Markets strengthen further; Sensex regains 35,600 mark

Indian equity markets gained further strength in late afternoon session to reach at their intraday fresh high points, with Sensex and Nifty regaining crucial 35,600 and 10,750 levels, respectively. Strong buying support across Auto, Healthcare and Energy indices, aided the bourses to extend gains in late noon deals. Besides, Bajaj Auto was leading the major industry players on BSE with the gains of almost 4%, followed by Maruti Suzuki and HDFC. Domestic sentiments got boost as the Indian services sector bounced back to growth in the month of June, on the back of strongest rise in new business. As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index rose back above the 50.0 no-change mark in June, posting reading at 52.6 from 49.6 in May. The Nikkei India Composite PMI Output Index which measures both manufacturing and services too climbed to 53.3 in June from 50.4 in May, signaling solid rate of expansion since October 2016. Traders were also taking encouragement with NITI Aayog Vice Chairman Rajiv Kumar’s statement that the India’s economy is on the cusp of a major sustained and ongoing recovery, and it is poised to grow above 8% from the next year.

Traders paid no heed towards Moody's Investors Service’s latest report that higher crude price is a key risk to India’s growth, but subsidy reform in petrol and diesel has diminished the risk to sovereign credit profile. On the sectoral front, Agri-linked stocks such as LT Foods and Kohinoor Foods rallied up after the Cabinet gave thumbs-up to the latest round of MSP hike. Metal stocks were also trading higher, amid reports that aluminium exports from the country increased by 36% in 2017-18, aided by global demand, which outstripped supply.

On the global front, European markets were trading in red, amid elevated tensions between the US and China over looming trade tariffs and investment restrictions. Market focus is largely attuned to the ongoing US-Sino trade row, with investors concerned that the dispute could soon derail a rare period of synchronized global growth. In economic releases, shop prices in the United Kingdom dropped an annual 0.5% in June, following the 1.1% annual drop in May. Services Purchasing Managers' surveys from the UK and euro area are due later in the session. Asian markets were also trading in red, as trade jitters continued to simmer ahead of the July 6 deadline for the Trump Administration's planned imposition of tariffs on Chinese imports. Back home, in scrip specific development, Dena Bank was trading higher after the bank proposed to sell its non-core assets by selling Equity Shares of various entities.

The BSE Sensex is currently trading at 35609.87, up by 231.27 points or 0.65% after trading in a range of 35309.67 and 35628.20. There were 20 stocks advancing against 11 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.22%, while Small cap index was up by 0.23%.

The top gaining sectoral indices on the BSE were Auto up by 1.18%, Healthcare up by 0.94%, Energy up by 0.86%, Consumer Disc up by 0.65% and Bankex up by 0.56%, while IT down by 0.50%, TECK down by 0.43%, Consumer Durables down by 0.40%, PSU down by 0.35% and Power down by 0.34% were the top losing indices on BSE.

The top gainers on the Sensex were Bajaj Auto up by 3.92%, Maruti Suzuki up by 2.05%, HDFC up by 1.68%, Hindustan Unilever up by 1.66% and Reliance Industries up by 1.65%. On the flip side, NTPC down by 1.19%, ONGC down by 1.17%, Vedanta down by 1.17%, Yes Bank down by 0.62% and Adani Ports & SEZ down by 0.57% were the top losers.

Meanwhile, recovering from the last month’s fall, the Indian services sector bounced back to growth in the month of June, on the back of strongest rise in new business. Acceleration in job creation coupled with improved demand conditions, also drove overall business activity during the month. However, the input inflationary pressure remained solid overall, amid higher fuel costs.

As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index rose back above the 50.0 no-change mark in June, posting reading at 52.6 from 49.6 in May. The Nikkei India Composite PMI Output Index which measures both manufacturing and services too climbed to 53.3 in June from 50.4 in May, signaling solid rate of expansion since October 2016.

The report also found that new orders grew across the service sector at fastest rate in a year, backed by strong underlying demand, while new business at manufacturing companies also rose at the fastest rate since last December in June. However, backlogs of work increased at service providers in June, stretching the period of expansion to 25 months, on account of stronger demand and delayed payments.

On inflation front, input cost inflation in the service sector remained solid and was broadly similar to the prior survey period. Besides, manufacturers also remained cost burdened in the reported month, as strongest rise in input costs since July 2014 in June. Further, output charge inflation rose in the reported period with the service companies passing on higher cost burdens on to clients but at the slowest pace in over a year.

The CNX Nifty is currently trading at 10763.45, up by 63.55 points or 0.59% after trading in a range of 10677.75 and 10766.35. There were 29 stocks advancing against 21 stocks declining on the index.

The top gainers on Nifty were Bajaj Auto up by 3.98%, Lupin up by 3.09%, Bharti Infratel up by 2.86%, Indiabulls Housing Finance up by 2.51% and Maruti Suzuki up by 2.14%. On the flip side, HPCL down by 2.65%, Grasim Industries down by 2.18%, BPCL down by 1.62%, ONGC down by 1.36% and NTPC down by 1.23% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 declined 68.50 points or 0.32% to 21,717.04, Hang Seng fell 303.90 points or 1.08% to 28,241.67, KOSPI was down by 7.30 points or 0.32% to 2,265.46 and Shanghai Composite decreased 26.30 points or 0.95% to 2,760.59. On the flip side, Taiwan Weighted increased 6.15 points or 0.06% to 10,721.87, Straits Times gained 8.03 points or 0.25% to 3,243.93 and Jakarta Composite was up by 89.12 points or 1.56% to 5,723.06.

European markets were trading mostly in red; UK’s FTSE 100 decreased 11.52 points or 0.15% to 7,581.77 and Germany’s DAX fell 15.65 points or 0.13% to 12,333.49. On the flip side, France’s CAC increased 3.30 points or 0.06% to 5,320.07.