Benchmarks trim gains; trade continues in green

After getting a gap-up start, Indian equities trimmed gains but continued to trade in green in the late morning session on the back of sustained buying in rate sensitive shares on hopes of a rate cut in the next monetary policy on the back of favourable macroeconomic numbers. However, yuan devaluation for the third straight day has casted a shadow on the metal pack with Tata Steel, Hindalco and Vedanta trading lower up to 4 present. The sentiments were on optimistic note from the early trade after 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. Besides, firm global cues coupled with the appreciation in rupee value against the dollar also propped up the sentiment. Some support also came 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. However, the passage of the GST bill on the last day of the monsoon session of the Parliament remains elusive keeping the investors unnerved.

On the global front, Asian stock markets stabilized after a two-day sell-off sparked by China's currency devaluation. Overnight, U.S. stocks rebounded in afternoon trading on Wednesday to end little changed as energy shares and Apple rebounded, offseting continued concerns about a slowdown in China. Back home, breaking its six-day falling spree, Indian rupee recovered 14 paise to 64.64 against the US dollar in early trade on fresh selling of the American currency by exporters and banks amid positive economic data.

Back on street, stocks from Consumer Durables, Banking and Auto counters were supporting the markets’ uptrend, while those from Metal counters was adding to the underlying cautious undertone. Meanwhile, shares of mobile service providers gained after the government permitted spectrum sharing between a move that could resolve the issue of call drops and improve efficiency in their respective telecom circles.  In scrip specific development, shares of Ashok Leyland have surged after the company reported net profit of Rs 159 crore in June 2015 quarter against a loss of Rs 48 crore in a year ago quarter. On the flip side, shares of National Aluminium Company have dipped after reporting 40% year-on-year (YoY) drop in net profit at Rs 163 crore for the quarter ended June 2015, due to lower sales income.

The market breadth on BSE was positive, out of 2388 stocks traded, 1327 stocks advanced, while 975 stocks declined on the BSE. 

The BSE Sensex is currently trading at 27671.74, up by 159.48 points or 0.58% after trading in a range of 27614.40 and 27791.10. There were 22 stocks advancing against 8 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.89%, while Small cap index up by 0.46%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.83%, Bankex up by 0.98%, Auto up by 0.75%, TECK up by 0.70% and Realty up by 0.64%, while Metal down by 1.55% was the sole losing index on BSE.

The top gainers on the Sensex were Bharti Airtel up by 2.97%, Cipla up by 2.35%, Lupin up by 2.26%, SBI up by 1.97% and Hero MotoCorp up by 1.37%. On the flip side, Tata Steel down by 3.69%, Vedanta down by 2.33%, Hindalco down by 2.29%, GAIL India down by 1.80% and Wipro down by 0.47% were the top losers.

Meanwhile, strengthening the case of another rate cut, Retail inflation fell to a record low of 3.78 percent in July. It was the slowest pace on record, helped by lower food prices of certain items including of vegetables, fruits and cereals. As per the data of the Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation, Consumer Price Index (CPI) Numbers on Base 2012=100 for Rural, Urban and Combined for the Month of July 2015 stood at 4.44 percent, 2.94 percent and 3.78 percent respectively.

The food inflation was down to 2.89 per cent in July from 5.73 per cent in June, inflation in items within the food basket such as pulses remained steady at 22 per cent while prices of items like fruits and vegetables, eggs and milk products have softened. The latest drop in food inflation was aided by a conducive base effect, as CPI food inflation was as high as 8.85% in July last year.

Core consumer inflation, a measure of demand, also eased from near 5 per cent in June to around 4.5 per cent. Consumer Food Price Index (CFPI) for all India Rural, Urban and Combined for July 2015 stood at 2.83 percent, 1.01 percent and 2.15 percent respectively. The General Indices (Provisional) for the month of July 2015 for Rural, Urban and Combined are 124.8, 122.4 and 123.7 respectively.  The CFPI for Rural, Urban and Combined for the same month were 127.3, 129.6 and 128.1 respectively.

The CPI number is significantly lower than expected and has halved over the 19 months from double digit levels, with food one of the significant factor on the downside. This number is significantly below RBI's projection for this period, which has targeted to keep retail inflation at less than 6 per cent. The apex bank is scheduled to review its monetary policy next on September 29 but there are chance that the central bank could cut interest rates before that.

The CNX Nifty is currently trading at 8395.00, up by 45.55 points or 0.55% after trading in a range of 8339.75 and 8429.50. There were 36 stocks advancing against 14 stocks declining on the index.

The top gainers on Nifty were Bharti Airtel up by 2.81%, Cipla up by 2.24%, BPCL up by 2.13%, Lupin up by 2.01% and SBI up by 1.97%. On the flip side, Tata Steel down by 3.71%, NMDC down by 3.56%, Vedanta down by 2.50%, Hindalco down by 2.45% and GAIL India down by 1.82% were the top losers.

Asian markets were trading mostly in green in; Taiwan Weighted was up by 0.25%, KOSPI Index up by 0.58%, FTSE Bursa Malaysia KLCI up by 1.01%, Straits Times up by 1.15%, Hang Seng up by 0.39%, Jakarta Composite up by 1.96% and Nikkei 225 up by 0.86%. On the flip side, Shanghai Composite was down by 0.43%.