Benchmarks continue to trade in green

Indian equity benchmarks continued their trade in green in the morning session on account of buying in frontline blue chip counters. The rupee appreciated against the US dollar, with the American currency coming under heavy selling by banks and exporters. The Reserve Bank of India (RBI) will be reviewing its monetary policy on August 2, with most economists expecting a 25 bps rate cut on the back of falling retail inflation. Traders took encouragement with Finance Minister Arun Jaitley’s statement, who underlining the government’s push on reforms has said that in the last three years, the prime minister has been forcing one or two important changes. India has to become a country where it is easy to do business and the businesses are done in the most ethical way. Separately, Prime Minister Narendra Modi highlighted the success of the Goods and Services Tax (GST) Bill and said it has transformed the economy. Terming the GST as pro-poor and an example of cooperative federalism, he said the government’s effort is to ensure there is no extra burden on the poor. Meanwhile, investors took note of India’s exports of engineering goods to China saw a whopping 123 percent growth at $629 million during April-June this fiscal, driven by an upsurge in shipments of non-ferrous metals. The country’s shipments to China stood at $282 million in the April-June quarter of the previous fiscal. Separately, global brokerage firm lowered its inflation forecast for 2017 to 3.1% from 3.6% earlier citing relatively benign outcomes of GST and monsoon. It, however, said headline inflation troughed in June and the trajectory is still that of a gradual rise in headline inflation.

Traders were seen piling up position in Metal, Capital Goods and IT stocks, while selling was witnessed in Healthcare, FMCG and Telecom sector stocks. In scrip specific development, Dena Bank was trading in red on reporting losses in the first quarter of this fiscal year on the back of huge loans loss but the management said that it expects to show profits from next fiscal year. The bank reported Rs 133 crore net loss against Rs 279 crore in comparable period last year. Pfizer was trading in red after the pharmaceuticals firm reported 28.57 percent decline in net profit at Rs 57.17 crore for the first quarter ended June 30, 2017 due to lower sales. The company had posted a net profit of Rs 80.04 crore in the same period last fiscal.

On the global front, Asian markets were trading mostly in red, while Chinese shares rose after growth in China’s manufacturing sector cooled slightly in July as foreign demand for Chinese goods slackened, but a government-led infrastructure push kept construction humming and helped prop up the world’s second-largest economy. Investors remained wary after North Korea conducted another missile test late on Friday that it said proved its ability to strike the US mainland. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 32,400 and 10,000 levels respectively. The market breadth on BSE was positive in the ratio of 1201:978, while 116 scrips remained unchanged.

The BSE Sensex is currently trading at 32424.22, up by 114.34 points or 0.35% after trading in a range of 32324.45 and 32451.72. 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 0.05%, while Small cap index was up by 0.13%.

The top gaining sectoral indices on the BSE were Metal up by 1.76%, Capital Goods up by 1.42%, IT up by 1.02%, Basic Materials up by 0.98% and TECK up by 0.72%, while Healthcare down by 0.97%, FMCG down by 0.54%, Telecom down by 0.52% and Realty down by 0.24% were the losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 3.06%, Larsen & Toubro up by 2.67%, Kotak Mahindra Bank up by 2.14%, ONGC up by 1.94% and Infosys up by 1.81%.

On the flip side, Sun Pharma down by 2.46%, Dr. Reddy’s Lab down by 1.85%, Lupin down by 1.18%, ITC down by 1.15% and Bajaj Auto down by 1.03% were the top losers.

Meanwhile, citing inflation at a five-year low and deceleration in the factory output, the industry chamber Associated Chambers of Commerce and Industry of India (ASSOCHAM) ahead of the meeting of the Monetary Policy Committee scheduled on August 2, has urged the Reserve Bank of India (RBI) Governor Urjit Patel to cut interest rates. After a long duration of consistency in the Repo rates, ASSOCHAM believes that the RBI could reduce the policy rate by 25 basis points (bps).

The industry chamber said a strong case was made out for a reduction in the interest rates, keeping in mind new lows in both the Consumer and Wholesale Price Index (WPI) inflation. It also said that the deceleration in factory output growth could further bolster the case for a rate cut next month to boost Asia's third-largest economy, which grew 6.1% in the January-March quarter - its weakest pace in more than two years.

Retail inflation in India during June dropped to a record low of 1.54%, while industrial production data showed that the growth in factory production fell to 1.7% in May, from 8% in the same month a year ago. The WPI also eased to 0.9% from 2.17%. ASSOCHAM said the case for rate-cut is additionally strengthened by easing of food inflation to (-) 2.12% from 0.31%. It added that good monsoon forecasts for the current financial year have additionally created a stance for further reduction in the food inflation.

Hoping for a due consideration of its demand, the ASSOCHAM further said the RBI also needs to come out with a special dispensation for loan recovery from the Small and Medium Enterprises, as also the mid-sized corporate, apart from directional guidance and softer measures on recovery from SMEs and Mid-corporate.

The CNX Nifty is currently trading at 10037.65, up by 23.15 points or 0.23% after trading in a range of 10016.95 and 10048.90. There were 30 stocks advancing against 21 stocks declining on the index.

The top gainers on Nifty were Tata Steel up by 3.11%, Vedanta up by 2.22%, ONGC up by 2.06%, Larsen & Toubro up by 2.05% and Infosys up by 1.87%.

On the flip side, Sun Pharma down by 2.54%, Dr. Reddy’s Lab down by 2.25%, Yes Bank down by 1.52%, Bajaj Auto down by 1.45% and Lupin down by 1.40% were the top losers.

The Asian markets were trading mostly in red; Taiwan Weighted decreased 29.74 points or 0.29% to 10,393.31, KOSPI Index decreased 4.08 points or 0.17% to 2,396.91, FTSE Bursa Malaysia KLCI decreased 0.83 points or 0.05% to 1,766.25 and Jakarta Composite decreased 0.73 points or 0.01% to 5,830.30.

On the other hand, Nikkei 225 increased 0.73 points to 19,960.57, Shanghai Composite increased 21.43 points or 0.66% to 3,274.67 and Hang Seng increased 281.84 points or 1.04% to 27,261.23.