Bulls tighten grip on Dalal Street in early deals; Nifty surpasses 9,800 mark

Bulls went berserk in early deals on Tuesday with Indian equity benchmarks making a gap-up opening and are trading jubilantly at their life time highs, surpassing crucial 31,800 (Sensex) and 9,800 (Nifty) levels. Traders shrugged off IMF chief Christine Lagarde’s statement where, warning against complacency in the current phase of global economic recovery, she asked the members of G20 group, which includes India, to step up reforms by reducing trade barriers and subsidies to promote a level playing field.

On the global front, Asian markets were trading mostly in green at this point of time, as investors awaited testimony from Federal Reserve Chair Janet Yellen to get more details on interest rate hikes. The US markets turned into mood of consolidation and posted modest gains in last session after initially showing a lack of direction.

Back home, auto stocks remained in top gear despite SIAM’s report that domestic automobile sales saw a muted growth of one per cent in June as the passenger vehicle (cars, utility vehicles and vans) segment declined more than 11 per cent. A four per cent growth in two-wheelers, however, helped the industry to remain in the green. Sugar stocks remained in sweet spot, as the government has hiked the import duty on sugar from 40 per cent to 50 per cent, to check cheap imports. Cheaper imports have been adversely affecting domestic sugar mills.

The BSE Sensex is currently trading at 31834.81, up by 119.17 points or 0.38% after trading in a range of 31744.27 and 31835.56. There were 18 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.09%, while Small cap index was up by 0.43%.

The top gaining sectoral indices on the BSE were IT up by 1.91%, TECK up by 1.36%, Auto up by 0.82%, Industrials up by 0.65% and Capital Goods up by 0.62%, while Telecom down by 0.61%, Consumer Durables down by 0.25%, Metal down by 0.16% and Realty down by 0.09% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 2.82%, Tata Motors up by 2.18%, Tata Motors - DVR up by 2.03%, Mahindra & Mahindra up by 1.63% and TCS up by 1.57%. On the flip side, Bharti Airtel down by 1.44%, Cipla down by 0.95%, ONGC down by 0.77%, Dr. Reddys Lab down by 0.72% and ITC down by 0.48% were the top losers.

Meanwhile, with a view to accelerate economic growth, Niti Aayog vice chairman Arvind Panagariya has said that India need transition of the massive workforce out of agriculture into industry and services, and encourage small enterprises to grow big. He added that underemployment is probably the biggest economic challenge India face. He also said that at the aggregate macro level, bringing about rapid growth is most critical as no major success in poverty alleviation is likely to happen without it.

Panagariya said that if they set the output per worker in agriculture equal to one, then output per worker in industry is 5 and that in services 3.8. In other words, even at the current productivity levels in each sector, moving one percentage-point workers out of agriculture into industry can increase the Gross Domestic Product (GDP) by 1.5%. He said that if India wants to increase total expenditures on education, health and infrastructure then the country has only two options, either cut expenditure on something else or increase the GDP. Unfortunately, ability to cut the expenditure on items other than education, health and infrastructure is extremely limited, therefore raising the GDP is the only practical option.

Pointing that the underemployment is probably India’s biggest economic challenge, Niti Aayog vice chairman said enterprises are excessively small and they have remained so. He further said that they must specifically look for policies that keep the enterprises small. Micro must grow into small, small into medium and medium into large. He added that the level of per-capita income limits the scope for redistribution.

The CNX Nifty is currently trading at 9809.25, up by 38.20 points or 0.39% after trading in a range of 9783.75 and 9810.00. There were 34 stocks advancing against 17 stocks declining on the index.

The top gainers on Nifty were Infosys up by 3.05%, Tata Motors up by 2.16%, Tech Mahindra up by 1.98%, Tata Motors - DVR up by 1.96% and TCS up by 1.95%. On the flip side, Bharti Airtel down by 1.45%, Cipla down by 0.92%, ONGC down by 0.71%, Tata Power down by 0.66% and Dr. Reddys Lab down by 0.55% were the top losers.

Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI rose 0.68 points or 0.04% to 1,757.81, KOSPI Index gained 6.41 points or 0.27% to 2,388.51, Taiwan Weighted surged 98.05 points or 0.95% to 10,387.96, Nikkei 225 added 98.71 points or 0.49% to 20,179.69 and Hang Seng was up by 286.29 points or 1.12% to 25,786.35.

On the flip side, Shanghai Composite decreased 5.67 points or 0.18% to 3,206.96 and Jakarta Composite was down by 0.96 points or 0.02% to 5,770.54.