600 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged by around two hundred and fifty points to finish above the psychological 28,400 mark. Broader markets too traded with traction throughout the trade and ended the session with a gain of around a percentage point. The market breadth remained in favor of advances, as there were 1,569 shares on the gaining side against 1,244 shares on the losing side while 137 shares remain unchanged.

Finally, the BSE Sensex surged by 247.83 points or 0.88% to 28446.12, while the CNX Nifty soared by 84.25 points or 0.99% to 8608.05.

The BSE Sensex touched a high and a low 28478.43 and 28245.81, respectively. The BSE Mid cap index was up by 1.33%, while Small cap index up by 0.75%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 2.06%, Bankex up by 1.91%, Power up by 1.17%, PSU up by 1.08% and Healthcare up by 1.06%, while they were no loser on the BSE index.

The top gainers on the Sensex were Axis Bank up by 4.14%, BHEL up by 2.36%, HDFC up by 1.62%, HDFC Bank up by 1.54% and Cipla up by 1.43%. On the flip side, Vedanta down by 1.17%, Mahindra & Mahindra down by 0.91%, Wipro down by 0.80%, Hero MotoCorp down by 0.38% and GAIL India down by 0.37% were the top losers.

Meanwhile, the Union Cabinet is expected to clear the proposal to bring composite cap on all kinds of foreign investments, including FDI, foreign institutional investors (FII) and other instruments in various sectors, which was announced by Finance Minister in the budget of the current fiscal. This simplification is aimed at promoting ease of doing business in India. The composite foreign investment caps will encompass all types of foreign investments. These will include foreign portfolio investment, NRI investment and depository receipts, foreign currency convertible bonds and fully and mandatorily convertible preference shares or debentures.This move would help in removing ambiguity on application of sectoral caps, conditions and approval requirements in different sectors and bring simplification in the foreign investment policy.

The Commerce and Industry Ministry  has already  proposed a composite foreign investment cap (FDI + FPI (FII, QFI) + NRI + FVCI) in sectors including agriculture, tea, mining, broadcasting, media, airports, retail (single brand and multi-brand), e-commerce, asset reconstruction companies, banking, commodity exchanges and insurance.

Presently, there are almost 12-13 sectors having composite cap which includes private sector banking, airlines, insurance defence and telecom. In future composite cap will provide benefit for sectors such as power and commodity exchanges, credit information companies and market infrastructure companies. While this proposal will have the biggest impact on the sectors where Foreign Investment Promotion Board nod is required for investment.

The CNX Nifty touched a high and low 8,616.10 and 8,542.90 respectively.

The top gainers on Nifty were Kotak Mahindra Bank up by 4.17%, Axis Bank up by 4.16%, Yes Bank up by 3.15%, BHEL up by 2.85% and BPCL up by 2.54%. On the flip side, NMDC down by 1.48%, Vedanta down by 1.20%, Ultratech Cement down by 0.63%, Gail down by 0.55% and Bank of Baroda down by 0.54% were the top losers.

European Markets were trading in the green; UK's FTSE was up by 0.52%, Germany’s DAX was up by 1.52% and France’s CAC was up by 1.46%.

Asian markets closed mostly in green on Thursday, while Indonesia Stock Exchange was closed today on account of ‘National Leave’ holiday. The Asian Development Bank trimmed its growth forecasts for China and developing Asia this year and next. After a slow first half, full-year gross domestic product growth in China is now estimated at 7 percent this year and 6.8 percent next year. That compares with its March estimate of 7.2 percent in 2015 and 7 percent next year. Weaker-than-expected external demand, a declining working-age population and rising wages were all factors in China’s slowing growth. Softness in major industrialized economies should lead to growth in East Asia including China, Taiwan, South Korea and Hong Kong to ease to 6.2 percent this year instead of 6.5 percent.

Indonesia posted a $477 million trade surplus in June, narrowing from a revised $1.1 billion in May as exports of coal and palm oil continue to fall. The country has recorded its seventh straight monthly surplus as slowing investments and lack of government spending drags demand of overseas goods. The surplus should provide some support to the rupiah, which continues falling ahead of the US Federal Reserve’s plan to raise its interest rate by the end of this year. A recovery in China’s home sales has yet to take hold and give developers enough confidence to speed up land acquisitions and new construction, although there are expectations the second half will be better than the past six months under strong policy support, including easier and cheaper funding. China’s property sales revenues rose 10 percent year-on-year in the first half, quickening from an increase of 3.1 percent in the first five months which ended a losing streak in the previous 15 months. Singaporean Retail Sales rose to a seasonally adjusted 6.1%, from 5.0% in the preceding month.