Boisterous benchmarks stage a remarkable rally; Nifty ends above 8200 mark

Indian benchmark indices staged a blockbuster performance on Wednesday by vehemently surging close to a percent in the session, with auto and retail sector shares rallying after the government approved a long-awaited pay hike for its employees, while sentiment was also boosted by a global relief rally as the immediate impact of Brexit began to fade. Meanwhile, the union cabinet approved the recommendations of the Seventh Pay Commission, a move which will boost consumption by putting extra disposable income in the hands of the central government’s 4.7 million employees. Furthermore, metal and mining stocks also get some light after the Cabinet approved the National Mineral Exploration Policy (NMEP), which will pave the way for auction of 100 prospective mineral blocks, boosting India’s mining potential.

Investors got some comfort with the Government’s assurances that it has enough support for passage of the GST bill in the Monsoon session of Parliament that will commence from July 18 till August 12. Also, Reserve Bank of India’s (RBI’s) Financial Stability Report (FSR) stated that despite global uncertainties, banking sector issues, the economy stands out in terms of growth as compared to other emerging markets and the Indian financial system remains stable. Some support also came with the Economic Affairs Secretary Shaktikanta Das’ statement that India is posed for a “big leap” in growth which could touch 8 percent in the current fiscal on the back of normal monsoon. However, many large market patients remained cautious with the Morgan Stanley’s report that Brexit is likely to have an adverse impact on India's growth with domestic GDP expected to decline by up to 60 basis points in a high-stress scenario within the next two years.

On the global front, Asian markets ended on firm note on Wednesday amid optimism that policy makers will introduce measures to limit the economic fallout from UK leaving the European Union Federal Reserve Governor Jerome Powell say that global risks have shifted further to the downside after Britain’s vote to exit the EU, introducing new uncertainties that may merit reassessing monetary policy. Moreover, Japan’s Prime Minister Shinzo Abe said he will mobilize all possible measures, while South Korea on Tuesday proposed a package of fiscal stimulus.  Meanwhile, Chinese shares surged as authorities sought to calm anxiety over potential shifts in Beijing's currency policy following last week's Brexit vote, while Japanese shares climbed as the safe-haven yen steadied and the global markets returned to a semblance of normality. Furthermore, European shares rose, with the France’s CAC advancing 2.49% in early trade, led by financial and energy stocks.

Back home, the local benchmarks got off to a positive start in the morning trade as investors were largely influenced by the supportive leads from Asian markets. Thereafter, the frontline indices slowly but steadily started gathering steam and surged by over half a percent by late morning trades. The bourses further capitalized on the momentum and spurted in afternoon trades on the back of broad based bottom fishing in undervalued stocks. The northbound journey only concluded with the close of the session, helping the key gauges in recovering the most of the ground lost after Brexit shock. Finally the NSE’s 50-share broadly followed index Nifty, got buttressed by close to a percent to settle above the crucial 8,200 support level while Bombay Stock Exchange’s Sensitive Index-Sensex accumulated over three hundred points and closed above the psychological 26,700 mark. Moreover, the broader markets too participated in the rally and closed with gains of around a percent.

The market breadth remained optimistic as there were 1851 shares on the gaining side against 751 shares on the losing side, while 186 shares remained unchanged.

Finally, the BSE Sensex surged 215.84 points or 0.81% to 26740.39, while the CNX Nifty rose 76.15 points or 0.94% to 8,204.00.

The BSE Sensex touched a high and a low 26776.17 and 26606.31, respectively. The broader indices made a positive closing; the BSE Mid cap index ended up by 0.98%, while Small cap index was up by 1.31%.

The top gaining sectoral indices on the BSE were Realty up by 3.15%, Power up by 1.66%, Auto up by 1.51%, IT up by 1.39% and TECK up by 1.33%, while FMCG down by 0.14% was the only losing index on BSE.

The top gainers on the Sensex were Hero MotoCorp up by 3.95%, Power Grid Corpn. up by 2.60%, NTPC up by 2.36%, Wipro up by 2.21% and GAIL India up by 1.55%. On the flip side, Lupin down by 0.67%, ITC down by 0.58%, Coal India down by 0.54% and Bharti Airtel down by 0.18% were the top losers.

Meanwhile, employees Provident Fund Organization (EPFO) in its vision document aiming an ambitious target of covering all the workers in the country under provident fund (PF), pension and life insurance by 2030. The vision document also talks about the online services for all EPFO benefits with modern technology and best service delivery practices. EPFO prepared a vision document which mentioned the objectives such as universal social security coverage on mandatory basis by way of provident fund, pension and life insurance for all workers of the country.

Accordingly, the Central Provident Fund Commissioner (CPFC) V P Joy called a meeting with EPF officers Association and All India EPF Staff Federation to discuss the Vision 2030. The meeting assumed significance as is talked about identifying the essential organizational changes which are needed to achieve Vision 2030.

Commenting on the same, Joy said that there is an urgent need to bring significant improvement in the working of the EPF offices and to bring an attitudinal change in the employees to deal with issues relating to EPF subscribers.

The CNX Nifty traded in a range of 8,212.40 and 8,157.65. There were 41 stocks advancing against 10 decliners on the index.

The top gainers on Nifty were Bosch up by 5.92%, Hero MotoCorp up by 4.23%, NTPC up by 2.74%, BHEL up by 2.56% and Wipro up by 2.43%. On the flip side, Lupin down by 0.89%, Coal India down by 0.73%, ITC down by 0.57%, Bank of Baroda down by 0.42% and Bharti Airtel down by 0.35% were the top losers.

European markets were trading in green; France’s CAC soared 84.18 points or 2.06% to 4,173.03, Germany’s DAX increased 126.22 points or 1.34% to 9,573.50 and UK’s FTSE 100 was up by 128.26 points or 2.09% to 6,268.65.

Asian stocks ended higher on Wednesday as oil extended overnight gains and solid US economic data as well as hopes of stimulus offset worries about the economic effects of Brexit on the global economy. Reports showed that a gauge of US consumer confidence hit its highest level since October in June, while the US economy expanded more than previously thought in the first quarter of 2016. Investors pushed back bets on US rate increases after US Federal Reserve Governor Jerome Powell said the Brexit result has introduced new uncertainties into the global outlook. Japanese shares climbed as the safe-haven yen steadied and the global markets returned to a semblance of normality. Meanwhile, Japanese Prime Minister Shinzo Abe pledged broad policy support to achieve market stability. Chinese shares ended higher as authorities sought to calm anxiety over potential shifts in Beijing's currency policy following last week's Brexit vote. The yuan held steady, hovering near its 5-1/2-year low against the dollar, after China's two main official securities newspapers said market expectations for the currency remained basically stable with no signs of panic selling.