Benchmarks extend winning streak for the second straight session

Indian equity markets showcased yet another courageous performance on Tuesday as the local indices rallied by over half a percent in the session, settling above the psychological 8,500 (Nifty) and 27,800 (Sensex) levels. Last session’s optimism got spilled over into the today’s session helping the frontline indices in extending the winning momentum for second successive session, as encouraging global developments buttressed domestic sentiments. Shares across the world gained on speculation the policy makers will act to stem any fallout from the UK decision to leave the European Union, with the Bank of England tipped to cut rates this week. Investors continued to build hefty positions across the board as sentiments got a boost after strong US monthly jobs data reassured investors about the health of the world's largest economy.  On the domestic front, sentiments also got some support with global ratings agency Crisil report that India’s economy will grow at 7.9 percent in the current financial year compared with 7.6 percent in fiscal 2016, if the country receives normal monsoon, 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. Besides, the strong likelihood of a Goods and Services Tax Bill being passed in the monsoon session of Parliament, which starts on July 18, and hopes of a good start to the quarterly earnings season also boosted investor sentiment. Market participants got some confidence with report that monsoon rains, the lifeblood of India's agriculture-dependent economy, will cover the whole of India in the next 48 hours, boosted the hopes of a rise in farm output and incomes after two straight years of drought.

On the global front, Asian stock markets climbed for a second day on Tuesday, as the yen continued to slide against the greenback and oil prices rebounded in Asian trade after steep overnight losses. Japanese stocks jumped again, leading gains in the regional markets, as investors remained hopeful about the prospects of more stimuli following a stronger-than-expected election victory by the country's ruling coalition. Meanwhile, European markets extended their gains for fourth consecutive day, as consumer prices advanced in Germany, business confidence rose in Spain and home-builders logged gains in the UK as house prices rose in the second quarter.

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. The key indices remained sluggish through the morning trades but saw a sudden spurt in buying post the sanguine European market opening.  Second half of the session saw the key gauges capitalizing on the momentum further and spurting to session’s highest levels in dying hour. However, a mild profit booking in dying moments of trade ensured that the key indices shut shops off the intraday highs. Finally the NSE’s 50-share broadly followed index Nifty, got buttressed by over half a percent to settle above the crucial 8,500 support level, while Bombay Stock Exchange’s Sensitive Index-Sensex accumulated over one hundred and eighty points and closed above the psychological 27,800 mark. On the BSE sectoral space, Metal counter remained the top gainer in the space with over two and half a percent gains followed by the Realty and Bank indices which ended with gains of around two percent. On the flipside, FMCG counter languished at the bottom of the table with cuts of around half a percent, while Power and IT counters too witnessed some selling pressure and ended in the negative terrain.

The market breadth remained pessimistic as there were 1243 shares on the gaining side against 1519 shares on the losing side, while 170 shares remained unchanged.

Finally, the BSE Sensex surged 181.45 points or 0.66% to 27808.14, while the CNX Nifty rose 53.15 points or 0.63% to 8,521.05.

The BSE Sensex touched a high and a low 27828.74 and 27667.81, respectively. The broader indices made a positive closing; the BSE Mid cap index ended up by 0.49%, while Small cap index was up by 0.08%.

The top gaining sectoral indices on the BSE were Metal up by 2.87%, Realty up by 2.02%, Bankex up by 1.62%, Consumer Durables up by 0.91% and Auto up by 0.57%, while FMCG down by 0.48%, Power down by 0.07% and IT down by 0.03% were the top losing indices on BSE.

The top gainers on the Sensex were ICICI Bank up by 4.68%, Tata Steel up by 4.63%, Axis Bank up by 3.03%, Maruti Suzuki up by 2.27% and HDFC up by 1.50%. On the flip side, Coal India down by 1.14%, Cipla down by 0.99%, Asian Paints down by 0.82%, Sun Pharma Inds. down by 0.73% and Dr. Reddys Lab down by 0.69% were the top losers.

Meanwhile, after the Cabinet last month approved spectrum auction rules except spectrum usage charges (SUC) recommended by the inter-ministerial panel Telecom Commission, the Telecom Regulatory Authority of India (Trai) is likely to give its view on annual SUC to the Department of Telecommunications (DoT) this week.

The SUC has been highly debatable issues within the industry, where Trai had recommended SUC at a uniform rate of 3 per cent across the industry and gradually bringing it down to 1 per cent of revenues from telecom services. Before 2010, there was only 2G spectrum and hence the calculation of revenue was easy. But the process became complex after new frequencies were allocated to companies for services like 3G and 4G. The government, in January 2014, decided to cap SUC at a flat 5 per cent for spectrum that was to be procured in the future auctions. At that point, telecom operators were asked to pay the weighted average of their existing SUC (on the old rate of 3-8 per cent) based on the quantum of spectrum they hold and five per cent if they acquire new spectrum.

Meanwhile, the Finance Minister Arun Jaitley had said that the Telecom Commission took the opinion of Attorney General on SUC after recommendation of Trai was received and hence before taking a final call there was need to consult the regulator again. The Telecom Commission had recommended that government should levy 3 per cent SUC on airwaves that will be allocated to companies following the auction.

Spectrum auction was earlier planned by DoT in July, in which airwaves worth Rs 5.66 lakh crore will be put on the block, but with the Cabinet asking for Trai’s view on SUC; it deferred the sale, till September.

The CNX Nifty traded in a range of 8,526.60 and 8,479.20. There were 30 stocks advancing against 21 decliners on the index.

The top gainers on Nifty were Tata Steel up by 5.03%, ICICI Bank up by 4.74%, Hindalco up by 4.61%, Axis Bank up by 2.87% and Maruti Suzuki up by 2.11%. On the flip side, Tata Power down by 1.83%, BPCL down by 1.36%, Cipla down by 1.26%, Coal India down by 1.22% and Bank of Baroda down by 1.14% were the top losers.

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.