Markets trade in fine fettle in late morning sessions

After getting a gap-up start, Indian equity benchmarks showed some strength in early morning trades and continued to trade in tight range in late morning sessions, with the Sensex over the 28,250 and the Nifty above 8,550 marks. Apart from blue chips, broader indices too participated in the gain with both mid cap and small cap indices trading up by 1.10 % and 1.20% respectively. The sentiments were on optimistic note with the report that services industry bounced back to growth in July, but the improvement was modest. For the first time in three months, the Nikkei Services Purchasing Managers' Index, compiled by Markit, nudged above the 50 mark that separates growth from contraction, coming in at 50.8 in July. It was 47.7 in June. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 119 crore on August 04, 2015. Moreover, shares of steel companies were trading higher on reports that the finance ministry may hike the import duty on long and flat steel products to curb imports and protect the ailing domestic industry  and IT stocks gained momentum on the back of a weakening rupee.

On global front, Asian stock markets were mostly higher after a lackluster start as a private survey showed China's services sector grew at its fastest pace in almost a year in July. However, U.S. stocks ended lower for a third straight day, pulled down by some disappointing earnings reports. Back home, Indian rupee depreciated 19 paise to 63.93 against the dollar in early trade due to rise in the greenback against other currencies overseas buoyed by a possible US Fed rate hike.

Back on street, all sectoral indices on the BSE were trading in the green led by Realty index up 3.29% followed by Metal, FMCG and Teck among others. In scrip specific development, shares of Bharti Airtel have surged after the company reported a 40% year-on-year (Y-o-Y) jump in consolidated net profit at Rs 1,554 crore for the quarter ended June 2015. Furthermore, shares of Torrent Power rose after the company reported two fold jump in its consolidated net profit after tax and minority interest at Rs 173.48 crore for the quarter ended June 30, 2015 as compared to Rs 86.24 crore for the same quarter in the previous year.

The market breadth on BSE was positive, out of 2509 stocks traded, 1767 stocks advanced, while 671 stocks declined on the BSE. 

The BSE Sensex is currently trading at 28276.74, up by 204.81 points or 0.73% after trading in a range of 28135.68 and 28308.50. There were 27 stocks advancing against 3 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.10%, while Small cap index up by 1.20%.

The top gaining sectoral indices on the BSE were Realty up by 3.29%, Metal up by 1.56%, FMCG up by 1.40%, TECK up by 1.22% and IT up by 1.17%, while there were no losers on the sectoral front.

The top gainers on the Sensex were Tata Steel up by 4.17%, Bajaj Auto up by 2.59%, Vedanta up by 2.00%, Bharti Airtel up by 1.96% and Infosys up by 1.81%. On the flip side, GAIL India down by 0.64%, SBI down by 0.35% and ICICI Bank down by 0.16% were the top losers.

Meanwhile, with an aim to cover a shortage of funds for meeting food subsidy bill, the government is scrutinizing a proposal to raise Rs 40000 crore through long-term bonds from LIC to meet the subsidy arrears. In the financial year 2015, Subsidy arrears of state-run Food Corporation of India (FCI), the nodal agency for procurement and distribution of grains, stood at Rs 50,730 crore, and is estimated to be Rs 22,348 crore for current financial year.

Food minister Ram Vilas Paswan has said that this department is facing shortage of funds in disbursing food subsidy to FCI as well as to states on account of less allocation of funds in the Budget compared to the projected requirement.  Minister further stated that  the government has sanctioned a cash limit of Rs 54,495 crore and raised short- term loan of up to Rs 30,000 crore from Rs 20,000 crore and given 'Ways and Means Advance' of Rs 10,000 crore, to ensure smooth functioning of FCI. The government has taken several measures to make available sufficient funds to FCI 

For the current financial year 2016, the government has allocated Rs 97,000 crore as against the requirement of Rs 1,19,348 crore. The arrears are estimated to be Rs 22,248 crore. In the financial year 2015, the government had allocated Rs 97,000 crore against the projected requirement of Rs 1,47,730 crore for the 2014-15 fiscal. The shortfall was Rs 50,730 crore for last year.

In recent years, the government has increased the budgetary allocation for food subsidy, but due to budgetary constraints and other pressing financial commitments, allocation made is still insufficient to meet the actual requirement of funds, especially in respect of FCI.

The CNX Nifty is currently trading at 8573.80, up by 56.90 points or 0.67% after trading in a range of 8545.85 and 8587.45. There were 38 stocks advancing against 12 stocks declining on the index.

The top gainers on Nifty were Tata Steel up by 3.75% and Bajaj Auto up by 2.59% and Bharti Airtel up by 2.04% and Infosys up by 1.93% and Zee Entertainment up by 1.93%. On the flip side, Asian Paints down by 1.30%, Bank of Baroda down by 0.71%, GAIL India down by 0.62%, Yes Bank down by 0.57% and Kotak Mahindra Bank down by 0.56% were the top losers.

Asian markets were trading Mostly in red; KOSPI Index was up by 0.07%, Straits Times up by 0.05%, FTSE Bursa Malaysia KLCI up by 0.27%, Jakarta Composite up by 0.49%, Taiwan Weighted increa up by 0.42%, Hang Seng up by 0.25% and Nikkei 225 up by 0.53%. On the flip side, Shanghai Composite was down by 1.3%.