Benchmarks stage smart recovery; Sensex regains 25,300 mark

Tuesday’s session turned out to be a fabulous day of trade for the Indian equity markets, where frontline gauges garnered gains of over one and a half percent. Hectic buying activity which took place during second half of trade mainly drove the markets higher, with frontline gauges ending near intraday high levels, recapturing their crucial 25,300 (Sensex) and 7,650 (Nifty) bastions. After trading choppy in morning deals, sentiment took U-turn in second half of trade as market-participants opted to take positions in beaten down but fundamentally strong stocks.

Sentiment turned up-beat with Prime Minister Narendra Modi’s brainstorming session on how India can manage global economic turbulence, including opportunities for Asia's third-largest economy in China's market and growth woes, where Prime Minister asked India Inc to increase risk-taking appetite and step up investments, while Industry body Assocham told the PM that policymakers needed to act fast to 'bullet-proof' India from the global headwinds and called for a deep cut in interest rates and new duties to stop dumping of Chinese products, such as steel. Appreciation in Indian rupee too supported the sentiments. The rupee firmed up during the trade and was trading higher by 20 paise at the time of equity markets closing to quote at 66.62 following sustained selling of the greenback by banks and exporters amid weakness of dollar overseas on the back of higher equities. Meanwhile, Moody’s Investors Service said India's current account deficit is likely to remain low supported by declining oil prices but a slow recovery in industrial output and investment would drag economic growth to 7% in the current fiscal.

Positive opening in European counters too supported the sentiments. CAC, DAX and FTSE were trading in the green terrain in early deals after trade surplus from the euro zone's largest economy hit its highest on record, suggesting strong demand for German goods. Asian Markets ended mostly in green after a six-day losing streak and the dollar firmed against the safe-haven Japanese yen, but gains were muted ahead of Chinese data which could offer more clues on the health of its economy.

Back home, some support also came with Minister of State for Finance Jayant Sinha’s statement that the government has the fiscal space to be able to absorb additional financial burden on account of OROP, without having any impact of the fiscal deficit target, which is 3.9 percent. Buying in metal counter too aided the sentiment after a government body found evidence that rising imports of some hot-rolled steel products from China, Japan, South Korea and Russia pose a threat to the domestic industry, potentially paving the way for an import levy known as a safeguard duty.

The NSE’s 50-share broadly followed index Nifty ended higher by around one hundred and thirty points to end above below its psychological 7,650 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex edged higher by over four hundred and twenty points to regain the psychological 25,300 mark. The broader markets too were traded in-line with benchmarks and ended the session with a gain of around one percent. The market breadth remained in favour of advances, as there were 1,459 shares on the gaining side against 1,190 shares on the losing side while 127 shares remain unchanged.

Finally, the BSE Sensex surged by 424.06 points or 1.70% to 25317.87, while the CNX Nifty soared by 129.45 points or 1.71% to 7688.25.

The BSE Sensex touched a high and a low 25411.00 and 24833.54, respectively. The BSE Mid cap index was up by 1.02%, while Small cap index was up by 0.60%.

The top gaining sectoral indices on the BSE were Bankex up by 3.61%, Power up by 3.17%, Capital Goods up by 3.16%, Realty up by 2.63% and Metal up by 2.33%, while Consumer Durables down by 1.20% and FMCG down by 0.85% were the losing indices on BSE.

The top gainers on the Sensex were GAIL India up by 6.48%, Tata Steel up by 5.97%, BHEL up by 5.60%, Axis Bank up by 5.13% and ICICI Bank up by 4.75%. On the flip side, Hindustan Unilever down by 2.15%, Bharti Airtel down by 0.09%, ITC down by 0.08% and Infosys down by 0.03% were the top losers.

Meanwhile, prime minister Narendra Modi is going to have a brainstorming session on agenda -- 'Recent Global Events: Opportunities for India', with the business leaders as well as bankers and economists of the country and will have a wide-ranging discussion on global economic scenario to explore opportunities for India against the backdrop of global events.

The meeting being held amid turbulence in global markets caused by a slowing Chinese economy, devaluation of the yuan and concerns surrounding the prospect of a US rate hike will be attended by over 40 delegates, including Cabinet ministers, top officials of the government and the Reserve Bank of India (RBI), industry representatives, top bankers and leading economists and sectoral experts.

It has been reported that Finance minister Arun Jaitley, RBI governor Raghuram Rajan, Niti Aayog vice-chairman Arvind Panagariya, finance secretary R P Watal, economic affairs secretary Shaktikanta Das, among others, will listen to the views of India Inc to prepare a road map on how India could take advantage from the events in China.From industry, Reliance Industries head Mukesh Ambani, Tata Group Chairman Cyrus Mistry along with Bharti Airtel chief Sunil Bharti Mittal, Essar Group head Shashi Ruia, Reliance Group Chairman Anil Ambani, Adani Group head Gautam Adani, ICICI Bank CEO Chanda Kochhar and SBI Chairman Arundhati Bhattacharya too will be attending the meeting.

The government has already been saying that India should take advantage of the global turbulence and look at how to convert it into an opportunity. In the meeting a wide-ranging discussion is expected on the impact of recent economic events, and how best India can take advantage of them. This is PM Modi's second high-level interaction with industry captains since he assumed office. As many has 27 business leaders, bankers and economists have been invited for the meeting.

The CNX Nifty touched a high and low 7720.90 and 7539.50 respectively.

The top gainers on Nifty were GAIL India up by 7.19%, Yes Bank up by 7.12%, BHEL up by 6.20%, Tata Steel up by 6.05% and Axis Bank up by 5.48%. On the flip side, Cairn India down by 2.17%, Hindustan Unilever down by 2.12%, BPCL down by 1.05% and Tech Mahindra down by 0.20% were the top losers.

European Markets were trading in the green; France’s CAC was up by 1.95%, Germany’s DAX was up by 2.21% and UK's FTSE was up by 1.74%.

The Asian markets barring KOSPI Composite and Nikkei closed in green on Tuesday. Japan’s economy shrank less than expected in the second quarter although capital expenditure fell more than originally forecast, keeping policymakers under pressure to do more to energize the fragile recovery. The world’s third-largest economy shrank an annualized 1.2 percent in April-June, less than the initial estimate of a 1.6 percent contraction. Japanese policymakers are clinging to the hope that companies will use the record profits they earned from a weak yen and lower energy costs to boost wages and investment, generating a positive cycle of rising income and higher spending. Japan’s Economy Watchers Current Index fell to a seasonally adjusted 49.3, from 51.6 in the preceding month. Chinese Trade Balance rose to 60.24B, from 43.03B in the preceding month. Manila-based multilateral lender Asian Development Bank has committed $2.2 billion in loans for Indonesia next year, up 40 percent from this year’s figure, to support the country’s development plan.