Benchmarks enter into positive territory amid gains in Power, Realty stocks

Indian equity markets erased all early losses and entered into the positive territory in late morning session on emergence of buying by funds and retail investors in select stocks. Sentiments got a boost with the reports that the government is considering reconvening Parliament to make another attempt to pass the Goods and National Sales Tax (GST). Parliamentary Affairs Minister Venkaiah Naidu has said that the government was holding parleys with the Opposition for an extended Monsoon Session and would decide on the matter after the talks. Some support also came with Reserve Bank of India Governor Raghuram Rajan’s statement that global financial markets may be in turmoil but Indian investors shouldn't worry too much. He said that there is confidence that we are actually quite healthy. Also, global rating agency Moody’s has said that it will upgrade India's rating if the government is able to push through reforms, inflation stabilises, regulatory environment improves and infrastructure investment rises. However, gains remained capped on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 2,080 crore on August 25, 2015. Investors remained cautious ahead of expiry of contracts in the derivatives segment on Thursday also influenced sentiments.

On the global front, Asian markets were trading mostly in green after the rate cuts by China's central bank. The People's Bank of China cut interest rates and lowered the reserve ratio late Tuesday in a much-anticipated move that some economists said was long overdue. However, US stocks slumped in late trades on Tuesday to erase intra-day gains, adding fresh uncertainty to markets that had seemed to be on the rebound. Back home, Indian rupee depreciated by 18 paise to 66.28 against the US dollar in early trade today due to fresh dollar demand from importers.

Back on street, stocks from Power, Realty and Infrastructure counters were supporting the markets’ uptrend, while those from Banking and Capital Goods counters was adding to the underlying cautious undertone. In scrip specific development, shares of Gayatri Projects have surged after the company has bagged various orders from National Highways Authority of India (NHAI) worth Rs 3318 crore.  Furthermore, Edelweiss Financial Services soars as its subsidiary Edelweiss Tokio Life Insurance has been granted approval by the Foreign Investment Promotion Board (FIPB) for increase in foreign equity from 26% to 49% of the paid up capital.

The market breadth on BSE was positive, out of 2139 stocks traded, 1306 stocks advanced, while 762 stocks declined on the BSE. 

The BSE Sensex is currently trading at 26086.61, up by 54.23 points or 0.21% after trading in a range of 25687.69 and 26156.61. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.54%, while Small cap index up by 0.94%.

The top gaining sectoral indices on the BSE were Power up by 1.14%, Realty up by 1.05%, Infrastructure up by 0.99%, Oil & Gas up by 0.97% and IT up by 0.97%, while Bankex down by 0.46% and Capital Goods down by 0.01% were the losing indices on BSE.

The top gainers on the Sensex were Lupin up by 3.10%, Wipro up by 2.45%, Reliance Industries up by 2.09%, TCS up by 1.58% and Coal India up by 1.54%. On the flip side, Hero MotoCorp down by 3.21%, BHEL down by 1.72%, Bharti Airtel down by 1.16%, HDFC down by 1.01% and ICICI Bank down by 0.99% were the top losers.

Meanwhile, Global rating agency Moody’s has said that it will upgrade India's rating if the government is able to push through reforms, inflation stabilises, regulatory environment improves and infrastructure investment rises. In its latest report the rating agency has said that “India's rating could be upgraded if it's expectations of gradual but credit positive reforms are realised in actual policy implementation and if the recent improvement in inflation, fiscal and current account ratios is sustained.”

Moody’s which is having a 'Baa3' rating on India with a positive outlook, said that it had changed its outlook on India in April to positive from stable, based on premise that the proposed policies are likely to lower sovereign credit risk by stabilising inflation, improving the regulatory environment, increasing infrastructure investment while maintaining the ongoing improvement in fiscal ratios.

Though, it also cautioned that rating outlook would likely return to stable if there was 'a slowdown or reversal of the policy reform process, if banking system metrics continue to weaken, or if there is a decline in foreign exchange reserves coverage of external debt and imports. It also said that India's performance on political stability, regulatory quality, control of corruption and government effectiveness is weaker than the median for sovereigns rated in the Baa range.

The agency highlighted that over the last year, performance on inflation and the balance of payments have improved, reflecting policy efforts. It also said the Modi government has made some progress on reforms to improve the operating environment and ease investment procedures, but the progress has stalled in two key areas -- passing a unified Goods and Services Tax (GST) and the Land Acquisition Act.

The CNX Nifty is currently trading at 7920.75, up by 40.05 points or 0.51% after trading in a range of 7785.60 and 7930.05. There were 32 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were Tata Power up by 4.96%, Lupin up by 3.23%, Idea Cellular up by 2.91%, Cairn India up by 2.86% and Reliance Industries up by 2.75%. On the flip side, Hero MotoCorp down by 2.49%, Ambuja Cement down by 1.88%, Bank of Baroda down by 1.40%, Indusind Bank down by 1.36% and NMDC down by 1.02% were the top losers.

Asian markets were trading mostly in green; Taiwan Weighted was up by 0.81%, FTSE Bursa Malaysia KLCI up by 0.78%, Hang Seng was up by 0.95%, Straits Times up by 0.08%, Shanghai Composite up by 2.73%, KOSPI Index up by 2.42% and Nikkei 225 was up by 2.58%.  On the flip side, Jakarta Composite was down by 0.68%.