Indian equities resume uptrend; Sensex regains 27900 mark

A session after displaying a distressing performance, Indian benchmark indices managed to pull through a scintillating performance by vivaciously rallying over half a percent on Thursday,  as investors turned cheerful after reports of talks between the Congress and the government fuelled hopes that the crucial Goods and Services Tax (GST) Bill is likely to be passed soon. Further, Union Minister Nitin Gadkari also expressed confidence that the crucial Goods and Services Tax (GST) Bill will be passed in the coming Monsoon session of Parliament as he touted the various reform measures implemented by the government to boost economic growth and attract billions of dollars of foreign investment and technical expertise across sectors. Besides, appreciation in Indian rupee too aided sentiments. Indian rupee firmed up by 6 paise to 66.99 against the US dollar at the time of equity markets closing at Interbank Foreign Exchange market on fresh selling of the American currency by exporters. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 290.53 crore on July 13, 2016. However, gains remained capped with the hardening of the WPI index follows an uptick in retail inflation, which hit a 22-month high of 5.77 per cent in June, dampening chances of a rate cut by RBI at its next policy meet scheduled for August 9, 2016.  Wholesale price index-based inflation accelerated for the third straight month in June hitting 1.62 per cent on costlier food and manufactured items.

On the global front, Asian markets ended mixed on Thursday, as investors remained cautious ahead of a Bank of England meeting and Friday's release of China's GDP data. Regional stocks also got a slight bump from the US Fed's beige book report, which indicated that the US economy is holding steady although consumption may be softening. Japanese shares rose for the fourth day as the yen dropped to the lower 105 range on expectations that policymakers will supplement monetary policy with fiscal stimulus. Hong Kong shares finished higher on hopes the Bank of England will cut rates to ward off a possible recession that could impact some Hong Kong companies.  Meanwhile, European stocks rallied in early trade after the UK's new Prime Minister Theresa May took office and named her cabinet, bringing stability to the country's political scene post-Brexit, and as investors anticipate easier monetary policy from central banks globally.

Back home, Indian market got off to a soft start as the indices showed signs of consolidation in early trade, ahead of quarterly corporate results and an expected government announcement on who would take over as the country's next central bank chief. Thereafter, the key indices remained choppy through the morning trades but saw a sudden spurt in buying in afternoon trades post the sanguine European market opening. Sentiments got some support with the cabinet approving a Rs 12,000-crore outlay for Pradhan Mantri Kaushal Vikas Yojana (PMKVY) to impart skills to 1 crore people over the next four years (2016-20). Skill training would be done based on industry-led standards aligned to the National Skill Qualification Framework. Short covering intensified in late hours of trade which stoked the bourses to the highest point in the session.  However, some profit booking in the dying moments of trade led the bourses snap the session slightly below the session’s highs.  Finally the NSE’s 50-share broadly followed index Nifty, got buttressed by over half a percent to settle above the crucial 8,550 support level, while Bombay Stock Exchange’s Sensitive Index-Sensex accumulated over one hundred and twenty points and closed above the psychological 27,900 mark. On the BSE sectoral space, Consumer Durables counter remained the top gainer in the space with over two percent gains followed by the Banking, PSU and Capital Goods indices which ended with gains of over a percent. On the flipside, IT and Realty counters witnessed some selling pressure and ended in the negative terrain.

The market breadth remained optimistic as there were 1587 shares on the gaining side against 1100 shares on the losing side, while 186 shares remained unchanged.

Finally, the BSE Sensex surged 126.93 points or 0.46% to 27942.11, while the CNX Nifty rose 45.50 points or 0.53% to 8,565.00.

The BSE Sensex touched a high and a low 27967.77 and 27763.15, respectively. The broader indices made a positive closing; the BSE Mid cap index ended up by 0.54%, while Small cap index was up by 0.73%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 2.16%, Bankex up by 1.48%, PSU up by 1.12%, Capital Goods up by 1.01% and Power up by 0.75%, while IT down by 0.17% and Realty down by 0.16% were the top losing indices on BSE.

The top gainers on the Sensex were ICICI Bank up by 2.72%, Maruti Suzuki up by 2.44%, SBI up by 2.00%, Power Grid up by 1.82% and GAIL India up by 1.45%. On the flip side, ONGC down by 1.53%, Infosys down by 1.45%, Mahindra & Mahindra down by 1.26%, Sun Pharma down by 1.05% and Cipla down by 0.84% were the top losers.

Meanwhile, accelerating for third straight month, India’s main inflation gauge based on monthly wholesale price index (WPI) spiked to 1.62 percent for the month of June, 2016, almost double as compared to 0.79 percent for the previous month and (-) 2.13 percent during the corresponding month of the previous year, driven by increases in food articles, minerals as well as fuel & power, apart from the base effect.

