Markets bounce back in style bucking sluggish global cues

Wednesday proved wonderful day of trade for the Indian markets, which smartly coming out their slump of last session posted triple digit rally. The start was on a sluggish note tailing the weakness in the global markets, but the markets bounced back in style in the very first hour and kept gaining momentum reclaiming the crucial psychological levels lost in last week’s sell-off. Though, the rally was guided by the surge in blue-chip stocks, the broader markets equally contributed to the upsurge. Once the markets started moving up there was no looking back, barring some stock specific profit taking. Traders got some support with Goods and Services Tax (GST) panel submitting its report to Rajya Sabha, proposing three modifications related to clause 12, 18 and 19. The first modification is regarding 1 percent additional tax on inter-state supply in Clause 18, which the panel has said that may lead to cascading effect on taxes. The panel said the term 'supply' should be clarified and proposed term ‘Band’ be defined within GST limit. The panel has recommended compensation for GST loss for 5 years. There is a strong possibility of passage of the GST Bill during the ongoing monsoon session of Parliament given 'broad consensus’ among political parties.

The most important factor of the rally was global cues remaining totally unsupportive and while most of the Asian markets ended in red, the European markets too made a weak start, extending decline for the second day, with Apple Inc.’s worse-than-forecast results dragging the semiconductor companies lower. Apple’s lower-than-expected iPhone shipments and a sales forecast below estimates hit shares of suppliers. Meanwhile, the ECB will monitor Greece’s aid program along with the European Commission and International Monetary Fund.

Back home, markets retained their jubilation throughout the trading session and both the major indices posted triple digit rally, with Nifty reclaiming the crucial psychological level of 8600 and ending near the three months closing high. Traders overlooked the depreciation in rupee, which traded modestly lower till the time of equity markets closing. There were lots of sector specific movements in the market, the realty sector was buzzing, after a unit of the New York-based private equity firm Warburg Pincus, in a biggest deal In India's real estate sector announced to invest $284 million for a minority stake in Piramal Realty, the real estate development arm of Piramal Group. Also, the FMCG stocks that were laggard of the last session due to disappointing numbers to HUL, too moved higher. On the other hand, the telecom stocks were a bit under pressure after telecom regulator TRAI said that most of the telecom companies in Delhi and Mumbai are not meeting the prescribed standards the telecom department has written to telecom operators to take steps to optimise radio frequencies in their networks and analyse the reasons for call drops, and report back to the government on the action they have taken to deal with the matter by July 31. Some profit booking in Infosys and as the global markets gave a thumbs-down to Apple’s third-quarter results after it missed expectation, kept the IT and tech stocks under pressure at home too.

The NSE’s 50-share broadly followed index Nifty surged over a 100 points to regain its psychological 8,600 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex added over 300 points to finish above the psychological 28,500 mark. Broader markets, performed in tandem to the benchmarks and ended the session with a gain of around one percent. The market breadth remained in favour of advances, as there were 1,769 shares on the gaining side against 1,046 shares on the losing side while 118 shares remain unchanged.

Finally, the BSE Sensex surged by 322.79 points or 1.15% to 28504.93, while the CNX Nifty soared by 104.05 points or 1.22% to 8633.50.

The BSE Sensex touched a high and a low 28546.42 and 28070.91, respectively. The BSE Mid cap index was up by 1.30%, while Small cap index up by 0.86%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 2.36%, Bankex up by 1.45%, PSU up by 1.27%, Infrastructure up by 1.25% and Auto up by 1.10%, while IT down by 0.40% and TECK down by 0.33% were the losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 4.26%, Mahindra & Mahindra up by 3.39%, Sun Pharma up by 3.35%, Bajaj Auto up by 2.93% and HDFC up by 2.74%. On the flip side, Lupin down by 3.29%, TCS down by 1.36%, Bharti Airtel down by 1.33%, Infosys down by 0.90% and Vedanta down by 0.37% were the top losers.

Meanwhile, telecom regulator, the Telecom Regulatory Authority of India (TRAI) releasing the findings of the audit of quality of service being provided by telecom operators has said that most of the telecom companies in Delhi and Mumbai are not meeting the prescribed standards. TRAI said “The drive test results revealed that most of operators are not meeting the benchmarks of network related parameters. They failed to achieve the benchmarks due to high block call rate, high drop call rate, low call setup success rate and poor Rx quality.”

The service quality audit which was done by an agency through independent drive tests in the two cities in June and July, has revealed that only Bharti Airtel in Mumbai and Tata Teleservices in Delhi met the laid-down quality of service (QoS) benchmarks for call drop rate, which as per norms should be less than 2 per cent. Airtel had call drop rate of 0.97 per cent and Tata was having call drop rate of 0.84 per cent

Regarding other service providers the audit stated that in Mumbai, Idea has a call drop rate of 5.56 per cent, Tata has 5.51 per cent, Vodafone has 4.83 per cent, Aircel has 3.19 per cent, Reliance has 2.29 per cent. In Delhi Reliance had a call drop rate of 17.29 per cent, Airtel 8.04 per cent, Aircel 5.18 per cent, Vodafone 4.28 per cent and Idea 2.84 per cent.

TRAI further stated that the drive test results revealed that most of operators are not meeting the benchmarks of network related parameters. It however, said that this result reflects only the network conditions on the route followed by the test vehicles and as determined during the day and time of the drive test.

Meanwhile, the telecom department has written to telecom operators to take steps to optimise radio frequencies in their networks and analyse the reasons for call drops, and report back to the government on the action they have taken to deal with the matter by July 31. The government has also asked TRAI to suggest a disincentive mechanism to tackle the problem.

The CNX Nifty touched a high and low 8,643.90 and 8,498.65 respectively.

The top gainers on Nifty were Zee Entertainment up by 5.22%, Reliance Industries up by 4.38%, Sun Pharma up by 3.35%, Mahindra & Mahindra up by 3.34% and Bajaj Auto up by 3.27%. On the flip side, Lupin down by 3.41%, Idea Cellular down by 1.67%, Bharti Airtel down by 1.24%, TCS down by 1.19% and Infosys down by 1.14% were the top losers.

European Markets were trading in the red; UK's FTSE was down by 0.33%, Germany’s DAX was down by 0.65% and France’s CAC was down by 0.24%.

Asian markets closed mostly in red on Wednesday following a negative lead from Wall Street and Japanese shares dragged by a stronger yen but Shanghai extended its latest rally to a fifth straight day. Japan’s cabinet is expected to approve by Friday the outline of a 2016/17 budget that will not set any cap on spending requests from ministries, reflecting the priority given to growth over fiscal restraint. The outline of the 2016/17 budget will be based on fiscal guidelines mapped out last month that called for limiting rises in general-account spending for the next three years, but stopped short of setting a binding target. Japan’s government lowered its assessment of industrial output in July as auto makers and electronic parts manufacturers curb output to bring down inventories of finished goods. Japan’s All Industries Activity Index fell to a seasonally adjusted -0.5%, from 0.1% in the preceding month. The Philippines will likely miss its export growth target of 8-10 percent this year after shipments contracted in the first five months of 2015. The exports in May fell 17.4 percent from a year earlier which is the steepest drop since September 2011, with total shipments in the first five months falling 5 percent.