Benchmarks hit fresh record closing highs on rate cut hopes

Bulls tightened their grip on Dalal Street, with frontline gauges extending their record hitting streak for fourth straight session with Sensex conquering 32,000 mark, while Nifty settled just shy of 9,900 mark. Sentiments remained up-beat throughout the session and markets traded with traction, as tepid data of industrial output coupled with record low inflation figures have rekindled hopes of a rate cut when the RBI reviews its monetary policy on August 2. Industrial output growth of India slowed down to 1.7% in the month of May 2017, as compared to 8% in the same month last year and 3.1% in April 2017, mainly due to poor performance of mining and manufacturing, while India’s retail inflation hit a record low of 1.54% in June 2017, down from 2.18% in May and 5.77% in June last year. June’s retail inflation was lowest since the government began issuing data based on the consumer price index (CPI) in 2012.

Some support to the markets also came with rating agency Fitch’s report that the global sovereign credit cycle is likely to turn less negative in 2017 as the global GDP growth forecast for 2017 and 2018 had improved. Traders also took some encouragement with report that India’s overseas shipments to top 10 destinations worldwide which include the countries like US, Japan, Hong Kong and UAE have gained strength in the passing financial year. According to the industry body, the PHD Chamber of Commerce and Industry (PHDCCI), the country’s share of exports to top 10 destinations grew to 51.6% in the financial year 2016-17 from 49% in the financial year 2013-14.

Firm opening in European counters too aided sentiments, after Fed Chair Janet Yellen’s comments about gradual policy tightening soothed fears of a central bank moving too fast. Asian markets scaled a two-year top on Thursday, as investors wagered policy tightening in the United States would be glacial at best, lifting Wall Street to record peaks and lowering bond yields almost everywhere.

Back home, 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%. Adding to the optimism 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.

On the sectoral front, stocks related to software space remained on buyers’ radar with TCS, the largest domestic IT firm by sales slated to announce its first quarter numbers. Telecom stocks too remained in focus after Telecom Secretary Aruna Sundararajan said that the ministry of communications will set up working groups and committees to start ground work on a new application-driven telecom policy (NTP) which is expected to come up in 2018. She also noted that the new policy will focus on areas such as Internet for all, next-generation technologies (like 5G and Internet of Things), skills development, and security, among others.

The NSE’s 50-share broadly followed index Nifty gained by over seventy points to end near its psychological 9,900 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex zoomed by over two hundred and thirty points to end above its crucial 32,000 mark. The broader markets too traded with traction and ended the session with a gain of around half a percent. The market breadth remained in favour of decliners, as there were 1,299 shares on the gaining side against 1,425 shares on the losing side, while 161 shares remain unchanged.

Finally, the BSE Sensex surged 232.56 points or 0.73% to 32,037.38, while the CNX Nifty was up by 75.60 points or 0.77% to 9,891.70. 

The BSE Sensex touched a high and a low of 32,091.52 and 31,892.63, respectively and there were 26 stocks on gainers side as against 5 stocks on the losers side on the index.

The broader indices ended in green; the BSE Mid cap index gained0.46%, while Small cap index was up by 0.42%.

The top gaining sectoral indices on the BSE were FMCG up by 1.58%, Capital Goods up by 1.03%, Bankex up by 0.91%, Metal up by 0.78% and Basic Materials up by 0.72%, while Oil & Gas down by 0.29% was the lone losing index on BSE.

The top gainers on the Sensex were ITC up by 3.03%, ICICI Bank up by 1.71%, Bharti Airtel up by 1.45%, Larsen & Toubro up by 1.30% and Sun Pharma up by 1.26%. On the flip side, ONGC down by 2.30%, Asian Paints down by 0.75%, Tata Motors down by 0.55%, Mahindra & Mahindra down by 0.43% and Coal India down by 0.12% were the top losers.

Meanwhile, the industry body Associated Chambers of Commerce and Industry of India (ASSOCHAM) has urged the union government to review 18 percent Goods and Services Tax (GST) rate on specific agriculture inputs such as bio fertilizers, bio pesticides/bio control agents (BCA), organic manures/vermicompost/farmyard manure (FYM) and others so as to compress the use of chemical fertilisers..

The industry body has highlighted that higher GST in this segment will directly promote the use of chemical fertilisers, thereby leading to increase in green house gas emissions. Apart from this, it noted that this will adversely impact public health too. Adding further, it pointed out that such a taxation policy on these segments will directly contradict efforts being made by Prime Minister Narendra Modi in promoting variety of schemes and projects such as Swachh Bharat, Soil Health Card, Namami Gange and various organic missions.

Underlining the importance of bio-fertilizers, the chamber has said that they are manufactured primarily by micro, small and medium enterprises (MSMEs) and also provide farmers an option towards sustainable agriculture practices like organic farming. Besides, it noted that bio-fertilizers are highly beneficial as they are alternate solutions to farmers from use of chemical fertilizers that tends to spoil both soil and environment.

The CNX Nifty traded in a range of 9,897.25and 9,853.45. There were 37 stocks in green as against 13 stocks in red, while one stock remained unchanged on the index.

The top gainers on Nifty were Yes Bank up by 4.39%, ITC up by 3.01%, Hindalco up by 2.04%, Indiabulls Housing Finance up by 1.94% and ICICI Bank up by 1.90%. On the flip side, Indian Oil Corporation down by 2.97%, ONGC down by 2.43%, Bharti Infratel down by 2.31%, Eicher Motors down by 0.72% and Asian Paints down by 0.72% were the top losers.

The European markets were trading in green; UK’s FTSE 100 rose 7.12 points or 0.1% to 7,424.05, Germany’s DAX agined 30.65 points or 0.24% to 12,657.23 and France’s CAC was up by 31.33 points or 0.6% to 5,253.46.

Asian equity markets ended mostly in green on Thursday, tracking firm overnight cues from Wall Street and Europe, as Fed Chair Janet Yellen's comments about gradual policy tightening soothed fears of a central bank moving too fast. In the first day of her testimony to Congress, Yellen on Wednesday reiterated the Fed's plans to raise rates and gradually reduce the size of its $4.5 trillion balance sheet, but said the federal-funds rate don't have to rise all that much further to get to a neutral policy stance. Chinese stocks ended higher, as investors were encouraged by China's solid trade data and Federal Reserve Chair Janet Yellen's signal to adopt a patient approach in the current US rate-tightening phase. Exports grew 11.3 percent year-over-year in June, faster than the 8.9 percent rise economists had forecast. Similarly, imports surged 17.2 percent from a year ago, bigger than the expected growth of 14.5 percent. Meanwhile, Japanese shares pared early gains to finish on a flat note as lower bond yields dragged down banking stocks and the yen firmed up, hurting exporters shares.