Meanwhile, the buildup inflation rate in the financial year so far was 3.82 percent compared to a build up rate of 1.70 percent in the corresponding period of the previous year. As per the data released by the Ministry of Commerce & Industry, the WPI for ‘All Commodities’ (Base: 2004-05=100) for the month of June, 2016 rose by 1.4 percent to 182.0 (provisional) from 179.4 (provisional) for the previous month.

Component wise, primary articles index, having weight of 20.12 percent rose by 2.9 percent to 262.8 (provisional) from 255.3 (provisional) for the previous month. In the primary article index, the index for 'Food Articles' group rose by 2.9 percent to 279.0 (provisional) from 271.1 (provisional) for the previous month. The index for 'Non-Food Articles' group rose by 2.1 percent to 231.2 (provisional) from 226.4 (provisional) for the previous month. The index for 'Minerals' group rose by 6.9 percent to 199.0 (provisional) from 186.2 (provisional) for the previous month.

Fuel & Power index having weight of 14.91% rose by 3.4 percent to 186.5 (provisional) from 180.3 (provisional) for the previous month.

Manufactured Products constituting the major portion of the index with weightage of 64.97 percent rose by 0.2 percent to 156.0 (provisional) from 155.7 (provisional) for the previous month. The index for 'Food Products' group rose by 0.9 percent to 186.9 (provisional) from 185.3 (provisional) for the previous month. The index for 'Beverages, Tobacco & Tobacco Products' group rose by 0.8 percent to 220.7 (provisional) from 219.0 (provisional) for the previous month. The index for 'Textiles' group rose by 0.2 percent to 140.9 (provisional) from 140.6 (provisional) for the previous month. The index for 'Paper & Paper Products' group rose by 0.3 percent to 155.9 (provisional) from 155.4 (provisional) for the previous month. The index for 'Rubber & Plastic Products' group rose by 0.1 percent to 146.1 (provisional) from 146.0 (provisional) for the previous month. The index for 'Chemicals & Chemical Products' group rose by 0.5 percent to 150.9 (provisional) from 150.1 (provisional) for the previous month. The index for ' Transport, Equipment & Parts ' group rose by  0.1  percent to 139.4 (provisional) from 139.3 (provisional) for the previous month.

Meanwhile, the index for 'Machinery & Machine Tools' group declined by 0.1 percent to 135.3 (provisional) fom 135.5 (provisional) for the previous month. The index for 'Basic Metals, Alloys & Metal Products' group declined by 0.6 percent to 153.9 (provisional) from 154.9 (provisional) for the previous month. The index for 'Non-Metallic Mineral Products' group declined by 0.6 percent to 177.7 (provisional) from 178.7 (provisional) for the previous month. The index for 'Leather & Leather Products' group declined by 0.1 percent to 145.5 (provisional) from 145.7 (provisional) for the previous month. The index for 'Wood & Wood Products' group declined by 0.2 percent to 196.6 (provisional) from 197.0 (provisional) for the previous month.

For the month of April, 2016, the final Wholesale Price Index for ‘All Commodities’ (Base: 2004-05=100) stood at 177.8 as compared to 177.0 (provisional) and annual rate of inflation based on final index stood at 0.79 percent as compared to 0.34 percent (provisional) respectively.

The hardening of the WPI index follows an uptick in retail inflation, announced earlier, which hit a 22-month high of 5.77 per cent in June, dampening chances of a rate cut by RBI at its next policy meet scheduled for August 9.

The CNX Nifty traded in a range of 8,571.40 and 8,500.70. There were 39 stocks advancing against 12 decliners on the index.

The top gainers on Nifty were Grasim Industries up by 2.97%, ICICI Bank up by 2.72%, Maruti Suzuki up by 2.33%, ZEEL up by 2.29% and Power Grid up by 2.22%. On the flip side, ONGC down by 1.45%, Infosys down by 1.35%, Sun Pharma down by 1.32%, Mahindra & Mahindra down by 1.32% and Dr. Reddys Lab down by 1.05% were the top losers.

European markets were trading in green with good gains, France’s CAC was up by 45.78 points or 1.06% to 4,381.04, UK’s FTSE 100 gained 58.08 points or 0.87% to 6,728.48 and Germany’s DAX added 138.21 points or 1.39% to 10,068.92.

Asian equity markets ended mixed on Thursday, as a steep fall in oil prices and tepid overnight cues from Wall Street instilled a sense of caution among traders ahead of the Bank of England's policy decision later in the day. Investors are pricing in an interest rate cut for the first time in more than seven years to curb economic fallout from Britain's vote to exit the European Union. However, Japanese shares rose for the fourth day as the yen dropped to the lower 105 range on expectations that policymakers will supplement monetary policy with fiscal stimulus. Hong Kong shares finished higher on hopes the Bank of England will cut rates to ward off a possible recession that could impact some Hong Kong companies. Meanwhile, Chinese shares eased a little bit, with metal and mining stocks pacing declines in response to disappointing trade data released on Wednesday. Reports showed that China’s June exports were better than expected, but imports fell sharply in the month.