Post Session: Quick Review

In yet another euphoric run the domestic benchmark indices BSE Sensex and NSE Nifty on Tuesday hit their fresh 11-month high. The markets got a good start on supportive global cues and the BSE Sensex advanced over 27700 in the early trade, while NSE Nifty hit 8,500-level again. Sentiments got bolstered on account of firm buying by domestic as well as foreign investors. While, the global cues gave the early lead, markets got strong support with global rating agency Crisil's latest report that Indian economy is likely to grow at 7.9 percent in the current fiscal provided the country receives normal monsoon as it will boost agriculture growth and lift rural demand. The rating agency also expects the Reserve Bank of India to continue its accommodative monetary stance and cut the repo rate by another 25 bps this fiscal. Markets also rejoiced the buzz that Arvind Panagariya, the former chief economist at the Asian Development Bank and the current Vice-Chairman of the NITI Aayog, was the front-runner to become the next governor of Reserve Bank of India (RBI). Rupee too strengthened and boosted the sentiments. The Indian rupee was marginally higher against the US dollar ahead of the key macroeconomic data due later today. The government will issue the Index of Industrial Production (IIP) and Consumer Price Index (CPI) based inflation data for May and June, respectively after the market hours. The general expectation is that Inflation for the month of June may see some downtick, but the food inflation may inch higher. On the same time, IIP is likely to see some contraction as indicated by weak core sector data.

On the global front, after the surge in US markets overnight, the Asian markets too gained for the third day on the speculation that the US Federal Reserve may not hike the rates for at least a year as Fed may focus on how the UK decision to leave the European Union impacts the global economy. Though, regional market investors awaited details of the stimulus package promised by Japan’s prime minister Shinzo Abe after his victory in last weekend’s upper house election, while a softer yen aided sentiment and the Japanese markets surged. The European markets too moved higher and the pound strengthened as the UK moved closer to getting a new leader. British Home Secretary Theresa May prepared to take over as prime minister.

Back home, though the markets managed to extend the rally for yet another day but it wasn’t a smooth ride for the indices, as they despite remaining in green faltered many times from the high points and some profit taking too was witnessed after the humungous rally of last session. But it was final hour surge that took the markets to their fresh highs. Encouraging US data and expectations of further monetary stimulus from global policymakers held out hopes for a strong global economic outlook, while from the domestic front there were strong likelihood of a Goods and Services Tax (GST) Bill being passed in the monsoon session of Parliament that kept the momentum going. Meanwhile, private oil producers like Reliance Industries and Cairn India moved higher on data from the Petroleum Planning and Analysis Cell (PPAC) of the oil ministry showing that India's fuel demand rose 6.2 per cent in June compared with the same month last year. Consumption of fuel, a proxy for oil demand, totalled 15.65 million tones. The PSU banking shares witnessed good buying interest in early deals on report that the Finance Ministry is likely to finalise this week the plans for the first round of capital infusion in select public sector banks, however some of them suffered profit taking and ended lower by the close. Midcap once again surged and ended at record highs with all sectoral indices led by metal, realty banking taking the markets higher. Metal stocks rally was led by Hindalco, which surged to its fresh 52 week high, tracking strong earnings numbers of Alcoa, the world's third largest producer of aluminum.

Apart from the secondary market there was buzz from the primary markets too, as the debutant Quess Corp made a stellar debut, surging around 59% on its listing day to Rs 503 from the issue price of Rs 317. The IPO received huge response and the issue was subscribed 144.50 times, the highest since January 2008.

The BSE Sensex ended at 27797.99, up by 171.30 points or 0.62% after trading in a range of 27667.81 and 27828.74. There were 18 stocks in green against 12 stocks in red on the index. (Provisional)

The broader indices too managed a positive close; the BSE Mid cap index was up by 0.40%, while Small cap index ended up by 0.04%. (Provisional)

The top gaining sectoral indices on the BSE were Metal up by 3.13%, Realty up by 2.05%, Bankex up by 1.53%, Consumer Durables up by 0.71%, Auto up by 0.57%, while FMCG down by 0.54%, Power down by 0.19%, IT down by 0.04% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Tata Steel up by 4.81%, ICICI Bank up by 4.62%, Axis Bank up by 2.79%, Maruti Suzuki up by 2.17% and HDFC up by 1.55%. On the flip side, Cipla down by 1.11%, Coal India down by 1.09%, Asian Paints down by 0.97%, Sun Pharma Inds. down by 0.66% and Dr. Reddys Lab down by 0.58% were the top losers. (Provisional)

Meanwhile, Credit rating agency Moody’s in its latest report Sovereigns - Brexit and Asia Pacific: Limited Direct Credit Impact; Some Sovereigns Exposed to Market Volatility’, has said that in India the room for fiscal policy easing is constrained by high debt burden, but it also said that Britain's exit from the European Union will not have any significant credit impact on the Asia Pacific region and the sovereigns’ exposure to external financing is limited for India.

Moody’s in its report said that over the coming months, announcements related to Brexit could trigger financial market volatility in Asia Pacific sovereigns. It added that a shift in portfolio and/or banking flows that resulted in tighter financing conditions in some Asia Pacific markets would hurt growth, especially in countries where fiscal and monetary policy space is constrained.

Furthermore, Moody’s said that where there is room for monetary and/or fiscal policy easing, the domestic authorities may take actions that would partially offset the negative shocks. It added that unless currencies depreciate significantly and stoke inflationary pressures, moderate inflation provides space to lower policy interest rates and ease domestic financing conditions.

The rating agency in its report cited that India’s exports to UK were 0.4 per cent of the GDP in 2015 while shipments to European Union make up for 1.7 per cent. It said that India’s GDP growth is likely to face challenge in next two years, due to sluggish global demand, high leverage in some corporate sectors and impaired credit supply.

The CNX Nifty ended at 8516.15, up by 48.25 points or 0.57% after trading in a range of 8479.20 and 8526.60. There were 31 stocks on gainers side against 19 stocks on decliners side  on the index. (Provisional)

The top gainers on Nifty were ICICI Bank up by 4.84%, Tata Steel up by 4.80%, Hindalco up by 4.61%, Axis Bank up by 3.05% and Maruti Suzuki up by 2.11%. On the flip side, Tata Power down by 1.83%, BPCL down by 1.48%, Cipla down by 1.25%, Coal India down by 1.20% and Bank Of Baroda down by 1.14% were the top losers. (Provisional)

European markets extended their gains with a positive start, UK’s FTSE 100 was up by 7.54 points or 0.11% to 6,690.40, France’s CAC increased 69.47 points or 1.63% to 4,334.00, while Germany’s DAX gained 152.58 points or 1.55% to 9,985.99.

Asian markets ended higher on Tuesday, as the yen continued to slide against the greenback and oil prices rebounded in Asian trade after steep overnight losses. Investors remained hopeful about the prospects of more central bank stimulus after Japanese Prime Minister Shinzo Abe ordered a new round of fiscal stimulus spending to help overcome consistently weak corporate investment. The Bank of England's monetary policy committee meets on Thursday and expects some action on interest rates for the first time in more than seven years. Japanese shares posted strong gains as hopes for fiscal stimulus weakened the yen to one-week low against the dollar. After a convincing win in Sunday's Upper House election, Prime Minister Shinzo Abe said he would order a fresh round of fiscal stimulus to shore up spending and push consumer prices higher. Hong Kong shares finished up, joining a global equity rally after the US benchmark S&P 500 hit a new high overnight.