Late hour buying helps benchmarks to end higher; Nifty reclaims 10,050 mark

Bulls which woke up in last leg of trade mainly helped the benchmarks to end near intraday high levels on Friday, as investors took to hefty across the board buying. Markets started the day on pessimistic note and extended their downside, as the Street remained disappointed with Reserve Bank of India’s 25 bps rate cut. Traders also remained concerned with Finance Minister Arun Jaitley’s statement that lending rate of 14-15 percent will make India uncompetitive in the global market and industry cannot invest at such higher interest rates. He said at a time when inflation was running high at 10 percent bank deposit rates were high at 9 percent. But loans were extended by banks at 14-15 percent interest rate and with such high interest rates global industrial investments will not come in.

However, 32,100 (Sensex) and 10,000 (Sensex) proved to be the strong support levels, as markets started recovering from thereon and entered into green terrain in last leg of trade. Traders took some solace with the private report expecting a pick-up in the note ban affected rural demand from October this year. The report further said that the second consecutive bumper crop on good monsoons, farm loan waivers, and lower agriculture input costs will help revive the rural demand. Meanwhile, the government may impose anti- dumping duty on castings for wind operated power generators from China to guard domestic players from below-cost imports.

Firm trading in European counters in early deals too aided sentiments as investors monitored earnings reports and reacted to further political uncertainty at the White House. Asian markets exhibited mixed trend, as investors eyed a flurry of data in coming week. Japan's economy was expected to grow for a sixth straight quarter in April-June, a poll found, buoyed by domestic demand as consumer spending recovered and firms increased their capital investment.

Back home, appreciation in Indian rupee too aided sentiments. The rupee appreciated by 5 paise to 63.63 against the US dollar at the time of equity markets closing on continued foreign capital inflows.  Buying in banking counter too supported sentiments, as the Lok Sabha passed the Banking Regulation (Amendment) Bill, 2017, after Finance Minister Arun Jaitley declared that criminal and recovery proceedings will be started against defaulters of bank loans who divert money and asserted that no one can claim equality in not repaying loans to the banks.

Stocks related to textile sector remained on buyers’ radar, as foreign direct investment (FDI) in textile sector more than doubled to $618.95 million during 2016-17 from $230.13 million in the previous fiscal. Aviation stocks flied higher after global airlines’ body the International Air Transport Association (IATA) said that India’s domestic air passenger traffic surged by 20.3% in June as compared to the corresponding month of the previous year, the highest among major aviation markets like Australia, Brazil, China, Japan, Russia and the US.

The NSE’s 50-share broadly followed index Nifty gained over fifty points to end above its psychological 10,050 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex rose around ninety points to surpass its crucial 32,300 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 1,201 shares on the gaining side against 1,389 shares on the losing side, while 168 shares remain unchanged.

Finally, the BSE Sensex gained 87.53 points or 0.27% to 32,325.41, while the CNX Nifty was up by 52.75 points or 0.53% to 10,066.40.

The BSE Sensex touched a high and a low of 32,352.19 and 32,107.99, respectively and there were 22 stocks on gaining side as against 9 stocks on losing side on the index.

The broader indices ended in green; the BSE Mid cap index gained 0.66%, while Small cap index was up by 0.10%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 4.21%, Oil & Gas up by 2.63%, Metal up by 2.50%, PSU up by 2.45% and Basic Materials was up by 1.07%, while Healthcare down by 0.94% and Telecom was down by 0.43% were the only losing indices on BSE.

The top gainers on the Sensex were Hero MotoCorp up by 3.11%, Coal India up by 3.04%, Tata Steel up by 2.85%, NTPC up by 2.78% and Hindustan Unilever up by 1.91%. On the flip side, Dr. Reddy’s Lab down by 3.76%, Sun Pharma down by 1.85%, Reliance Industries down by 1.76%, Bharti Airtel down by 0.78% and HDFC down by 0.27% were the top losers.

Meanwhile, the Lok Sabha has passed the Banking Regulation (Amendment) Bill, 2017, which gives RBI the power to direct banking companies to resolve specific stressed assets by initiating insolvency resolution process. The bill, introduced by Finance Minister Arun Jaitley, replaces Banking Regulation (Amendment) Ordinance, 2017 promulgated in May this year in the absence of an ongoing Parliament session.

The RBI would also be empowered to issue other directions for resolution, appoint or approve for appointment, authorities or committees to advise the banking companies for stressed asset resolution. Moving on fast-track, the RBI in June had identified 12 large loan defaulters who account for 25 percent of the total bad loans in the banking sector and started the process of resolution of stressed assets. Non-performing assets (NPAs) of banks have risen to over Rs 9 lakh crore and so it had become necessary for the RBI to intervene.

Besides, Finance Minister Arun Jaitley has said that the new legislation will help activate the Asset Reconstruction Companies (ARCs) which will take over the stressed assets of companies to make them turn around as performing assets. He also said that the government is also taking action against the loan defaulters.

The CNX Nifty traded in a range of 10,075.25 and 9,988.35. There were 37 stocks in green as against 14 stocks in red on the index.

The top gainers on Nifty were Indian Oil Corporation up by 8.24%, BPCL up by 5.69%, Vedanta up by 3.18%, Hero MotoCorp up by 3.08% and Coal India up by 3.08%. On the flip side, Dr. Reddy’s Lab down by 3.63%, Tata Power down by 2.90%, Aurobindo Pharma down by 2.16%, Sun Pharma down by 1.83% and Reliance Industries down by 1.69% were the top losers.

European markets were trading in green; UK’s FTSE 100 rose 5.1 points or 0.07% to 7,479.87, France’s CAC increased 7.13 points or 0.14% to 5,137.62 and Germany’s DAX was up by 16.33 points or 0.13% to 12,171.05.

Asian equity markets made a mixed closing on Friday amid political uncertainty in the US and ahead of the US monthly jobs report slated for release later in the day. The dollar remained under selling pressure after the Wall Street Journal reported that US Special Counsel Robert Mueller's investigation into possible Russian interference in the 2016 elections is intensifying. It was said that Mueller has impaneled a grand jury in Washington to investigate allegations of Russia's interference in the elections. US crude futures remained below $50 a barrel on concerns over high OPEC supplies while the yen hit a seven-week high. Japanese shares ended lower as the yen's strength in the wake of renewed concerns over US President Donald Trump's ability to push through tax changes and a surprisingly soft reading on the US services sector overshadowed investors’ optimism on corporate earnings. Chinese shares ended lower even as a rally in cyclicals remained intact.