Buying in second half help markets to end higher

Thursday’s session turned out to be a good day of trade for the Indian equity markets, where frontline gauges garnered gains of around quarter of a percent. Hectic buying activity which took place during last leg of trade mainly drove the markets higher, with frontline gauges ending just shy of their crucial 28,300 (Sensex) and 8,600 (Nifty) bastions. Earlier, markets traded choppy as traders took cautious stance on bets that the Federal Reserve will boost interest rates as soon as next month. However, sentiments turned up-beat in second half of trade with RBI Governor Raghuram Rajan’s statement that the central bank will cut interest rate provided it feels confident that inflation will remain below 6 percent even after the reduction.

Sentiments also got a strong support with retirement fund manager Employees Provident Fund Organisation (EPFO) entering the stock market through exchange-traded funds (ETFs). The retirement fund manager will invest up to 5% or Rs 5,000 crore and Rs 6,000 crore of its incremental corpus in ETFs between 6 August and 31 March 2016. Some support also came with government’s proposals for big investments of Rs 30,552.45 crore, pertaining to sectors such as pharmaceuticals, information & broadcasting, insurance, non-banking finance companies and private banks.

On the global front, European counters were trading choppy in early deals, led by weakness in the energy and mining sectors, as investors focused on a mixed bag of corporate earnings. Asian markets ended in red as jitters about China’s economy and upcoming U.S. jobs data kept buying appetite in check. Sentiments also remained dampened on reports that Chinese manufacturing is weakening despite government stimulus efforts have reignited concerns about a hard landing for the world's No. 2 economy.

Back home, appreciation in Indian rupee aided sentiments, following increased selling of the American currency by exporters amid higher foreign funds inflow. Some support also came with reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 447.90 crore on August 5, as per provisional data released by the stock exchanges. Buying in software counter too helped in markets up-move taking cues from the earnings of the US-headquartered Cognizant Technology Solutions, which reported a 6% sequential growth in revenues for the June quarter and also raised its annual guidance. Stocks related to capital goods counters too remained on buyers’ radar after robust results from Siemens. The company reported a 13-fold jump in standalone net profit at Rs 168 crore for the quarter ended June 30, 2015 (Q3), due to cost rationalisation process and strong performance by its power and gas segment.

The NSE’s 50-share broadly followed index Nifty ended higher by twenty points to end above its psychological 8,550 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex edged higher by over seventy points to end near the psychological 28,300 mark. The broader markets struggled to get any traction and ended the session mixed. The market breadth remained in favour of decliners, as there were 1,391 shares on the gaining side against 1,532 shares on the losing side while 112 shares remain unchanged.

Finally, the BSE Sensex gained 75.05 points or 0.27% to 28298.13, while the CNX Nifty added 20.70 points or 0.24% to 8588.65.

The BSE Sensex touched a high and a low 28359.96 and 28163.69, respectively. The BSE Mid cap index was up by 0.36%, while Small cap index was down by 0.12%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.91%, Capital Goods up by 1.68%, Healthcare up by 1.14%, Auto up by 0.56% and Bankex up by 0.55%, while FMCG down by 1.13%, Metal down by 0.55%, Oil & Gas down by 0.26%, Power down by 0.16% and PSU down by 0.03% were the losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 2.74%, Dr. Reddys Lab up by 1.79%, Tata Motors up by 1.63%, Lupin up by 1.37% and TCS up by 1.28%. On the flip side, ITC down by 1.70%, Coal India down by 1.59%, Reliance Industries down by 0.84%, Vedanta down by 0.78% and Wipro down by 0.63% were the top losers.

Meanwhile, Commerce and Industry Minister Nirmala Sitharaman replying to a query in the parliament has informed that, as many as 19 proposals with an estimated investment of Rs 30,552.45 crore are under the consideration of the government. She said that “There are 19 proposals of big investments, each in excess of Rs 100 crore under consideration of government.”

It was further elaborated that proposals for big investments under the government consideration pertains to sectors such as pharmaceuticals, information & broadcasting, insurance, non-banking finance companies and private banks.

Separately, the minister said that Centre has undertaken a number of steps to improve ease of doing business in India and the ministries and state governments have been advised to simplify and rationalize the regulatory environment through business process reengineering and use of information technology amongst the other important steps. Further she said that, as FDI is largely a matter of private business decisions, global investors normally take time to assess a new policy and its implications in the context of a particular market before making investment.

The minister said in the light of the importance of foreign direct investments for economic growth and development, the government announced key FDI reforms in the defence and railways sectors. The entire range of rail infrastructure was opened to 100 percent FDI under the automatic route, and in defence, sectoral cap was raised to 49 percent.

The CNX Nifty touched a high and low 8606.30 and 8551.50 respectively.

The top gainers on Nifty were Larsen & Toubro up by 2.94%, Dr. Reddys Lab up by 2.22%, Kotak Mahindra Bank up by 1.95%, PNB up by 1.73% and Tata Motors up by 1.65%. On the flip side, Tech Mahindra down by 3.29%, ITC down by 1.84%, Coal India down by 1.81%, Asian Paint down by 1.20% and Vedanta down by 1.06% were the top losers.

European Markets were mostly trading in the red; UK's FTSE was down by 0.34% France’s CAC was down by 0.01% while Germany’s DAX was up by 0.02%.

Asian markets, barring Nikkei 225 and Straits Times closed, in red on Thursday. Indonesian Central Bureau of Statistics highlighted that the economy will find it hard to meet the Indonesian government’s expectations for 5.2 percent growth this year. Earlier, the statistics bureau (BPS) reported that Southeast Asia’s largest economy expanded 4.67 percent in April-June from a year ago. South Korea’s president called for major surgery on the economy, which faces slowing growth and increasing challenges as she approaches the half-way point of her single five-year term. Park Geun-hye, whose popularity has dipped below 40 percent, has fallen short on pledges to breathe fresh momentum into Asia’s fourth-largest economy and seen her push for labor market reforms and job creation sputter. South Korea’s economy recorded its weakest growth in six years in the second quarter, battered by a deadly outbreak of Middle East Respiratory Syndrome (MERS) and poor exports, prompting the government to scramble to put together a stimulus package with a supplementary budget. Thai consumer confidence fell to a 14-month low in July, dented by slow economic growth, contracting exports and low commodity prices. The consumer confidence index of the University of the Thai Chamber of Commerce dropped to 73.4 in July from 74.4 in June, its seventh consecutive monthly decline. The reading was the lowest since May 2014, when the army seized power to end political unrest. Japan’s index of leading economic indicators rose to a seasonally adjusted 107.2, from 106.2 in the preceding month.