Benchmarks pare gains; Sensex above 28,150 mark

The Indian equity markets pared some portion of early gains,  but still remain fairly well placed in positive territory on continued buying activities by both funds and retail investors amid firm global cues. Sentiments got a boost after Finance Minister Arun Jaitley said that Indian economy has defied global slowdown and geo-political tensions and is now poised to seize the opportunity to grow faster. Investors’ morale also remained upbeat after Moody's Investors Service said the Indian government's targeting of inflation at four per cent with a range of plus/minus two per cent is a 'credit positive' measure that will help macroeconomic stability.  According to Moody’s, sustained moderate inflation would contribute to macroeconomic stability and help prevent a repetition of the short marked cycles of the past.  Some support also came with a joint study by Confederation of Indian Industry (CII) and the Indian Banks' Association (IBA) stating that the overall financial conditions index in India rose 28 per cent sequentially to 61.1 percent in the first quarter of 2016-17 from 47.8 percent in the previous quarter of 2015-16, indicating healthy improvement. Meanwhile, banking stocks firmed up ahead of the RBI policy review on August 09, 2016, while Auto shares extended their gains as the sector is likely to benefit the most, post the implementation of the GST Bill on the back of a lower effective tax rate.

On the global front, Asian markets were trading higher on Monday amid encouraging US jobs data with shares in Japan and Australia surging the most, while Chinese shares were trading flat after drop in forex reserves in July. As per the data released by the central bank, China's foreign exchange reserves declined to $3.2 trillion in July 2016. Back home, stocks from Oil & Gas, Realty and Metal counters were supporting the markets’ uptrend, while those from Capital Goods and Power counters were adding to the underlying cautious undertone. In scrip specific development, Wockhardt has tanked on reports that the US Food and Drugs Administration (USFDA) has issued an import alert on the company’s Ankleshwar facility for alleged violation of good manufacturing practices. On the other hand, Hindalco Industries has rallied after its US-subsidiary Novelis reported robust earnings for the quarter ended June 30, 2016 Q1FY17.

The market breadth remained optimistic as there were 1410 shares on the gaining side against 826 shares on the losing side, while 95 shares remained unchanged.
The BSE Sensex is currently trading at 28167.72, up by 89.37 points or 0.32% after trading in a range of 28141.76 and 28226.38. There were 20 stocks advancing against 10 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.71%, while Small cap index up by 0.65%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.72%, Realty up by 1.12%, Consumer Durables up by 0.75%, Metal up by 0.62% and PSU up by 0.59%, while Capital Goods down by 0.18% was the losing index on BSE.

The top gainers on the Sensex were Lupin up by 1.56%, Reliance Industries up by 1.43%, HDFC up by 1.31%, Dr. Reddys Lab up by 1.21% and Wipro up by 0.99%. On the flip side, Bharti Airtel down by 1.16%, Sun Pharma down by 0.96%, NTPC down by 0.90%, Larsen & Toubro down by 0.64% and Tata Steel down by 0.55% were the top losers.

Meanwhile, government has notified an inflation target at 4 per cent with a range of 2 per cent for the next five years, just days ahead of the Reserve Bank of India’s (RBI’s) bi-monthly monetary policy review. It is an important confirmation of the inflation-fighting policies championed by outgoing RBI Governor Raghuram Rajan, who steps down next month.

Finance Ministry has said that fixation of an inflation target while giving due emphasis to the objective of growth and challenges of an increasingly complex economy, is an important monetary policy reform with necessary statutory back-up. The inflation target is a part of the Monetary Policy Framework agreement between the Finance Ministry and the RBI signed in January last year. This will mean that the RBI will work to contain consumer price index-based inflation at an average 4 per cent, with an upper limit of 6 per cent and lower limit of 2 per cent.

Under the agreement, the six-member committee will set interest rates to lower consumer price inflation to 4 per cent from 2016-17. Each member of the committee will have one vote and the RBI Governor will have a second or casting vote, in case of a tie. Earlier, the government had also notified the amended RBI Act and the rules for the procedure for selection of members of the Monetary Policy Committee (MPC) and terms and conditions of their appointment and factors constituting failure to meet inflation target under the MPC Framework.

The CNX Nifty is currently trading at 8709.50, up by 26.35 points or 0.30% after trading in a range of 8699.15 and 8723.50. There were 34 stocks advancing against 16 stocks declining on the index, while one stock remained unchanged.

The top gainers on Nifty were Hindalco up by 4.70%, BPCL up by 4.34%, Tech Mahindra up by 1.65%, Lupin up by 1.63% and Bosch up by 1.62%. On the flip side, Idea Cellular down by 3.06%, Bharti Airtel down by 1.41%, Bharti Infratel down by 1.14%, Sun Pharma down by 1.06% and Ambuja Cement down by 1.00% were the top losers.

The Asian markets were trading in green; FTSE Bursa Malaysia KLCI rose 0.11%, KOSPI Index gained 0.33%, Shanghai Composite increased 0.3%, Taiwan Weighted added 0.38%, Jakarta Composite jumped 0.37%, Hang Seng surged 1.14% and Nikkei 225 was up by 2.17%.