Bulls tighten grip on Dalal Street in early deals; Sensex surpasses 32,600 mark

Extending their record hitting streak, Indian equity benchmarks have made a gap-up opening and are trading jubilantly in early deals on July F&O expiry day, with frontline gauges hitting fresh all time highs and surpassing their crucial 32,600 (Sensex) and 10,050 (Nifty) levels. Sentiments remained up-beat with news that retirement fund body the Employees' Provident Fund Organisation plans to pump in Rs 22,500 crore in exchange traded funds in 2017-18 following approval from the central board of trustees to increase the equity investment from 10 per cent to 15 per cent. Traders also took some comfort with report that Bharatiya Janata Party (BJP) strengthened its foothold in Bihar after Nitish Kumar ended his party, JDU’s mahagathbandhan or Grand Alliance with Lalu Yadav’s RJD and the Congress last evening and joined hands with his former partner BJP.

Global cues too remained supportive with Asian markets trading mostly in green at this point of time after FOMC voted to maintain its key interest rate at a 1.00 to 1.25 percent range, and on optimism about corporate earnings. The US markets extended their gains in last session, sending the Dow Jones Industrial Average to a new record high on some good earnings.

Back home, increased liquidity and better than expected Q1 corporate earnings too aided sentiments. On the sectoral front, stocks related to infra space edged higher despite Global Infrastructure Outlook report that India is underperforming in terms of spending needs (in relation to GDP) in several infrastructure segments, within its peer group.

The BSE Sensex is currently trading at 32610.64, up by 228.18 points or 0.70% after trading in a range of 32492.01 and 32621.42. There were 24 stocks advancing against 7 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.44%, while Small cap index was up by 0.34%.

The top gaining sectoral indices on the BSE were Realty up by 1.52%, Bankex up by 0.90%, IT up by 0.87%, Auto up by 0.77% and Utilities was up by 0.68%, while Telecom down by 0.52% and Consumer Durables was down by 0.02% were the only losing indices on BSE.

The top gainers on the Sensex were HDFC up by 3.17%, Maruti Suzuki up by 1.05%, Hindustan Unilever up by 1.00%, ICICI Bank up by 0.97% and Asian Paints up by 0.94%. On the flip side, Bharti Airtel down by 1.54%, Cipla down by 0.63%, Sun Pharma down by 0.47%, Tata Steel down by 0.34% and Dr. Reddys Lab down by 0.25% were the top losers.

Meanwhile, a joint study conducted by the Federation of Indian Chambers of Commerce and Industry (FICCI) and EY has pointed out the need to resolve multiple issues dampening the private sector interest and slowing rate of private investment in the transport sector. The study titled ‘Revival of PPP momentum in the transport sector’ calls for key interventions to remove the roadblocks to the public private partnership (PPP) model, besides suggesting an acceleration of such projects. These interventions would include policy actions, regulatory changes and pushing reforms agenda, all of which would create a conducive environment for bringing investments into the sector.

The main recommendations of the study include: Strengthening of lending institutions, Greater participation of insurance and pension funds, Establishment of Infrastructure PPP Project Review Committee (IPRC) and the Infrastructure PPP Adjudicatory Tribunal (IPAT), Setting up of 3P India as proposed in the Union Budget for 2014-15, Mechanism to keep a check on aggressive bidding , Need for independent regulators, Passing and enactment of pending Bills, Strong emphasis on performance-based contracts, Better preparation of DPR and  Revisiting the Viability Gap Funding (VGF) Scheme.

A FICCI-EY study noted that companies need access to long-term funds for infrastructure projects with long gestation periods. There is an urgent need in India to tap such markets to fund its infrastructure requirement. The study recommended that the government should promote and issue rupee denominated Zero Coupon Bonds (ZCB). This will also help promote the general bond market in the country and attract investments from certain categories of investors such as pension funds and insurance companies. It also urged the government to put in place a mechanism to check aggressive bidding in projects. It added that aggressive bidding is a major cause of concern in PPP projects.

The CNX Nifty is currently trading at 10096.10, up by 75.45 points or 0.75% after trading in a range of 10054.95 and 10098.10. There were 42 stocks advancing against 9 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 3.60%, Eicher Motors up by 3.36%, HCL Tech up by 3.23%, HDFC up by 2.71% and Aurobindo Pharma up by 1.19%. On the flip side, Bharti Airtel down by 1.30%, Tech Mahindra down by 1.04%, Sun Pharma down by 0.73%, Cipla down by 0.53% and Tata Steel down by 0.41% were the top losers.

Asian markets were trading mostly in green; KOSPI Index rose 3.21 points or 0.13% to 2,437.72, FTSE Bursa Malaysia KLCI gained 4.68 points or 0.27% to 1,770.68, Jakarta Composite increased 17.12 points or 0.3% to 5,817.32, Nikkei 225 advanced 31.76 points or 0.16% to 20,081.92, Taiwan Weighted added 91.06 points or 0.87% to 10,510.17 and Hang Seng was up by 134.34 points or 0.5% to 27,075.36. On the flip side, Shanghai Composite was down by 10.64 points or 0.33% to 3,237.04.