Markets make an optimistic start on firm global cues

Indian equity benchmarks have made an optimistic start and are trading with traction in early deals on Monday, tracking firm global cues following favorable US jobs data. Traders are getting encouragement with industry body Assocham’s statement that the government’s decision to hike the minimum support price (MSP) for 14 khariff crops would boost farmers’ income, resulting in a huge rural demand push to the Indian economy. Some support also came with a report by the World Trade Organization (WTO) showing that India has initiated far more number of measures widely considered to be trade restricting since last year, when the US and China began locking horns on a global trade war spanning hundreds of billions of dollars. Adding to the optimism, foreign investors have pumped in over Rs 3,000 crore in the Indian capital markets in the last five trading sessions after pulling out hefty funds during April-June. The recent infusion comes following a net outflow of more than Rs 61,000 crore in the last three months. Prior to that, they had poured in Rs 2,662 crore in March.

Global cues too remained supportive with Asian markets rallying at this point of time, as investors set aside concerns about escalating trade tensions to prepare for the latest earnings season after signs of continued economic strength. The US markets ended higher on Friday, as strong US jobs growth blunted the impact of an escalating US-China trade dispute.

Back home, stocks related to steel sector edged higher with a private report that India’s crude steel output grew six per cent to 26 million tonne (MT) in the first quarter of the ongoing financial year. The country had produced 24.5 MT of crude steel during April-June, 2017-18. Banking stocks remained in focus on report that Public sector banks are planning to tap the markets to raise more than Rs 50,000 crore this fiscal to shore up their capital base for business growth and meeting regulatory global risk norms.

The BSE Sensex is currently trading at 35846.13, up by 188.27 points or 0.53% after trading in a range of 35817.44 and 35931.09. There were 27 stocks advancing against 4 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.85%, while Small cap index was up by 0.99%.

The top gaining sectoral indices on the BSE were Metal up by 1.26%, Healthcare up by 1.11%, Utilities up by 1.01%, Basic Materials up by 0.94% and Power up by 0.93%, while there were no losers on the BSE sectoral front.

The top gainers on the Sensex were Axis Bank up by 2.42%, Yes Bank up by 1.73%, Vedanta up by 1.71%, Sun Pharma up by 1.52% and Asian Paints up by 1.47%. On the flip side, TCS down by 1.22%, Hero MotoCorp down by 0.46%, Hindustan Unilever down by 0.07% and Kotak Mahindra Bank down by 0.07% were the top losers.

Meanwhile, days after the government hiked the minimum support price (MSP) for 14 khariff crops, the industry chamber, Associated Chambers of Commerce and Industry of India (ASSOCHAM) has said that this better realizations for famers’ crops would boost their income and will result in a huge rural demand push to the Indian economy. The government had increased the MSP for paddy by a record Rs 200 per quintal that will cost the exchequer over Rs 15,000 crore, and help fulfil its poll promise to give farmers 50% more than their cost of production.

The industry chamber also said the MSP may not be an ideal and a perfect solution to address the farmers’ woes, but the long-term reforms would take long time and farmers cannot be allowed to suffer that long. It further said the entire rural landscape constitutes about 70% of consumer basket and unless they have adequate purchasing power, the much-needed demand push for India Inc would not materialise.

ASSOCHAM noted that the concern over MSP increase leading to inflationary pressure may be addressed by improving the administrative machinery in the foodgrains and vegetable mandis, which are still under the clutches of cartels. It added that the state governments have a key role in demolishing the mandi cartels which trigger a huge volatility in agri prices, especially those of fruits and vegetables. Besides, it suggested setting up of a number of procurement and processing companies in the Public, Private Partnership (PPP) which can act as a bridge between the farmers and the consumers which may even be B2B consumer.

The CNX Nifty is currently trading at 10827.45, up by 54.80 points or 0.51% after trading in a range of 10818.25 and 10844.70. There were 43 stocks advancing against 7 stocks declining on the index.

The top gainers on Nifty were Axis Bank up by 2.59%, Dr. Reddys Lab up by 2.08%, Vedanta up by 1.92%, Yes Bank up by 1.91% and HCL Tech. up by 1.79%. On the flip side, TCS down by 1.43%, Titan Co down by 0.80%, Grasim Industries down by 0.61%, Zee Entertainment down by 0.39% and BPCL down by 0.39% were the top losers.

Asian markets are rallying; Nikkei 225 soared 300.91 points or 1.36% to 22,089.05, Straits Times gained 31.58 points or 0.98% to 3,223.40, Hang Seng surged 424.47 points or 1.48% to 28,740.09, Taiwan Weighted jumped 124.62 points or 1.16% to 10,733.19, KOSPI added 15.83 points or 0.69% to 2,288.70, Jakarta Composite rose 68.23 points or 1.18% to 5,763.14 and Shanghai Composite was up by 45.34 points or 1.62% to 2,792.57.