Benchmarks continue firm trade; Nifty holds 9800 mark

Indian equity benchmarks continued their firm trade in morning session, on account of buying in frontline blue chip counters. The rupee opened higher against dollar on sustained selling of dollars by exporters amid a record rally in domestic equities. Foreign Portfolio Investors stood net seller in domestic equity markets on Monday and sold shares worth Rs 419.86 crore with gross purchases and gross sales of Rs 3,717.12 crore and Rs 4,136.98 crore, respectively. Domestic equity markets were taking support on account of short covering after SEBI put in place restrictions on Foreign Portfolio Investors from issuing participatory notes (P-Notes) where the underlying asset is a derivative. The new norms announced by the capital markets regulator say that participatory notes against equity derivatives are not allowed if not for hedging. In cases where the derivatives positions are not for the purpose of hedging the equity shares, FPIs have to liquidate the holdings latest by date or maturity or by December 31, 2020, whichever is earlier. Investors took note of India Meteorological Department (IMD) statement that the seasonal monsoon rains have covered most of India and the amount of precipitation so far is within expectations, raising hopes for higher farm output after increased sowing of rice and soybean crops. Meanwhile, the government has saved a whopping Rs 57,000 crore with its Direct Benefit Transfer (DBT) scheme under which subsidies are given directly to beneficiaries. According to government data, of the Rs 57,029 crore saved under DBT in 2016-17, the LPG subsidy scheme ‘Pahal’ accounted for Rs 29,769 crore. The DBT programme, a major reform initiative to check graft in welfare funds, was launched by the UPA government on January 1, 2013.

Traders were seen piling up position in IT, TECK and Auto stocks, while selling was witnessed in Telecom, Metal and Consumer Durables sector stocks. In scrip specific development, most of the sugar stocks were trading on firm note after the government increased import duty on sugar to 50% to curb dumping of the commodity in India as international prices fell. Cheaper imports have been adversely affecting domestic sugar mills. Jet Airways was trading in green after global carriers Lufthansa and KLM-Air France, private equity funds including the Blackstone Group, KKR & Co and TPG Capital have joined the race along with US airlines Delta to invest around $200-250 million in India’s second largest airline which is looking to raise capital to fund operations, face growing competition amidst severe macro headwinds.

On the global front, Asian shares were trading mostly in green, as investors awaited testimony from Federal Reserve Chair Janet Yellen. South Korean finance ministry said that weak private consumption and tepid employment growth are holding back the country’s economy even as exports steadily gain. May retail sales declined 0.9 percent from April while the consumer price index gained 1.9 percent year-on-year in June, cooling from 2 percent in July and pointing to a slower-than-expected recovery in domestic demand. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 31,800 and 9,800 levels respectively. The market breadth on BSE was positive in the ratio of 1214:1081, while 113 scrips remained unchanged.

The BSE Sensex is currently trading at 31808.56, up by 92.92 points or 0.29% after trading in a range of 31744.27 and 31842.37. There were 17 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.04%, while Small cap index was up by 0.22%.

The top gaining sectoral indices on the BSE were IT up by 1.57%, TECK up by 1.10%, Auto up by 0.71%, Industrials up by 0.59% and Capital Goods up by 0.45%, while Telecom down by 0.45%, Metal down by 0.33%, Consumer Durables down by 0.31%, FMCG down by 0.26% and Realty down by 0.16% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 2.71%, Infosys up by 2.42%, Tata Motors - DVR up by 2.03%, Mahindra & Mahindra up by 1.63% and NTPC up by 1.34%.

On the flip side, Cipla down by 1.56%, Bharti Airtel down by 1.09%, ONGC down by 1.07%, Adani Ports & Special Economic Zone down by 0.79% and Coal India down by 0.75% were the top losers.

Meanwhile, IMF chief Christine Lagarde at the G20 summit has called for urgent action to strengthen global growth and build inclusive economies while keeping away from complacency. 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.

Lagarde said that “We can strengthen global trading system by reaffirming our commitment to well-enforced rules that promote competition while creating a level playing field”. She further said that the current period of growth should be used as an opportunity- to further safeguard the financial sector by building up capital buffers and strengthening corporate and bank balance sheets. Further, the current period of recovery must also be used to address the issue of stagnant real wages which can undermine the recovery and fuel discontent, and to confront the problem of excessive current account imbalances - with both surplus and deficit countries playing their part.

She emphasized that we can strengthen global trading system by reaffirming our commitment to well-enforced rules that promote competition and said that the countries involved in the first wave of this effort are already receiving support from the IMF - to help strengthen their macroeconomic frameworks and institutions, including by increasing support for capacity development. She also welcomed the G20’s focus on climate change, the sustainable development goals, and the challenges facing low-income countries.

The CNX Nifty is currently trading at 9802.30, up by 31.25 points or 0.32% after trading in a range of 9783.75 and 9814.60. There were 29 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were Infosys up by 2.71%, Tata Motors up by 2.68%, Tata Motors - DVR up by 1.98%, Mahindra & Mahindra up by 1.84% and TCS up by 1.56%.

On the flip side, Cipla down by 1.58%, Bharti Airtel down by 1.10%, ONGC down by 0.95%, ITC down by 0.69% and Adani Ports & Special Economic Zone down by 0.65% were the top losers.

The Asian markets were trading mostly in green; Shanghai Composite increased 0.35 points or 0.01% to 3,212.98, KOSPI Index increased 10.97 points or 0.46% to 2,393.07, Nikkei 225 increased 101.52 points or 0.51% to 20,182.50, Taiwan Weighted increased 105.43 points or 1.02% to 10,395.34 and Hang Seng increased 323.35 points or 1.27% to 25,823.41.

On the other hand, Jakarta Composite decreased 0.6 points or 0.01% to 5,770.90 and FTSE Bursa Malaysia KLCI decreased 0.47 points or 0.03% to 1,756.66.