Sensex slams double century; extends rally for second successive session

Indian benchmarks carried forward their northbound journey for yet another session on Friday, optimistic cues from Asian market helped the indices to surpass crucial support levels of 8,650 and 28,150 and move in higher trajectories. A strong lead from Wall Street and a rebound in oil prices gave Asian stock markets a lift on Friday, even as fresh economic data from China missed expectations. On the domestic front, sentiments got some support from India Meteorological Department (IMD’s) reports that monsoon rains in India were 15 percent above average in the week ended August 10, 2016. The weather office has retained its forecast for an above-average monsoon this year, boosting hopes of a rise in farm output and income after two years of drought. Investors got some comfort with the report that India's gold imports, one of the primary causes of the current account deficit, fell sharply by 76 percent to 60 tonnes in the April-July period this fiscal on high import duty and other taxes. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 608 crore on August 11, 2014.  However, market participants showed some cautiousness too ahead of key economic data of industrial production (IIP) for June and consumer price index (CPI) for July, to be released after market closing.

Shares of public sector undertaking (PSU) banks rallied after the nation's top lender by assets, reported stability in its asset quality for the quarter ended June 30, 2016. State Bank of India (SBI), which accounts for more than a fifth of India's total bank loans and deposits, reported a net non-performing assets (NPA) of around 4%, which  is very comforting given much higher NPA levels in other state-run banks. Further, auto stocks like Mahindra & Mahindra and Tata Motors gained traction after the Supreme Court lifted the ban on registration of diesel cars with capacity above 2000cc in Delhi-NCR. Shares of power companies too came in limelight in Friday’s trade after the government said that there is no shortage of coal in India and coal stock for 23 days is available with thermal power stations. Many stock specific actions popup during the session like Rane Engine Valve surged over eight percent after the company announced the sale of part of its land in Alandur, Chennai at a market value of Rs 94.82 crore. Alkem Laboratories gained after the pharmaceutical company announced the successful US drug regulator inspection at its bioequivalence facility at Taloja, Maharashtra. However, mild profit booking witnessed in information technology (IT) stocks like Tech Mahindra, HCL Technologies and Infosys.

Earlier on Dalal Street, the local benchmark started the day on an optimistic note tracking the Asian peers which traded mostly in the green following the upbeat overnight cues from the Wall Street. Thereafter, the frontline indices slowly but steadily started gathering steam and surged by over half a percent by late morning trades.  The bourses further capitalized on the momentum and spurted in afternoon trades on the back of broad based bottom fishing in undervalued stocks. Finally the NSE’s 50-share broadly followed index Nifty, got buttressed by around a percent to settle above the crucial 8,650 support level, while Bombay Stock Exchange’s Sensitive Index-Sensex accumulated around three hundred points and closed above the psychological 28,150 mark. However, the broader markets underperformed their larger peers by a big margin as the BSE’s midcap index went home with gains of 0.83%, while the smallcap index climbed 0.21% points.

The market breadth remained pessimistic, as there were 1264 shares on the gaining side against 1392 shares on the losing side, while 182 shares remained unchanged.

Finally, the BSE Sensex gained 292.80 points or 1.05% to 28152.40, while the CNX Nifty rose by 80.00 points or 0.93% to 8,672.15.

The BSE Sensex touched a high and a low 28203.27 and 27900.91, respectively. The broader indices made a positive closing; the BSE Mid cap index ended up by 0.83%, while Small cap index was up by 0.21%.

The top gaining sectoral indices on the BSE were Bankex up by 2.03%, Metal up by 1.26%, PSU up by 1.18%, Auto up by 1.07% and Power up by 0.82%, while Realty down by 0.48%, IT down by 0.44%, TECK down by 0.37% and Oil & Gas down by 0.08% were the top losing indices on BSE.

The top gainers on the Sensex were SBI up by 7.16%, Axis Bank up by 3.99%, Tata Motors up by 2.58%, Power Grid Corpn. up by 2.24% and Reliance Industries up by 2.22%. On the flip side, Infosys down by 1.28%, Cipla down by 1.26%, Sun Pharma down by 0.88%, Asian Paints down by 0.57% and Hindustan Unilever down by 0.28% were the top losers.

Meanwhile, a joint study of industry body Associated Chambers of Commerce and Industry of India (Assocham) and Crisil, titled 'For greater good', has said that there is a need to increase the asset allocation to equity allowed in retirement funds like Employees’ Provident Fund (EPF) from the current level of five per cent, as it will help in realising the country's huge demographic advantage.

The study stated that at five per cent, overall exposure to equity could barely reach five per cent in 20 years, and even if allocation was increased to 15 per cent, it may take three more years to cross the five per cent overall mark. It pointed that the global exposure level is much higher in OECD (Organisation for Economic Co-operation and Development) countries, like Canada and the United States, for instance, the average is near 30 per cent, it is imperative, therefore, to increase this exposure level.

It said the OECD countries, despite having an ageing economy, continue to remain strongly invested in long-term asset classes like equity and even the non-OECD countries are putting their demographic advantage to better use by investing in equities. In India, however, pension assets are predominantly invested in debt. This is despite the demographic advantage the country has and is expected to enjoy over a long term. The study further highlighted that as per a global analysis of investments, even the non-OECD countries are putting their demographic advantage to better use by investing in equities.

The CNX Nifty traded in a range of 8,684.30 and 8,604.45. There were 33 stocks advancing against 18 decliners on the index.

The top gainers on Nifty were SBI up by 7.24%, Axis Bank up by 3.48%, Yes Bank up by 3.07%, Hindalco up by 2.64% and Tata Motors up by 2.53%. On the flip side, BPCL down by 2.83%, Tech Mahindra down by 2.20%, Cipla down by 2.11%, Idea Cellular down by 1.78% and Infosys down by 1.46% were the top losers.

The European markets were trading mostly in red; Germany’s DAX decreased 30.86 points or 0.29% to 10,711.98, France’s CAC decreased 3.51 points or 0.08% to 4,500.44, while UK’s FTSE 100 increased 6.14 points or 0.09% to 6,920.85.

Asian equity markets ended mostly higher on Friday after Wall Street shares surged to record highs overnight, oil prices climbed and the yen weakened against the dollar in the wake of a rise in US bond yields amid hawkish interest-rate comments from a senior Federal Reserve official. Investors shrugged off disappointing Chinese data that showed industrial production grew 6 percent in July from a year earlier, a tad below expectations for 6.1 percent growth and slower than the 6.2 percent increase in June. Meanwhile property investment growth continued to slow, retail sales grew less than expected, and growth in fixed-asset investment slipped to its lowest level in more than 16 years. Chinese shares ended sharply higher, led by financial and property shares as disappointing economic data raised the prospect of more government stimulus. Japanese shares rose sharply to hit their highest levels in over two months as traders returned to their desks after a national holiday on Thursday.