Benchmarks trim gains in late trade, still Nifty ends above 8300 mark

The Indian stock markets ended the first day of new F&O series on an optimistic note, on the back of bottom fishing in fundamentally strong shares gathering greater force. Sentiments remained buoyant across the board as the frontline indices registered strong back-to-back gains in last three trading sessions scaling beyond psychological levels. Investors got some confidence with the report that Indian manufacturing activity surged to a three-month high in June, driven by stronger demand, while the firms barely raised prices, leaving the door open for another rate cut by the central bank this year. The Nikkei/Markit Manufacturing Purchasing Managers’ Index (PMI) rose to 51.7 in June from May’s 50.7, its sixth month above the 50 mark that separates growth from contraction after it fell below that level in December for the first time in more than two years.

On the monsoon front, the India Meteorological Department (IMD) stated that during the week ended June 29, monsoon rains were 1% above the long-term average. The June-September monsoon has remained 12 percent lower than average so far, but rains have covered almost the entire country, and helped quicken the planting process of summer crops such as rice, soybeans, cotton and pulses. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 1,107 crore on June 30, 2016. However, gains remained capped with the report that Infrastructure sectors grew at five-month low rate of 2.8 per cent in May, slipping from a four-year high of 8.5 per cent in previous month, as oil and natural gas output contracted. Also, there are reports that India and Cyprus are poised to ink a new tax treaty which, like in the case of a similar deal with Mauritius, shuts the door on investors using the country’s tax loopholes to avoid paying taxes in India.

On the global front, Asian stock markets ended mostly in green on Friday as investors turned bullish after Bank of England Governor Mark Carney signalled a stronger possibility of a summer rate cut to support the UK economy in the wake of the country’s vote last week to leave the European Union. Further, Chinese stocks edged up, with military defence and shipping manufacturing stocks leading gainers, as the country’s Communist Party celebrated its 95th anniversary Friday, while Japanese shares extended gains for the fifth day despite a firmer yen. Meanwhile, European stock indices continued their post-Brexit recovery on Friday amid high hopes across the world for central bank growth shots.

Back home, the local benchmark 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.  However, the optimism soon started showing signs of easing in late hours of trade and profit booking in few sectors, weighed down the local bourses by the end of session. Eventually the NSE’s 50-share broadly followed index Nifty, got buttressed by close to half a percent to settle above the crucial 8,300 support level, while Bombay Stock Exchange’s Sensitive Index-Sensex accumulated over one hundred and forty points and closed just below the psychological 27,150 mark. Furthermore, the broader markets succeeded to outperform their larger peers as the BSE’s midcap gained 1.20% and smallcap index jumped 0.71%. On the BSE sectoral space, Oil & Gas counter remained the top gainer in the space with over two and half a percent gains followed by the Capital Goods and FMCG indices which ended with gains of around two percent. On the flipside, IT counter languished at the bottom of the table with moderate cuts of around half a percent, while TECK counter too witnessed some selling pressure and ended in the negative terrain.

The market breadth remained optimistic as there were 1598 shares on the gaining side against 1011 shares on the losing side, while 221 shares remained unchanged

Finally, the BSE Sensex surged by 145.19 points or 0.54% to 27144.91, while the CNX Nifty rose 40.60 points or 0.49% to 8,328.35.

The BSE Sensex touched a high and a low 27243.36 and 27061.40, respectively. The broader indices made a positive closing; the BSE Mid cap index ended up by 1.20%, while Small cap index was up by 0.71%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 2.76%, Capital Goods up by 2.10%, FMCG up by 1.85%, PSU up by 1.60% and Realty up by 0.63%, while IT down by 0.37% and TECK down by 0.16% were the top losing indices on BSE.

The top gainers on the Sensex were ONGC up by 3.72%, Larsen & Toubro up by 2.97%, ITC up by 2.83%, Dr. Reddys Lab up by 2.77% and GAIL India up by 2.61%. On the flip side, TCS down by 1.92%, Adani Ports &Special down by 1.04%, Coal India down by 0.97%, Bajaj Auto down by 0.65% and HDFC down by 0.64% were the top losers.

Meanwhile, once again putting them in gaining trajectory, India's manufacturing sector output surged to three-month high in June, driven by stronger demand, pointing to some improvement in the health of the sector. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers’ Index (PMI) edged to 51.7 in June from 50.7 in May, a reading above 50 on the index indicates economic expansion.

According to the survey, the contributing factors to the upward movement in the PMI were stronger rates of growth in new orders and output. Incoming new work rose across the three broad areas of the manufacturing economy, as did production. The best-performing category was consumer goods. The domestic market continues to be the main growth driver, as the Indian economic upturn provides a steady stream of new business. Besides, there was also a sign of improvement in overseas markets, as new foreign orders rose in June following a decline in May.

Though the new export orders increased in June, the rate of expansion was only slight and below the long-run series average. Two of the three monitored market groups recorded higher levels of new business from abroad, the exception being intermediate goods.

Input costs in June increased for the ninth month running. The rate of inflation eased to the slowest since March, and was moderate overall. Concurrently, factory gate charges were broadly unchanged in June. Furthermore, there was broadly no change to manufacturing employment in India during June due to sufficient staff to work on both new and existing projects and others noting shortages of skilled labour in the country.

The CNX Nifty traded in a range of 8,356.75 and 8,308.65. There were 31 stocks advancing against 20 decliners on the index.

The top gainers on Nifty were ONGC up by 5.87%, BHEL up by 3.33%, Larsen & Toubro up by 3.14%, Dr. Reddys Lab up by 2.97% and ITC up by 2.95%. On the flip side, TCS down by 2.13%, Kotak Mahindra Bank down by 1.42%, Zee Entertainment down by 1.15%, Adani Ports &Special down by 1.14% and Ambuja Cements down by 0.90% were the top losers.

European markets were showing mixed trend, UK’s FTSE 100 increased by 15.5 points or 0.24% to 6,519.83, while Germany’s DAX declined by11.24 points or 0.12% to 9,668.85 and France’s CAC was lower by 7.82 points or 0.18% to 4,229.66.

Asian markets closed mostly higher on Friday as hints of further central bank stimulus helped offset sluggish data out of China and Japan. While Bank of England Governor Mark Carney hinted at fresh economic stimulus measures this summer, the European Central Bank is considering loosening the rules for its bond purchases in response to the Brexit vote. The Bank of Japan's closely-watched Tankan index for big manufacturers' sentiment held steady in the second quarter of 2016, household spending fell for the third straight month in May and the country's core inflation fell in May for the third straight month, making a strong case for fresh policy action. Disappointing Chinese data also added to pressure on Beijing to stimulate the economy by hastening infrastructure investment and urbanization. Chinese shares ended higher as investors digested mixed data and comments from China's central bank late on Thursday that there are no reasons for the long-term weakening of the yuan. Reports showed that growth in China's manufacturing sector stalled in June and Caixin's China June manufacturing PMI hit a four-month low, but the official reading on services sector picked up pace in June, indicating progress in Beijing's bid to rebalance the world's second-largest economy. Japanese shares extended gains for the fifth day despite a firmer yen. Activity in Japan's manufacturing sector continued to contract in June, albeit at a slower pace, the latest survey from Nikkei showed on Friday with a manufacturing PMI score of 48.1. Another report from the Cabinet Office showed that Japan's consumer confidence improved more-than-expected in June to the strongest level in five months. Hong Kong’s stock market is closed Friday for the July 1 public holiday to mark the establishment day of the Hong Kong Special Administrative Region.