Benchmark continue firm trade in late afternoon session

Indian equity markets added gains and continued their firm trade in late afternoon session on account of buying in frontline blue chip counters. The sentiments were on upbeat mood on reports that India’s retail inflation eased to 3.78% in July from 5.40% in June and the growth in factory output accelerated to 3.8% in June from 2.5% in the previous month. The sharp drop in the consumer price index (CPI) inflation in July has yet again fuelled speculations of a rate cut in September or even before that. Traders were seen piling position in Bankex, IT and Auto stocks, while selling was witnessed in Metal, Consumer Durables and Realty sector stocks. In scrip specific development, Nestle India was trading firm after the Bombay High Court ruled in favour of the company in its challenge to a ban by the food safety watchdog of Maggi instant noodles over concerns the popular snack contained excess levels of lead.

On the global front, the Asian markets traded in green, while the European markets were trading on optimistic note. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 8,350 and 27,500 levels respectively. The market breadth on BSE was negative in the ratio of 1108:1571 while 103 scrips remained unchanged.

The BSE Sensex is currently trading at 27592.01, up by 79.75 points or 0.29% after trading in a range of 27535.97 and 27791.10. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green and red; the BSE Mid cap index was up by 0.28%, while Small cap index down by 0.24%.

The gaining sectoral indices on the BSE were Bankex up by 0.84%, IT up by 0.57%, Auto up by 0.38%, INFRA up by 0.37% and PSU up by 0.31%, while Metal down by 1.89%, Consumer Durables down by 0.70%, Realty down by 0.58%, Capital Goods down by 0.56% and Power down by 0.23% were the losing indices on BSE.

The top gainers on the Sensex were Lupin up by 2.93%, Cipla up by 2.42%, Mahindra & Mahindra up by 1.67%, Axis Bank up by 1.52% and Infosys up by 1.51%.

On the flip side, Vedanta down by 5.93%, Tata Steel down by 4.94%, Hindalco down by 3.44%, BHEL down by 2.02% and GAIL India down by 1.83% were the top losers.

Meanwhile, Narendra Modi’s two-day visit to UAE next week mainly focuses to boom trade and investments between the two regional economic powerhouses and also aims to attract much needed foreign investment to boost the economy. The visit aims to attract the huge untapped potential of the Abu Dhabi Investment Authority (ADIA) sovereign wealth funds estimated at over $800 billion for infrastructural needs in the backdrop of the $1 trillion infrastructure spending planned by India. India's on-going talks with the Gulf countries on finalizing Free Trade Agreement (FTA) are also expected to get a new boost with the Indian leader's visit. Attracting more foreign direct investments to India, which is among the top three trade partners of the UAE, is certainly one of the main agendas of the Indian leadership.

Further this visit will also give impetus to Bilateral Investment Protection Agreements (BIPA) which earlier has not functioned to its potential to attract investments due to fluctuation in the Indian economy in the last two years. India is committed to implementing the BIPA signed with the UAE to encourage further investment flow into the country. Earlier in December 2013 the deal was signed to ensure protection of cross border investments by India and the UAE which aimed to speed up the investments and also giving a fresh momentum to stalled joint venture projects.

Currently, the UAE investments in India are estimated to be $8 billion of which around $3.01 billion as of January 2015 is in the form of foreign direct investment, while the remaining is portfolio investment. Due to curb on gold imports the two-way trade has declined from a record high of $75.45 billion in 2012-13 to $59.54 billion in 2013-14. The UAE's investments in India are mainly concentrated in five sectors which include 15.52% in Construction Development, 13.09% in Power, 9.90% in Metallurgical Industries, 9.58% in Services Sector and 4.90% in Computer Software & Hardware.

UAE is the tenth biggest investor in India in terms of FDI, investments by Indian companies in the UAE are estimated to be in excess of $55 billion, making the Gulf country a sought-after destination of Indians.

The CNX Nifty is currently trading at 8364.30, up by 14.85 points or 0.18% after trading in a range of 8339.75 and 8429.50. There were 33 stocks advancing against 17 stocks declining on the index.

The top gainers on Nifty were Tata Power up by 3.11%, Lupin up by 2.58%, Cipla up by 2.34%, Cairn India up by 1.61% and Coal India up by 1.53%.

On the flip side, Vedanta down by 6.10%, Tata Steel down by 5.14%, Hindalco down by 3.49%, NMDC down by 2.70% and Idea Cellular down by 2.41% were the top losers.

The Asian markets were trading in green; KOSPI Index increased 7.99 points or 0.4% to 1,983.46, FTSE Bursa Malaysia KLCI increased 16.52 points or 1.03% to 1,626.45, Taiwan Weighted increased 28.36 points or 0.34% to 8,311.74, Straits Times increased 37.41 points or 1.22% to 3,098.90, Shanghai Composite increased 68.24 points or 1.76% to 3,954.56, Hang Seng increased 102.78 points or 0.43% to 24,018.80, Jakarta Composite increased 112.17 points or 2.5% to 4,591.66 and Nikkei 225 increased 202.78 points or 0.99% to 20,595.55.

The European markets were trading in green; UK’s FTSE 100 increased 32.73 points or 0.5% to 6,603.92, France’s CAC increased 66.72 points or 1.35% to 4,992.15 and Germany’s DAX increased 101.25 points or 0.93% to 11,025.86.