Benchmarks magnify gains; Nifty above 8050 mark

Extending their early gains, Indian equity markets continued to trade with vigor on sustained buying by funds and retail investors, tracking gains in the global peers on the back of strong US GDP data indicating that the economy grew faster than initially thought in the second quarter. At present, Sensex and Nifty were trading above the crucial 26,600 and 8050 levels respectively. Apart from blue chips, broader indices too participated in the rally with both mid cap and small cap indices trading up by 1.37% and 1.57% respectively. The market sentiment was also supported by the prospect that a September US rate hike was unlikely, which fuelled optimism that the worse of recent market turmoil may be over. Some support also came with the government’s announcement of the ambitious Smart City project, which is hoped to attract investment to boost the economy. Government has announced Rs 48,000 crore for development of 100 Smart cities out of which 98 names were declared and rest two will be nominated in due course.

On global front, Asian markets extended a global rally on Friday after firm US economic data cheered the mood of the investors, with Chinese stock market raise for the second day following a shaky start to the week.  Tokyo led the gains, with Hong Kong and Shanghai in tow, and oil prices zoomed higher after the US reported a surprisingly strong new estimate of economic growth in the second quarter. Back home, Indian rupee recovered marginally by two paise to 66.02 against the US dollar in early trade amid gains in stock markets.

Back on street, all sectoral indices were trading in the positive territory with BSE Infrastructure index up 2.64% followed by Realty, Power and Metal indices trading higher by over two percent. In scrip specific development, Shares of drug maker Cipla have surged after the company decided to foray into nutritional business and launch full range of nutritional products over the next 12-18 months. Furthermore, Sequent Scientific has rallied after Alivira Animal Health, a subsidiary of Sequent Scientific, entered into a definitive agreement with Lyka Exports, a subsidiary of Lyka Labs, under which Alivira will acquire the animal health business of Lyka Exports on a going concern basis.

The market breadth on BSE was positive, out of 2261 stocks traded, 1632 stocks advanced, while 566 stocks declined on the BSE. 

The BSE Sensex is currently trading at 26626.45, up by 395.26 points or 1.51% after trading in a range of 26479.10 and 26687.33. There were 27 stocks advancing against 3 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.37%, while Small cap index up by 1.57%.

The top gaining sectoral indices on the BSE were Infrastructure up by 2.64%, Realty up by 2.33%, Power up by 2.16%, Metal up by 2.01% and PSU up by 2.00% while there were no losers on the sectoral space. 

The top gainers on the Sensex were Vedanta up by 5.54%, ONGC up by 5.35%, NTPC up by 4.24%, Hindalco up by 3.97% and Bajaj Auto up by 3.37%. On the flip side, ITC down by 0.28%, Mahindra & Mahindra down by 0.16% and Lupin down by 0.09% were the top losers.

Meanwhile, Putting back his concentration on the inflation, the Reserve Bank of India (RBI) Governor Raghuram Rajan has said that the central bank will continue its focus on taming inflation, speeding up resolution of distressed projects and ensuring enough capital for banks through balance sheet clean-up.

While listing out short-term macroeconomic priorities, the RBI governor stated that focus on bringing down inflation in line with the proposed glide path, work with the government and banks on speeding up the resolution of distressed projects and cleaning up bank balance sheets and ensure banks have capital to make provisions, support new lending, and thus pass on future possible rate cuts.

Rajan in the Governor's overview to the annual report noted that despite efforts from both the government and RBI to restore macroeconomic stability, three areas are still 'work in progress' from RBI's perspective. The first being, economic growth is still below levels the country is capable of. Second, inflation projections for January 2016 are still at the upper limits of RBI's inflation objective, and 'Third, the willingness of banks to cut base rates -- whereby they forgo income on existing borrowers to attract more new business -- is muted. Not only does weak corporate investment reduce the volume of new profitable loans, some bank capital positions weakened by NPAs may prevent them from lending freely.'

The CNX Nifty is currently trading at 8069.10, up by 120.15 points or 1.51% after trading in a range of 8023.70 and 8091.80. There were 46 stocks advancing against 4 stocks declining on the index.

The top gainers on Nifty were Cairn India up by 6.82%, Vedanta up by 5.76%, ONGC up by 5.56%, Zee Entertainment up by 5.39% and NTPC up by 4.20%. On the flip side, BPCL down by 1.81%, Mahindra & Mahindra down by 0.22%, ITC down by 0.21% and Grasim Industries down by 0.02% were the top losers.

Asian markets were trading in green; FTSE Bursa Malaysia KLCI was up by 0.73%, KOSPI Index up by 1.43%, Straits Times up by 1.54%, Shanghai Composite up by 1.65%, Jakarta Composite up by 0.83%, Hang Seng up by 0.47%, Taiwan Weighted up by 2.6% and Nikkei 225 was up by 2.78%.