Bulls tighten grip on Dalal Street; Nifty ends shy of 9,900 mark

Coming out from the initial choppiness, Indian equity benchmarks staged splendid performance on Wednesday, extending their northward journey for second straight session to end near their crucial 9,900 (Nifty) and 31,800 (Sensex) levels. Markets traded drearily in early deals, as traders remained concerned with wholesale inflation rising to 1.88 percent in July as prices of some commodities increased in the first month of Goods and Services Tax (GST) rollout. Higher Retail inflation too dampened traders’ mood as it rose to 2.36% in the month of July. However, key gauges gathered momentum in afternoon session and started moving northward, as traders took some encouragement with statements by the Prime Minister Narendra Modi who on 70th Independence Day promising to lead the country on a new track of economic progress, said his government would intensify the fight against black money and corruption. Adding to the optimism, India’s trade deficit narrowed to $11.45 billion in July from a month ago, following a slowdown in merchandise imports. Also, recording a growth of over 3.9 percent on the back of a healthy rise in shipments of engineering goods, petroleum products and chemicals, Indian exports in July grew at $22.5 billion.

Market extended their rally and ended near intraday high levels on report that Markets regulator SEBI notified relaxed norms for stake purchase in distressed listed companies by lenders, exempting them from making open offers for shareholders. The relaxation will be subject to certain conditions, including shareholders’ approval of the stake acquisition by way of special resolution. Some support also came with a foreign brokerage report highlighting that India’s growth momentum will get stronger with revival in private investment cycle and real GDP growth is expected to average at about 7.4 percent over 2017 and 2018. It also termed as faulty the argument that a 7.5-8 percent real GDP growth in the next few years will still be lower than what was achieved in the boom period of 2006-2008.

Firm opening in European counters too aided sentiments ahead of euro zone GDP figures which are expected to confirm the bloc’s economic growth was on track. The jobless rate in the UK unexpectedly dropped in June, while wage inflation registered a stronger-than-expected increase. Asian markets ended mixed, as geopolitical tensions regarding the Korean peninsula eased and investors tracked a muted performance overnight on Wall Street.

Back home, steel stocks remained on buyers’ radar on report that domestic crude steel production witnessed a 4.6 percent increase at 8.45 million tonnes (MT) in July. PSU stocks remained in focus, on report that the government is in advanced stage of appointing advisers for proposed strategic sales in state-run firms such as Scooters India, BEML, Pawan Hans and Hindustan Prefab. Shares of tobacco stocks edged higher on value buying, as most of these stocks had corrected between 25% and 40% from their recent high touched in July, after the GST Council increased cess on cigarettes.

The NSE’s 50-share broadly followed index Nifty gained over hundred points to end near its psychological 9,900 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex soared over three hundred and twenty points to end above its crucial 31,700 mark. The broader markets too traded with traction and ended the session with a gain of over a percent. The market breadth was in the favour of advances, as there were 1,646 shares on the gaining side against 942 shares on the losing side, while 116 shares remain unchanged.

Finally, the BSE Sensex soared 321.86 points or 1.02% to 31,770.89, while the CNX Nifty was up by 103.15 points or 1.05% to 9,897.30.

The BSE Sensex touched a high and a low of 31,805.99 and 31,399.35, respectively and there were 21 stocks on gaining side as against 10 stocks on losing side on the index.

The broader indices ended in green; the BSE Mid cap index surged 1.26%, while Small cap index was up by 1.31%.

The top gaining sectoral indices on the BSE were FMCG up by 2.49%, Metal up by 1.72%, Auto up by 1.62%, Basic Materials up by 1.31% and Bankex was up by 1.26%, while Capital Goods down by 0.13% and Utilities was down by 0.05% were the only losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 3.57%, Cipla up by 3.54%, ITC up by 3.01%, Hindustan Unilever up by 3.00% and Sun Pharma up by 2.69%. On the flip side, NTPC down by 1.05%, Asian Paints down by 0.94%, Power Grid Corporation down by 0.88%, Coal India down by 0.67% and Lupin down by 0.56% were the top losers.

Meanwhile, domestic rating agency, ICRA in its latest report has stated that the domestic mining and construction equipment (MCE) industry is likely to grow by 13-17 percent in the calendar year 2017, with the demand for MCE continues to grow largely due to the surge in infrastructure spending. It also pointed out that this comes after a healthy 35 percent growth in the demand for MCE during the previous calendar year after four consecutive years of weak demand.

However, ICRA has said that in CY17, the growth in the sector has been marginally curtailed despite strong growth during January-February 2017 as the markets were temporarily affected by emission related ambiguity and Goods and Services Tax (GST) during April and July 2017, respectively. It expects that the sector’s growth to lower in 2018 with it growing by 8-10 percent. For 2019, it also expects that the growth in the sector may slow down to around 4 percent on the back of Union elections and high base effects.

According to the report, infrastructure investments in roads, irrigation, railways and metro drove demand whereas coal and iron ore mining, power, oil and gas and real estate tampered demand. It also said that the improvement in average per day execution of National Highway Authority of India (NHAI) projects to 10.33 km in the fourth quarter of the financial year 2017 despite demonetization and investments by Indian Railways helped in the growth in demand for MCE.

The CNX Nifty traded in a range of 9,903.95 and 9,773.85. There were 37 stocks in green as against 13 stocks in red, while one stock remained unchanged on the index.

The top gainers on Nifty were Tech Mahindra up by 4.41%, Tata Motors up by 3.69%, Cipla up by 3.58%, Bank of Baroda up by 3.44% and Tata Power up by 3.14%. On the flip side, Asian Paints down by 1.10%, NTPC down by 0.96%, Yes Bank down by 0.94%, Power Grid Corporation down by 0.92% and Infosys down by 0.64% were the top losers.

European markets were trading in green; UK’s FTSE 100 increased 48.1 points or 0.65% to 7,431.95, France’s CAC surged 57.93 points or 1.13% to 5,198.18 and Germany’s DAX was up by 104.4 points or 0.86% to 12,281.44.

Asian equity markets ended mixed on Wednesday as underlying sentiments turned cautious in the wake of expectations for a December rate hike from the Federal Reserve and the IMF’s warning that China’s credit growth is on a ‘dangerous trajectory’. Chinese shares ended lower after central bank data showed China’s new yuan loans fell sharply in July and broad money supply growth slowed. Further, Japanese shares ended slightly lower, dragged down by automakers on uncertainty about the fate of Mexico ahead of the first round of NAFTA negotiations.