Benchmarks snap two days losing streak

After showing a sluggish trend for most part of the session, Indian benchmarks indices managed to negotiate a close in the green terrain, breaking the two session downtrend, on fresh buying by investors and foreign funds, on hopes of passage of the GST Bill in Rajya Sabha during the monsoon session of Parliament. Sentiments remained buoyant with a report of global financial services major Morgan Stanley, revising upwards its India growth estimate for this year to 7.7 percent from 7.5 percent earlier, because of 'positive surprises' in the macro data. According to it  the growth recovery is becoming more broad-based, driven by public capex, FDI and consumption. Some support also came with Chief economic adviser (CEA) to the finance ministry Arvind Subramanian’s statement that the Indian economy can grow at more than 8 per cent in the next decade, if global economic environment remains supportive.  However, markets participants remained cautious  with the RBI Governor Raghuram Rajan’s statement that  India has a long way to catch up with China on per capita GDP and will need years of strong growth and cautioned against expanding economy at the cost of environment. He also said that the rupee level currently is pretty reasonable and any attempt to devalue it may lead to a surge in inflationary pressures and offset any benefits. According to the RBI governor, the country has come a long way as far as financial inclusion is concerned, but still has a way to go.

On the global front, Asian market ended lower on Tuesday as a downturn in crude oil curbed the enthusiasm from fresh record highs on Wall Street. Investors also turned jittery over the report that Asian Development Bank (ADB) cut its 2016 growth projection for developing economies in Asia and the Pacific to 5.6 per cent from earlier forecast of 5.7 per cent. Chinese shares came under pressure on fears of possible capital outflows, a day after the yuan slipped below the psychologically important level of 6.7 to the dollar for the first time in more than five years. The spectre of a slowing housing market and doubts over the nature of economic growth in the county also dented investor sentiment. However, stocks in Japan rose for their sixth straight session amid continued expectations that the Bank of Japan will soon roll out stimulus for the economy. Meanwhile, European stock markets retreated from a three-week high on Tuesday, as disappointing corporate updates soured the investing mood.

Back home, after witnessing a subdued trade throughout the morning trade, the key gauges plunged to lowest point in the day in late afternoon session as sudden bouts of profit booking emerged in the local markets immediately after a somber European market opening. Yet, final hour buying ensured that the key indices do not shut shops below neutral line and snap the two session declining streak. Finally the NSE’s 50-share broadly followed index Nifty, got buttressed by around a quarter percent to settle above the crucial 8,500 support level, while Bombay Stock Exchange’s Sensitive Index-Sensex accumulated forty points and closed above the psychological 27,700 mark. On the BSE sectoral space, Oil & Gas counter remained the top gainer in the space with around two percent gains, followed by the PSU, Power and Teck indices which ended with gains of over half a percent. On the flipside, FMCG, Consumer Durables and Realty counters witnessed some selling pressure and ended in the negative terrain.

The market breadth remained pessimistic as there were 1214 shares on the gaining side against 1456 shares on the losing side, while 166 shares remained unchanged.

Finally, the BSE Sensex gained 40.96 points or 0.15% to 27787.62, while the CNX Nifty rose 19.85 points or 0.23% to 8,528.55.

The BSE Sensex touched a high and a low of 27826.69 and 27637.98, respectively. The broader indices made a positive closing; the BSE Mid cap index ended up by 0.18%, while Small cap index was up by 0.11%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.90%, PSU up by 0.87%, Power up by 0.64%, TECK up by 0.44% and Auto up by 0.34%, while FMCG down by 0.62%, Consumer Durables down by 0.29%, Realty down by 0.26% and Bankex down by 0.15% were the top losing indices on BSE.

The top gainers on the Sensex were ICICI Bank up by 2.11%, Power Grid up by 1.90%, Lupin up by 1.52%, Tata Steel up by 1.27% and TCS up by 1.15%. On the flip side, Hindustan Unilever down by 2.75%, Axis Bank down by 1.06%, HDFC Bank down by 1.03%, Mahindra & Mahindra down by 0.84% and Coal India down by 0.81% were the top losers.

Meanwhile, domestic rating agency ICRA has said that the Wholesale Price Index (WPI) increasing to a 20-month high of 1.6 per cent in June from 0.8 per cent in May will augur well for the toll road projects revenues for financial year 2017-18.

According to a latest research report, ICRA expect the toll rates to increase in the range of 3.0-3.7 per cent during FY2018 - the highest growth after FY2015, following significant de-growth in toll rates for two consecutive years. While, traffic is expected to increase by about 5-6 per cent in terms of annual average daily traffic. Overall, the growth in toll collections is expected to remain healthy at more than 10-11 per cent levels.

The report further said, “With rising inflation the operations, maintenance and interest costs will also witness an increase. However, growth in revenues will be higher, resulting in improved profitability. Impact of negative WPI is seen during FY2016 & FY2017. Projects for which toll rates are linked fully with WPI, the toll rates were revised downwards whereas for the other projects, the increase has been 2.7% in FY2016 and 1.9% in FY 2017. However, the traffic growth has been robust during FY2016 which is likely to continue during current FY.Toll fees are revised annually to adjust for inflation, as determined by the movement in WPI, which links revenues of toll road SPVs to movements in the price index.

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 BPCL up by 3.21%, Idea Cellular up by 2.46%, ICICI Bank up by 2.22%, Power Grid up by 2.14% and Lupin up by 2.09%. On the flip side, Hindustan Unilever down by 2.97%, Indusind Bank down by 2.08%, Yes Bank down by 1.74%, Eicher Motors down by 1.02% and Axis Bank down by 0.88% were the top losers.

European markets were trading in red; Germany’s DAX declined 128.57 points or 1.28% to 9,934.56, France’s CAC decreased 41.06 points or 0.94% to 4,316.68 and UK’s FTSE 100 was down by 27.35 points or 0.41% to 6,668.07.

Asian equity markets ended mixed on Tuesday as oil extended overnight losses on concerns over a crude and refined fuel glut, and Moody's Investors Service placed Turkey's investment-grade credit rating on review for downgrade, saying it needs to evaluate the effects of the recent coup attempt. Chinese shares lost ground on fears of possible capital outflows, a day after the yuan slipped below the psychologically important level of 6.7 to the dollar for the first time in more than five years. The spectre of a slowing housing market and doubts over the nature of economic growth in the country also dented investor sentiment. Hong Kong shares fell as investors took profits following sharp gains over the past two weeks. However, Japanese shares rose for a sixth straight day, its highest level in nearly six weeks, with a sagging yen and Wall Street's rise to a fresh record boosting investors' appetite for riskier assets.