Benchmarks trade with strong gains; Sensex above 26900 mark

Indian equity markets strengthened further with hectic buying across blue chip counters, following a strong lead from Asian markets where stocks moved higher after near term worries over Brexit started easing. Investors also got some comfort with Parliamentary Affairs Minister Venkaiah Naidu’s statement that the government will seek to ensure that the bill on a pan-India goods and services tax (GST) will be passed in the upcoming session of parliament, scheduled from July 18 to August 12. Further, some support also came with the report that implementation of the much-awaited pay hike for over 1 crore central government employees and pensioners will be a positive for the economy as it will push up consumption and its impact on inflation is likely to be moderate.  The Cabinet has cleared the recommendations of the 7th Pay Commission according to which the overall hike in salary and allowance of central government employees and pensioners comes to 23.5 per cent. Meanwhile, after disappointing on first half of June, Monsoon have gathered pace in second half of the month, leading to significant drop in countrywide rainfall deficiency. As on June 29, the countrywide cumulative rainfall deficiency stands at 12%, which had once mounted to 25% earlier.  

On the global front, most of the Asian stock markets rose in early trade, tracking an overnight rally on Wall Street, while the safe-haven Japanese yen was held in check as global markets regained a semblance of calm after the Brexit shock. Further, US stocks advanced amid a global rally, with the S&P 500 index posting its strongest two-day climb in four months. Back home, all BSE sectoral indices were trading in the green. Among them, Realty index gained the most by 1.52 per cent, followed by Auto 1.23 per cent, Banking 1.08 per cent and Power 1 per cent. In scrip specific development, Future Enterprises gained after the company approved & allotted 750, 10.25% Secured Redeemable Non-Convertible Debentures (NCDs) of Rs 10 lakh each, aggregating to Rs 75.00 crore, on private placement basis. Moreover, Sagar Cements rallied after the company completed acquisition of grinding unit owned by Toshali Cements for Rs 60 crore.

The market breadth remained optimistic as there were 1544 shares on the gaining side against 417 shares on the losing side, while 101 shares remained unchanged.

The BSE Sensex is currently trading at 26935.19, up by 194.80 points or 0.73% after trading in a range of 26902.79 and 26994.34. There were 28 stocks advancing against 2 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.66%, while Small cap index gained 0.90%.

The top gaining sectoral indices on the BSE were Realty up by 1.52%, Auto up by 1.23%, Bankex up by 1.08%, Power up by 1.00% and Capital Goods up by 0.98%, while there were no losers on the BSE sectoral indices.

The top gainers on the Sensex were Tata Motors up by 2.71%, NTPC up by 2.01%, ICICI Bank up by 2.01%, Dr. Reddys Lab up by 1.93% and SBI up by 1.73%. On the flip side, Infosys down by 0.21% and Sun Pharma down by 0.04% were the top losers.

Meanwhile, In the aftermath of Britain’s decision to exit European Union, the Chief Economic Advisor (CEA) Arvind Subramanian has reiterated that the Current Account Deficit (CAD) the net difference between outflows and inflows of foreign currencies will possibly dip below 1 per cent in the financial year 2016-17, on the back of lower global oil prices, but said that the Brexit is expected to impact India as the global economy will slow down.

Subramanian said that the CAD will be very manageable and hopefully will be within 1 per cent of GDP. He added that “we had forecast growth rate of 7-7.5 per cent and I think broadly we are going to stick to that. As I said there is going to be Brexit and offsetting factors like good monsoons and at the moment we are not revising the forecast of GDP growth.”

CEA further said that the gold prices, which were on a record rise, might not have any impact on the overall CAD as the yellow metal imports account for only less than half of the oil import bill, resulting in a net positive affect. Elaborating further he said even if the oil prices decline, gold prices go up by similar amount and the net will be quite positive and the gold price effect should unwind itself as well, because there is always a broad correlation that when the dollar goes up commodity prices come down.

He said that from India's point of view it is significant in economic terms because one thing is the world economy might slow down as result of this which of course then impact India. Though Subramanian remained positive that the India is 'relatively well cushioned' to dwell any impact of the kind of external events.

The CNX Nifty is currently trading at 8263.50, up by 59.50 points or 0.73% after trading in a range of 8253.25 and 8277.20. There were 46 stocks advancing against 5 stocks declining on the index.

The top gainers on Nifty were BHEL up by 2.91%, Tata Motors up by 2.79%, Dr. Reddys Lab up by 1.95%, ICICI Bank up by 1.92% and Tata Motors - DVR up by 1.89%. On the flip side, Bharti Infratel down by 0.44%, Ambuja Cement down by 0.20%, Infosys down by 0.16%, Tech Mahindra down by 0.03% and BPCL down by 0.03% were the top losers.

Most of the Asian counters were trading in green; FTSE Bursa Malaysia KLCI increased 0.61%, KOSPI Index gained 0.56%, Jakarta Composite jumped  0.97%, Taiwan Weighted rose 0.76%, Nikkei 225 added 0.58% and Hang Seng was up by 1.47%. On the flip side, Shanghai Composite was down by 0.23%.