Markets extend early gains; Nifty crosses 7750 mark

Following a firm start, Indian equity markets have extended early gains on value buying and short covering at lower levels with financials leading the gains after the sharp correction in the previous sessions. The broader markets also firmed up on bargain hunting in fundamentally sound mid-cap and small-cap indices. Sentiments got a boost with chief economic adviser at the finance ministry Arvind Subramanian’s comments that the Indian economy is still expected to grow around 8 percent in the fiscal year to March 2016, after economic growth slowed to 7 percent in the quarter to June. International Monetary Fund (IMF) too has said that near-term growth prospects remain favourable in India but some macroeconomic imbalances still exist. However, gains remained capped with the report that India's June-September monsoon rains are likely to be below the prior forecast of 88 percent of the long-term average, which could make it the driest year since 2009 and reduce farm output.

On the global front, Asian stocks rose in early trade after Wall Street rebounded from a sharp sell-off and as a holiday in China gave investors a break from its torrid markets. Global equity volatility climbed to its highest level since 2011 earlier in the week, as signs China’s economy may be headed for a hard landing fueled anxiety over the global outlook.  Further, attention is turning to the European Central Bank's meeting on Thursday as weak commodity prices and slowing global growth work against its efforts to stimulate inflation and economic growth. Back home, Indian rupee depreciated 7 paise to 66.26 against the dollar in early trade on foreign fund outflows amid appreciation in the US currency overseas.

Back on street, barring Oil & Gas, all the other BSE sectoral indices were trading in the green. Good buying was seen in Realty, Capital Goods, Banking and Auto stocks. In scrip specific development, shares of Vascon Engineers have surged after the company decided to raise Rs 200 crore via rights issue and sale of non-core assets to reduce its debt burden and meet working capital requirements. Furthermore, VA Tech Wabag has rallied after the company and its consortium partner Muhibbah Engineering (M) Bhd has bagged a contract worth Rs 1,500 crore from Malaysia's national oil and gas company Petronas (Petroliam Nasional Berhad).

The market breadth on BSE was positive, out of 2143 stocks traded, 1553 stocks advanced, while 521 stocks declined on the BSE. 

The BSE Sensex is currently trading at 25683.65, up by 230.09 points or 0.90% after trading in a range of 25555.77 and 25745.46. There were 23 stocks advancing against 7 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.71%, while Small cap index up by 1.22%.

The top gaining sectoral indices on the BSE were Realty up by 4.69%, Capital Goods up by 1.50%, Bankex up by 1.36%, Auto up by 1.31% and Power up by 1.07%, while Oil & Gas down by 0.01% was the only losing index on BSE.

The top gainers on the Sensex were Tata Steel up by 3.57%, Tata Motors up by 2.64%, Axis Bank up by 2.61%, Vedanta up by 2.61% and HDFC up by 2.32%. On the flip side, GAIL India down by 2.03%, Lupin down by 0.85%, Hindustan Unilever down by 0.77%, Coal India down by 0.45% and Hero MotoCorp down by 0.29% were the top losers.

Meanwhile, the government after struggling to keep the inflation under control has now pointed deflation as new challenge for the economy, though expressed hope that the economic growth will be close to 8% in the current fiscal year, despite lower first quarter GDP number. Chief Economic Advisor (CEA) Arvind Subramanian has said that one real challenge that looms ahead is not to be the price inflation but appears to be a possible price deflation. The wholesale price index has been in the negative zone since November 2014, while the retail inflation (CPI) too has fallen sharply in last couple of months.

Subramanian further stated that “the economic growth is moving in the right direction, although its pace is still below what the economy needs... But at a pace that is expected to pick up in response to the ongoing reforms”.

Talking about the below-than-expected first quarter economic growth of current financial year, Subramanian said, the numbers indicated that 'economy is recovering' and is consistent with the other more high-frequency indicators such as revenue collection and real credit growth. April-June 2015 quarter saw economic growth at 7%, lower than the 7.5% notched up during the previous quarter.

In the first four month of current fiscal (April-July), the indirect tax collection had registered an increase of 37% and after discounting for fresh initiatives, the growth worked out to be 14.6%. CEA said that if the revenue maintains at this pace, it is quite likely that the GDP growth numbers will be higher, may be even substantially higher than what was suggested by the latest numbers. 

The CNX Nifty is currently trading at 7790.30, up by 73.30 points or 0.95% after trading in a range of 7754.05 and 7811.80. There were 39 stocks advancing against 11 stocks declining on the index.

The top gainers on Nifty were Ambuja Cement up by 4.17%, Tata Steel up by 3.42%, Tata Motors up by 2.93%, Axis Bank up by 2.70% and ACC up by 2.59%. On the flip side, Idea Cellular down by 2.23%, GAIL India down by 1.72%, BPCL down by 1.00%, Lupin down by 0.87% and Coal India down by 0.61% were the top losers.

Asian markets were trading in green; KOSPI Index was up by 0.07%, FTSE Bursa Malaysia KLCI up by 0.8%, Jakarta Composite up by 0.57%, Straits Times up by 0.83%, Taiwan Weighted up by 0.65% and Nikkei 225 was up by 1.42%. China’s Shanghai Composite and Hong Kong’s Hnag Seng are closed today.