Benchmarks make gap-up opening on upbeat macro data

With a gap-up opening Indian equity markets have recovered most of their previous session losses and are now trading in fine fettle with the gains of above half a percent, supported by upbeat macro data, India's retail inflation fell to 3.78% in July from 5.40% in the month before and the growth in factory output accelerated to 3.8% in June from 2.7% in the previous month. This development has added to the clamor for interest rate cut by RBI. Sentiment also got some support with Finance Minister Arun Jaitey’s statement, that the government is committed to pursuing subsidy reforms by efficient targeting of subsidies to the poor and needy while saving the 'scarce financial resources' for infrastructure and development needs. Rupee, snapping a six-day losing streak, opened higher against the dollar on Thursday and was trading at 64.65, up 12 paise at the Interbank Foreign Exchange that too supported the markets. At present, both Sensex and Nifty were trading above the crucial 27,700 and 8,400 levels respectively.  The session was also proving fruitful for broader indices, which outperforming larger counterparts were trading with gains in the range of 1.20-1.35%.

On the global front, US markets ended mostly higher as energy shares and Apple bounced back, offsetting continued concerns about a slowdown in China. Asian markets were trading mostly in green following Wall Street recovery overnight from an early sell-off and as the rebound in commodity prices lifted resources stocks.

Back home, all the sectoral indices, barring Metal, were trading in green led by Consumer Durables and Realty. The market breadth on BSE was positive in the ratio of 1399: 437 while 39 scrips remained unchanged.

The BSE Sensex is currently trading at 27741.67, up by 229.41 points or 0.83% after trading in a range of 27623.19 and 27791.10. There were 27 stocks advancing against 3 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index surged by 1.34%, while Small cap index was up by 1.25%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.86%, Realty up by 1.82%, Bankex up by 1.47%,  Healthcare  up by 1.21% and Capital Goods up by 1.13%, while Metal down by 0.44% was the lone losing index on BSE.

The top gainers on the Sensex were Bharti Airtel up by 3.34%, Cipla up by 2.20%, ICICI Bank up by 1.97%, SBI up by 1.85% and Lupin up by 1.70%. On the flip side, Coal India down by 1.41%, GAIL India down by 0.98% and TCS down by 0.50% were the top losers.

Meanwhile, Finance Minister Arun Jaitey, while tabling the Medium-Term Expenditure Framework Statement in the parliament, reiterated that the government is committed to pursuing subsidy reforms by efficient targeting of subsidies to the poor and needy while saving the ‘scarce financial resources’ for infrastructure and development needs.

Jaitey said that the macro-economic scenario has improved significantly on back of higher growth and subdued inflation, and exuded confidence that interest rates will decline in coming years. He added that Macro-economic outcomes have improved significantly, primarily with the revival of economic growth and subsidence of inflationary tendencies. He said “With fiscal deficit coming down, and easing of inflationary pressure, it's expected that interest rates would be falling in years to come.” Finance minister however cautioned that the Seventh Pay Commission award “poses a risk”.

As per the expenditure framework, the outlay on salary is estimated to go up to Rs 1.16 lakh crore in 2016-17 and Rs 1.28 lakh crore in 2017-18 from Rs 1 lakh crore this fiscal. In case of pension, the expenditure is estimated to rise to Rs 1.02 lakh crore in 2016-17 and Rs 1.12 lakh crore in 2017-18 from Rs 88,521 crore this fiscal. It was also reported that gross domestic saving declined from 33.9 percent in 2011-12 to 30.6 percent in 2013-14, while gross fixed capital formation came down from 31.4 percent in 2011-12 to 28.7 percent in 2014-15.

Jaitley further said that the government is committed to bringing down the fiscal deficit to 3.5 percent in 2016-17, and 3 percent in 2017-18. For the current fiscal, it has been pegged at 3.9 percent of GDP. He said 'Fiscal consolidation strategy of the government hinges on reclaiming high growth in gross tax revenues achieved in the past. This is also essential for creating space for financing programmes of the government.”

The CNX Nifty is currently trading at 8417.70, up by 68.25 points or 0.82% after trading in a range of 8339.75 and 8429.50. There were 44 stocks advancing against 6 stocks declining on the index.

The top gainers on Nifty were Bharti Airtel up by 3.26%, PNB up by 2.42%, Bank Of Baroda up by 2.39%, Idea Cellular up by 2.32% and Cipla up by 2.06%. On the flip side, NMDC down by 1.80%, GAIL India down by 0.96%, BPCL down by 0.83%, Coal India down by 0.75% and TCS down by 0.57% were the top losers.

Asian markets were trading mostly in green in; Taiwan Weighted increased 8.98 points or 0.11% to 8,292.36, KOSPI Index increased 10.43 points or 0.53% to 1,985.90, FTSE Bursa Malaysia KLCI increased 11.74 points or 0.73% to 1,621.67, Straits Times increased 36.24 points or 1.18% to 3,097.73, Hang Seng increased 47.03 points or 0.2% to 23,963.05, Jakarta Composite increased 62.16 points or 1.39% to 4,541.65 and Nikkei 225 increased 160.84 points or 0.79% to 20,553.61.

On the flip side, Shanghai Composite decreased 24.26 points or 0.62% to 3,862.06.