Benchmarks continue to hold their head above water

Indian equity benchmarks paired some early gains and were trading in a narrow range with a positive bias in late morning session on the back of sustained foreign capital inflows after government eased FDI rules and a firming trend at other Asian markets. Sentiments got a boost with the report that Reserve Bank India (RBI) has allowed banks to factor export receivables on a non-recourse basis, so as to enable exporters to improve their cash flow and meet their working capital requirements. Besides, expectations that a fall in global oil prices following a deal between world powers and Iran will provide enough cushion to RBI to cut rates, also supported the upside. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 745.81 crore on July 16, 2015. However, investors remained cautious as southwest monsoon remained 32% below normal in the first 15 days of July, which is the key month for sowing of kharif crops.

On the global front, Asian stocks mostly advanced early trade, extending the gains made in recent sessions, following the positive lead overnight from Wall Street and as worries over Greece eased. Overnight, Wall Street had ended stronger on Thursday after earnings reports from eBay and Netflix boosted optimism. Back home, Indian rupee recovered by 5 paise to 63.46 against the US dollar in early trade on fresh selling of the American currency by exporters amid increased foreign capital inflows.

Back on street, stocks from Consumer Durables, Teck and IT counters were supporting the markets’ uptrend, while those from Banking and FMCG counters was adding to the underlying cautious undertone. In scrip specific development, Shares of Man Industries surged after the company reported a nearly six-fold jump in its standalone net profit at Rs 17.71 crore for the quarter ended June 2015. Furthermore, Delta Corp rallied after the company posted a consolidated net profit at Rs 10 lakh for the quarter ended June 2015 against a loss of Rs 20 crore in the year-ago quarter.

The market breadth on BSE was positive, out of 2295 stocks traded, 1205 stocks advanced, while 981 stocks declined on the BSE. 

The BSE Sensex is currently trading at 28460.28, up by 14.16 points or 0.05% after trading in a range of 28417.46 and 28576.32. There were 20 stocks advancing against 10 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.19%, while Small cap index up by 0.61%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.01%, TECK up by 0.89%, IT up by 0.69%, Power up by 0.64% and Capital Goods up by 0.62%, while Bankex down by 0.23% and FMCG down by 0.02% were the few losing indices on BSE.

The top gainers on the Sensex were BHEL up by 1.16%, Sun Pharma up by 1.04%, Bharti Airtel up by 0.95%, Tata Steel up by 0.92% and Lupin up by 0.90%. On the flip side, HDFC down by 1.69%, Coal India down by 0.94%, Hindustan Unilever down by 0.83%, Tata Motors down by 0.53% and Axis Bank down by 0.53% were the top losers.

Meanwhile, the Asian Development Bank (ADB) in its supplement to the Asian Development Outlook  (ADO) 2015, has retained its India GDP growth projection for 2015-16 at 7.8 percent, but cautioned that delay in reforms relating to land acquisition and GST could hamper growth. ADB said that “In India, growth forecasts remain unchanged at 7.8 percent in fiscal year (2015-16) and 8.2 percent in 2016-17, supported by a healthy monsoon and new investments.” It further stated that, underlying indicators suggest that India is on track to achieve the ADO 2015 growth forecast of 7.8 percent in 2015-16.

ADB also said that the pace of GDP growth is expected to accelerate to 8.2 percent in 2016-17, driven by continued service sector growth and removal of procedural bottlenecks that have hampered investment flow. It said “A healthy monsoon extending to early July has seen summer crop sowing increase 57.6 percent over the last year and is expected to boost growth in agriculture. The number of new investment projects announced has continued to increase for the fourth consecutive quarter during the quarter ended June 2015, indicating brighter investment sentiment.”

It added that improvements in indirect tax collection in the first quarter of the current fiscal points to some recovery in manufacturing. The index of industrial production rose at an average rate of 3.2 percent in January-May 2015, double the 1.6 percent growth in the same period of 2014.

The international agency based in Manila, though has cut its 2015 growth forecast for developing Asia to 6.1% from 6.3%, amidst slower-than-expected economic activity in the United States (US) and the People’s Republic of China. It added that ongoing softness in the major industrialized economies (US, Japan, Euro Area) will see a slowdown in East Asia as a whole, with growth now at 6.2% in 2015, down from 6.5% forecast earlier.

The CNX Nifty is currently trading at 8611.30, up by 3.25 points or 0.04% after trading in a range of 8593.15 and 8642.95. There were 32 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were Tech Mahindra up by 2.29%, Idea Cellular up by 1.53%, Tata Steel up by 1.25%, HCL Tech up by 1.19% and Grasim Industries up by 1.15%. On the flip side, HDFC down by 1.70%, Kotak Mahindra Bank down by 1.27%, Zee Entertainment down by 1.19%, Yes Bank down by 1.02% and Coal India down by 0.98% were the top losers.

Asian markets were trading mostly in green; Nikkei 225 was up by 0.12%, Shanghai Composite up by 1.66% and Hang Seng was up by 1.06%. On the flip side, KOSPI Index was down by 0.43% and Taiwan Weighted was down by 0.05%.