Late buying take benchmarks to fresh closing highs; Nifty surpasses 10,100 mark

Buying in last leg of trade comes as the saving grace for the markets and helped them to settle at fresh record closing highs, with Nifty surpassing its crucial 10,100 mark, as traders remained optimistic ahead of outcome interest rate decision from two-day Monetary Policy Committee meeting that started today. The street is expecting a rate cut of at least 25 basis points by RBI tomorrow. Markets traded with huge volatility throughout the day, with frontline gauges swinging between green and red for most part of the day, but bulls which woke up in dying hour of trade mainly supported the markets to hit another record high. Traders also took encouragement with report that the collection of Integrated Goods and Services Tax from imports crossed Rs 20,000 crore in July - the first month of the roll out of the new indirect tax regime. Adding to the optimism, global rating agency Moody’s has reported that India's GDP growth will remain in the range of 6.5-7.5 percent over the next 12-18 months and GST will support the momentum for faster growth.

However, gains remained capped as some cautiousness crept in the markets after the growth of eight core sectors slowed to 0.4% in June due to contraction in output of coal, refinery products, fertiliser and cement. The growth rate of eight infrastructure sectors was 7% in June last year. Some anxiety also spread among the investors, as PMI survey data indicated that the introduction of the goods & services tax (GST) weighed heavily on the Indian manufacturing industry in July. The Nikkei/IHS Markit Manufacturing Purchasing Managers’ Index fell to 47.9 in July from June's 50.9, its first reading below the 50 mark that separates growth from contraction since December and its lowest reading since February 2009. Some concerns also came with the report that investments in the domestic capital market through participatory notes (P-notes) slumped to Rs 1.65 lakh crore in June amid stringent norms put in place by Sebi to curb the inflow of illicit funds.

On the global front, European markets have made a positive start, moving higher after two straight months of declines thanks to a positive flow of earnings released on Monday. Asian markets ended mostly in green, as investors prepared to assess a fresh round of corporate earnings reports and data releases on the global economy, starting with an upbeat Chinese factory numbers.

Back home, stocks of oil marketing companies remained on buyers’ radar, as the government asked oil marketing companies to raise the prices of subsidised cooking gas by Rs 4 per cylinder every month. Stocks related to Auto space too caught speed on strong sales performances in the month of July by companies like Tata Motors, Mahindra & Mahindra, Ashok Leyland and Maruti Suzuki.

The NSE’s 50-share broadly followed index Nifty gained around forty points to end above its psychological 10,100 support level, while Bombay Stock Exchange's Sensitive Index -- Sensex gained over sixty points to surpass its crucial 32,550 mark. The broader markets however struggled to get any traction and ended the session mixed. The market breadth was in the favour of decliners, as there were 1,055 shares on the gaining side against 1,620 shares on the losing side, while 164 shares remain unchanged.

Finally, the BSE Sensex gained 60.23 points or 0.19% to 32,575.17, while the CNX Nifty was up by 37.55 points or 0.37% to 10,114.65.

The BSE Sensex touched a high and a low of 32,632.02 and 32,462.25, respectively and there were 20 stocks on gaining side as against 11 stocks on losing side on the index.

The broader indices ended mixed; the BSE Mid cap index gained 0.45%, while Small cap index was down by 0.12%.

The top gaining sectoral indices on the BSE were Auto up by 1.57%, Metal up by 1.02%, Consumer Discretionary Goods & Services up by 0.88%, Oil & Gas up by 0.36% and Basic Materials was up by 0.28%, while Consumer Durables down by 0.75%, Capital Goods down by 0.37%, Telecom down by 0.37%, Power down by 0.08% and PSU was down by 0.07% were the top losing indices on BSE.

The top gainers on the Sensex were Hero MotoCorp up by 2.05%, Maruti Suzuki up by 1.96%, Wipro up by 1.82%, Mahindra & Mahindra up by 1.77% and Dr. Reddy’s Lab up by 1.73%. On the flip side, Lupin down by 1.36%, ONGC down by 1.21%, SBI down by 1.20%, Asian Paints down by 0.98% and Kotak Mahindra Bank down by 0.67% were the top losers.

Meanwhile, after hitting a 7-month high in the month of May, the share of foreign portfolio investments (FPI) through participatory notes (P-notes) has decreased to Rs 1.65 lakh crore at the end of June, due to strict norms enforced by SEBI to tackle inflow of illicit funds. According to Securities and Exchange Board of India (SEBI) data, total value of P-Notes investments in Indian markets including equity, debt and derivatives, at June-end declined to Rs 165,241 crore, from Rs 180,718 crore at the end of May.

Of the total, P-note holdings in equities at June-end were at Rs 107,113 crore, while in debts and derivatives were at Rs 25,672 crore and Rs 32,456 crore respectively. The quantum of FPI investments via P-Notes decreased to 5.7 percent in June, from 6.3 percent in the preceding month. P-notes are issued by registered Foreign Portfolio Investors to overseas investors who wish to be a part of the Indian stock markets without registering themselves directly. They however need to go through a proper due diligence process.

The SEBI had put in place restrictions on foreign portfolio investors from issuing participatory notes where the underlying asset is a derivative, as the markets regulator continues to make norms stricter for such instruments. Now, participatory notes or Offshore Derivative Instruments (ODIs) where the derivative is underlying can be issued only for the purpose of hedging with respect to the equity shares held.

The CNX Nifty traded in a range of 10,128.60 and 10,065.75. There were 35 stocks in green as against 16 stocks in red on the index.

The top gainers on Nifty were Eicher Motors up by 4.73%, Tech Mahindra up by 4.30%, Indiabulls Housing Finance up by 4.25%, BPCL up by 3.07% and Hindalco up by 2.78%. On the flip side, Bank of Baroda down by 1.54%, Lupin down by 1.37%, ONGC down by 1.18%, Asian Paints down by 1.16% and SBI down by 1.12% were the top losers.

European markets were trading in green; France’s CAC increased 24.5 points or 0.48% to 5,118.27, Germany’s DAX gained 58.52 points or 0.48% to 12,176.77 and UK’s FTSE 100 was up by 61.65 points or 0.84% to 7,433.65.

Asian equity markets closed mostly higher on Tuesday as stable oil prices, improved corporate earnings in Japan and better-than-expected China Caixin manufacturing PMI data helped investors shrug off geopolitical tensions and policy uncertainty in the United States. Chinese shares ended higher after the latest survey from Caixin revealed the manufacturing sector in China picked up steam in July, with a manufacturing score of 51.1. Other regional manufacturing surveys painted a mixed picture, with activity in Japan, Australia and Taiwan expanding while manufacturing sectors in South Korea, Malaysia and Indonesia swung to contraction in July. Further, Japanese shares ended higher, buoyed by companies such as Nitto Denko and Mitsui Sumitomo Financial Group reporting strong earnings, though gains were tempered by a stronger yen.