Benchmarks extend gains; Sensex regains 27,600 mark

Indian equity benchmarks extended early gains to continue firm trade in late morning session on back of value-buying in recently beaten down select blue-chip stocks. Besides, covering-up of pending short positions by investors ahead of the July month’s expiry in the derivatives segment on Thursday supported the recovery. Sentiments got a boost with the Finance Minister Arun Jaitley statement that the government will not take any ‘knee-jerk’ reaction that will adversely impact country’s investment climate. Some support also came with Chief Economic Advisor (CEA) Arvind Subramanian’s statement that India can grow at 8-10%, provided exports put up a strong show. However, gains remained capped on muted earnings by some bluechip companies amid fears over stricter norms on participatory notes (PNs).  Further, the report that the Foreign Portfolio Investors (FPIs) were the net sellers to the tune of Rs 860 crore on July 27, 2015 also weighed on market sentiment.

On global front, Asian stock markets were mostly lower as the rout in Chinese stock markets drove global equities lower and increased risk aversion. Weak commodity prices also weighed on the sentiment. Investors were remained cautiously ahead of a two-day US Federal Reserve meeting that begins later in the day. Back home, Indian rupee recovered by 12 paise to 64.04 against the US dollar in early trade on fresh selling of the US currency by exporters.

Back on street, stocks from Capital Goods, FMCG and Banking counters were supporting the markets’ uptrend, while those from Realty, Metal and Auto counters was adding to the underlying cautious undertone. In scrip specific development, shares of KEC International surged after the company reported more than doubling in consolidated net profit at Rs 30.40 crore for the quarter ended June 30, 2015 against Rs 11.40 crore in the corresponding quarter of previous year. On the flip side, shares of Ambuja Cements have declined after the company has reported a fall of 44.62% in its net profit at Rs 226.35 crore for the quarter ended June 30, 2015 as compared to Rs 408.7 crore for the same quarter in the previous year.

The market breadth on BSE was positive, out of 2180 stocks traded, 1275 stocks advanced, while 819 stocks declined on the BSE. 

The BSE Sensex is currently trading at 27629.25, up by 67.87 points or 0.25% after trading in a range of 27505.75 and 27676.65. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.28%, while Small cap index up by 0.44%.

The gaining sectoral indices on the BSE were Capital Goods up by 0.83%, FMCG up by 0.60%, Bankex up by 0.51%, Power up by 0.51% and Consumer Durables up by 0.38%, while Realty down by 1.64%, Metal down by 0.35%, Auto down by 0.28%, Infrastructure down by 0.11% and PSU down by 0.04% were the losing indices on BSE.

The top gainers on the Sensex were BHEL up by 1.64%, Mahindra & Mahindra up by 1.16%, Larsen & Toubro up by 1.08%, Dr. Reddys Lab up by 1.06% and NTPC up by 1.01%. On the flip side, Tata Motors down by 2.53%, Hero MotoCorp down by 1.26%, Bharti Airtel down by 1.18%, Wipro down by 1.10% and Tata Steel down by 1.01% were the top losers.

Meanwhile, the Employees’ Provident Fund Organization (EPFO), the Retirement fund body, has decided to invest around Rs 410 crore in exchange traded funds (ETFs), every month during the current financial year. The body has decided to invest 5% of its incremental deposits every month. ETFs are security that tracks an index, a commodity or a basket of assets such as an index fund, but trades like a stock on an exchange.

Currently, the EPFO has received average monthly incremental deposits of Rs 8,200 crore during this financial year so far. Accordingly, 5 per cent of incremental deposits comes to around Rs 410 crore

In April 2015, Labour Ministry had suggested new investment pattern, which provided that EPFO will invest a minimum of 5% and up to 15% of incremental deposits in equity or equity-related schemes. Though, it has not invested in any ETF so far.  

The EPFO has been mainly investing in the central and state government securities which provide fixed returns and complete safety of investments. It manages a huge corpus of Rs 6.5 lakh crore with a subscribers base of six crore.

Earlier, the Department of Disinvestment (DoD) had asked EPFO to invest Rs 6,000 crore in the country's only exchange traded fund of PSU stocks, however later it committed Rs. 1,000 crore. The ETF forms, part of government disinvestment programme of current financial year through which DOD targets to raise Rs 41,000 crore by selling minority stake in PSUs.

The CNX Nifty is currently trading at 8385.50, up by 24.50 points or 0.29% after trading in a range of 8344.85 and 8397.40. There were 32 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were BHEL up by 2.08%, Mahindra & Mahindra up by 1.58%, Zee Entertainment up by 1.37%, Larsen & Toubro up by 1.32% and Kotak Mahindra Bank up by 1.29%. On the flip side, NMDC down by 3.80%, Tata Motors down by 2.45%, Hero MotoCorp down by 1.35%, Asian Paints down by 1.15% and PNB down by 1.11% were the top losers.

Asian markets were trading mostly in red; Jakarta Composite was down by 0.82%, Nikkei 225 down by 0.23%, Shanghai Composite down by 1%, Straits Times down by 0.6% and KOSPI Index down by 0.06%. On the flip side, FTSE Bursa Malaysia KLCI was up by 0.1%, Taiwan Weighted up by 0.62% and Hang Seng increased up by 1.52%.