Benchmarks trade firm; Sensex holds 32,000 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 fresh dollar selling by banks and exporters. The firm trade was on account of a sharp drop in retail inflation in June and dovish comments from US Fed Chair Janet Yellen in her testimony before the US Congress, where she hinted at slower-than-expected rate hikes going ahead. Falling growth in industrial production as well as falling retail inflation give the Reserve Bank of India just the leeway to cut policy rates in August. Traders also took support after the largest oil producing bloc OPEC in its monthly report highlighted that India’s economic growth will accelerate to 7.5% in the next year 2018, widening the lead over China, whose economic expansion will slow further to 6.2%. Separately, Foreign Portfolio Investors (FPIs) have poured a record $15.86 billion into Indian debt so far this calendar year, according to data available till July 11. This is the highest amount of net inflows into Indian debt on a year-to-date basis. Compared to this, the last year had witnessed a net outflow of $1.72 billion in the same period. Investors took note that the first set of numbers after the rollout of the goods and services tax should calm any jitters about its prospects. Integrated goods and services tax (IGST) collections on imports in the first 10 days of the new regime crossed Rs 4,000 crore, in line with expectation and suggests that the rollout has been largely smooth. Separately, industry body PHDCCI said that the share of India’s total exports to top 10 destinations worldwide has increased to 51.6% in 2016-17, compared to 49% in 2013-14. The country's merchandise exports to the US grew from $39.14 billion in 2013-14 to $42.33 billion in 2016-17. 

Traders were seen piling up position in Realty, Capital Goods and FMCG stocks. In scrip specific development, ITC was trading firm after a foreign brokerage firm said that the company is its top conviction pick. The brokerage said its channel checks indicate the company has cut product prices by 1-2% in high VAT states. Cement stocks were buzzing on domestic brokerage report that average cement prices are expected to rise by 6% Y-o-Y and 7% on Q-o-Q basis across the country despite volume decline in the southern and central regions. 

On the global front, Asian shares were trading mostly in green. China reported better-than-expected trade data for June, suggesting the economy is holding up well thanks to firmer global demand, despite a cooling property market at home amid a financial crackdown that has put firms under pressure. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 32,000 and 9,850 levels respectively. The market breadth on BSE was positive in the ratio of 1429:788, while 119 scrips remained unchanged.

The BSE Sensex is currently trading at 32028.94, up by 224.12 points or 0.70% after trading in a range of 31892.63 and 32046.57. There were 27 stocks advancing against 4 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.68%, while Small cap index was up by 0.72%.

The top gaining sectoral indices on the BSE were Realty up by 1.34%, Capital Goods up by 1.21%, FMCG up by 1.20%, Power up by 0.87% and Bankex up by 0.75%, while there were no losing indices.

The top gainers on the Sensex were ITC up by 1.72%, ICICI Bank up by 1.40%, Larsen & Toubro up by 1.36%, Axis Bank up by 1.19% and Bharti Airtel up by 1.11%.

On the flip side, ONGC down by 1.11%, Tata Motors down by 0.41%, Bajaj Auto down by 0.16% and Mahindra & Mahindra down by 0.12% were the top losers.

Meanwhile, reacting to the historically low level of retail inflation at 1.54 percent in June, Chief Economic Adviser (CEA) Arvind Subramanian has said that record low inflation was a paradigm shift in the inflationary process which has been missed by all and that the latest IIP and CPI data will surely be taken note by policy makers.

Subramanian said, “This unusually and hearteningly low number is consistent with our analysis for some time now. The number of 1.54 per cent is historically low and reflects the firm and ongoing consolidation of macroeconomic stability. He said that it’s a shift that I think has been missed by all reflected in the large, one-sided and systematic inflation forecast errors that have been made”.

The Reserve Bank, which mainly factors in retail inflation to arrive at its monetary policy, is slated to meet in early August to announce the next bi-monthly policy rate. RBI, in its last monetary policy review on 7 June, kept key interest rates unchanged but lowered the statutory liquidity ratio by 50 basis points (bps) to 20%.

The CNX Nifty is currently trading at 9880.35, up by 64.25 points or 0.65% after trading in a range of 9853.45 and 9885.65. There were 43 stocks advancing against 8 stocks declining on the index.

The top gainers on Nifty were Indiabulls Housing Finance up by 2.25%, ITC up by 1.75%, ICICI Bank up by 1.59%, Yes Bank up by 1.38% and Larsen & Toubro up by 1.31%.

On the flip side, Bharti Infratel down by 2.03%, Indian Oil Corporation down by 1.94%, ONGC down by 1.20%, ACC down by 0.41% and Tata Motors down by 0.39% were the top losers.

The Asian markets were trading mostly in green; Shanghai Composite increased 17.84 points or 0.56% to 3,215.38, KOSPI Index increased 27.5 points or 1.15% to 2,419.27, Taiwan Weighted increased 47.61 points or 0.46% to 10,468.29 and Hang Seng increased 286.33 points or 1.1% to 26,329.97.

On the other hand, Nikkei 225 decreased 4.71 points or 0.02% to 20,093.67, FTSE Bursa Malaysia KLCI decreased 1.78 points or 0.1% to 1,755.46 and Jakarta Composite decreased 1.11 points or 0.02% to 5,818.02.