Markets hit fresh record closing highs on RBI rate cut hopes

Indian equity benchmarks ended the splendid performance with a gain of over half a percent on Monday, settling at fresh all time closing high levels. Key gauges traded firmly throughout the session and ended above their crucial 10,050 (Nifty) and 32,500 (Sensex) levels amid rate cut optimism. Market participants expects the Reserve Bank of India (RBI) to cut rates by 25 bps on falling inflation in the coming policy meet, which will start tomorrow. Meanwhile, ahead of the next monetary policy review, Reserve Bank Governor Urjit Patel on Friday called on Finance Minister Arun Jaitley and is believed to have discussed various macro-economic issues. Traders also took some 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.

Adding to the optimism, 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. Markets extended their northward journey in second half as market participants got some boost on report that 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.

Firm opening in European counters too aided sentiments, as Chinese manufacturing data boosted miners and investors focused on positive earnings news from Europe’s largest bank, HSBC. Asian markets closed mixed, as investors turned their attention to a raft of global economic data and earnings this week.

Back home, some support came with Moody’s report that India’s GDP growth will remain in the range of 6.5-7.5% over the next 12-18 months and GST will support the momentum for faster growth. Besides, 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.

On the sectoral front, stocks related to oil space edged higher, as the union minister Dharmendra Pradhan said that centre is planning to set up petrochemical clusters in eastern, western and southern India, to spur growth of the sector amid increasing demand. Stocks related to auto sector remained in top gear ahead of monthly sales numbers for the month of July to be released tomorrow.

The NSE's 50-share broadly followed index Nifty gained over sixty points to end above its psychological 10,050 support level, while Bombay Stock Exchange's Sensitive Index -- Sensex soared over two hundred points to surpass its crucial 32,500 mark. The broader markets too traded with traction and ended the session in green. However, the market breadth was in the favour of decliners, as there were 1,261 shares on the gaining side against 1,418 shares on the losing side, while 197 shares remain unchanged.

Finally, the BSE Sensex surged 205.06 points or 0.63% to 32,514.94, while the CNX Nifty was up by 62.60 points or 0.63% to 10,077.10.

The BSE Sensex touched a high and a low of 32,546.50 and 32,324.45, respectively and there were 20 stocks on gaining side as against 11 stocks on losing side on the index.

The broader indices ended in green; the BSE Mid cap index gained 0.39%, while Small cap index was up by 0.14%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.86%, Metal up by 1.69%, PSU up by 1.66%, Capital Goods up by 1.40% and Bankex up by 1.30%, while Healthcare down by 1.52%, FMCG down by 0.99% and Telecom was down by 0.08% were the top losing indices on BSE.

The top gainers on the Sensex were SBI up by 4.46%, Power Grid Corporation up by 4.23%, Tata Steel up by 2.89%, Larsen & Toubro up by 2.85% and ONGC up by 2.82%. On the flip side, Sun Pharma down by 3.47%, Dr. Reddy’s Lab down by 3.11%, Lupin down by 2.90%, ITC down by 2.09% and Cipla down by 1.18% were the top losers.

Meanwhile, the government has expressed its hope that the India's gems and jewellery sector to grow 6-7 percent annually and has set a target of $60 billion exports by 2022 from the present $43 billion. According to the Gem and Jewellery Export Promotion Council's provisional data, the country exported gems and jewellery worth $43.156 billion during FY17, a rise of nearly 10 percent over $39.286 billion exported in FY16.

In order to become globally competitive and promoting jewellery exports, Department of Commerce Joint Secretary Manoj Dwivedi has said that the jewellery industry needs to achieve a higher scale of achievement in the coming years. He also mentioned that the government is making various policy initiatives to find out ways and mean to improve this sector since it is only sector having maximum employment opportunities to both skilled and unskilled workers pan India.

Adding further, he pointed out that although the downward trend witnessed in the global markets, the country's gems and jewellery exports showed upward trend, which is very positive sign. He also stated that they want to explore new markets for jewellery and diamond exports for which process is on.

The CNX Nifty traded in a range of 10,085.90 and 10,016.95. There were 32 stocks in green as against 19 stocks in red on the index.

The top gainers on Nifty were SBI up by 4.48%, Power Grid Corporation up by 4.03%, ONGC up by 2.82%, Larsen & Toubro up by 2.80% and Bank of Baroda up by 2.79%. On the flip side, Sun Pharma down by 3.48%, Dr. Reddy’s Lab down by 3.32%, Lupin down by 3.00%, ITC down by 2.16% and Yes Bank down by 1.76% were the top losers.

European markets were trading mostly in green; Germany's DAX increased 15.39 points or 0.13% to 12,178.09 and UK's FTSE 100 was up by 28.66 points or 0.39% to 7,397.03, while France's CAC was down by 1.63 points or 0.03% to 5,129.76.

Asian equity markets ended mixed on Monday as geopolitical tensions escalated, US political uncertainty deepened and China's manufacturing and service sector readings fell slightly in July. Activity in China's manufacturing sector continued to expand in July, albeit at a slower pace, the National Bureau of Statistics said with a PMI score of 51.4, down from 51.7 in June. The bureau's non-manufacturing index came in at 54.5 - down from 54.9 in the previous month. Investors remained wary after North Korea conducted a missile test late on Friday that it said proved its ability to strike the US mainland. The US responded by flying two bombers over the Korean peninsula on Sunday. Japanese shares ended at 6-1/2-week lows even as the yen came off from its early highs against its major rivals. Meanwhile, Chinese shares ended higher as investors piled into resource firms which forecast jumps in first-half earnings, reinforcing a rotation into blue chips that feature solid growth and fundamentals.