Markets extend jubilation for third straight session

Extending jubilation for third straight day, Indian equity benchmarks ended the Tuesday’s trade with a gains of over around a percent, recapturing their crucial 36,200 (Sensex) and 10,900 (Nifty) levels, amid firm global cues. After a positive start, there appeared not even an iota of profit booking in the session with benchmarks fervently gaining from strength to strength to end near intraday highs, as investors continued hunt for fundamentally strong stocks. Sentiments remained up-beat throughout the session with rating agency Crisil’s latest report stating that India Inc will deliver the highest quarterly revenue growth in three years at 12.8% in the April-June period, but high oil prices will narrow profit margins by 0.20%. Traders also took some encouragement with NITI Aayog vice-chairman Rajiv Kumar making a case for promoting Zero Budget Natural Farming (ZBNF) in states, saying it would help in doubling farmers’ income by 2022. Some support also came with the Reserve Bank of India (RBI) in its latest report revealing that private corporate business sector records robust sales growth in fourth quarter of 2017-18, with the companies posting sales of Rs 9.25 trillion as compared Rs 8.41 trillion in the last quarter of 2016-17. A performance analysis report is based on the abridged financial results of 2,723 listed non-government non-financial (NGNF) companies for the Q4 FY18.

Markets extended gains in last leg of trade with a private report stating that India and South Korea will reduce duties on 11 tariff lines in a bid to expand bilateral trade by updating their existing free-trade agreement, called the comprehensive economic partnership agreement (CEPA). Investors also took support from BSE Managing Director and CEO Ashishkumar Chauhan’s statement that there was no need to ‘panic’ over risk management firm Kroll’s observations about Indian economy as the country was a thought leader in corporate governance worldwide. The street paid no heed towards a private report stating that Indian inflation likely rose to a near two-year high in June, driven by surging oil and food prices, a development that would strengthen calls for more monetary policy tightening by the RBI.

Global cues too remained supportive with European markets trading in green in early deals, after European Central Bank policymaker Ewald Nowotny warned that Britain's ramshackle exit from the European Union could damage economic growth in the euro zone. Investors also focused on upcoming corporate earnings. Asian markets ended mostly in green, as overnight gains on Wall Street and the lack of bad news surrounding US-China tariffs boosted sentiments.

Back home, auto stocks remained in top gear after data released by the Society of Indian Automobile Manufacturers (SIAM) showed that domestic passenger vehicle sales rose 37.54 % to 2,73,759 units in June this year from 1,99,036 units in the corresponding month last year. Data also showed that the domestic car sales were up 34.21% to 1,83,885 units as against 1,37,012 units in June 2017. Banking sector stocks edged higher despite a private report that banking sector woes are expected to continue in the first quarter of the financial year with weak profits despite a pickup in retail-backed credit growth and easing of fresh bad loans. Select textile stocks ended lower after report stated that India’s apparel exports are estimated to have declined by 17% in the first quarter of FY19 due to a slowdown in demand from developed countries following weak economic activity there.

Finally, the BSE Sensex surged 304.90 points or 0.85% to 36,239.62, while the CNX Nifty was up by 94.35 points or 0.87% to 10,947.25.

The BSE Sensex touched a high and a low of 36,274.33 and 36,019.63, respectively and there were 21 stocks advancing against 10 stocks declining on the index.
The broader indices ended in green; the BSE Mid cap index gained 1.01%, while Small cap index was up by 1.04%.

The top gaining sectoral indices on the BSE were Energy up by 2.01%, Realty up by 1.79%, Telecom up by 1.75%, Metal up by 1.58% and Utilities was up by 1.30%, while Healthcare down by 0.14% was the lone losing index on the BSE.

The top gainers on the Sensex were Reliance Industries up by 3.02%, Yes Bank up by 2.58%, Coal India up by 2.56%, Bajaj Auto up by 2.36% and Wipro up by 2.26%. On the flip side, Indusind Bank down by 1.00%, Sun Pharma down by 0.96%, Kotak Mahindra Bank down by 0.96%, Hero MotoCorp down by 0.83% and TCS down by 0.56% were the top losers.

Meanwhile, the World Trade Organisation (WTO) in its latest report has showed that a total of 39 new trade-restrictive measures were applied by G20 economies between October 16, 2017 and May 15, 2018, including tariff increases, stricter customs procedures, imposition of taxes and export duties. It noted that this equates to an average of almost six restrictive measures per month, which is significantly higher than the three measures recorded during the previous review period. It mentioned that the G20 is a group of developed and developing countries which include India, Australia, Brazil, China, France, UK, EU, Germany, Japan, Korea, Russia, South Africa and Turkey. 

The report further indicated that the G20 nations also implemented 47 measures to facilitate trade during this review period, including elimination or cut in tariffs, simplified import and export customs procedures and reduction of import taxes. It noted that at an average of almost seven trade-facilitating measures per month, this is marginally higher than the six measures recorded in the previous reporting period (mid-May to mid-October 2017). The report comes against the backdrop of trade wars intensifying globally, led by the US and China, in the past couple of months.

According to the report, the marked increase in such measures among G20 economies should be of real concern to the international community. It also pointed out that additional trade-restrictive measures have been announced in the weeks since this reporting period and therefore the deterioration in trade relations may be even worse than that recorded here. It noted that this continued escalation poses a serious threat to the global trade growth. Adding further, it said that increase in trade restrictive steps is not a good news for India as it would impact exports growth of the country. It is taking several steps to promote the outbound shipments, which helps create employment opportunities, earn foreign exchange and boost economic activities.

The CNX Nifty traded in a range of 10,956.90 and 10,876.65. There were 33 stocks in green as against 17 stocks in red on the index.

The top gainers on Nifty were GAIL India up by 5.07%, Hindalco up by 3.15%, Reliance Industries up by 3.05%, Coal India up by 2.88% and Yes Bank up by 2.64%. On the flip side, HPCL down by 1.92%, Indian Oil Corporation down by 1.40%, Indiabulls Housing Finance down by 1.22%, Indusind Bank down by 1.14% and Kotak Mahindra Bank down by 1.03% were the top losers.

European markets were trading in green; Germany’s DAX increased 48.84 points or 0.39% to 12,592.73, UK’s FTSE 100 added 13.70 points or 0.18% to 7,701.69 and France’s CAC was up by 28.69 points or 0.53% to 5,426.80.

Asian equity markets ended mostly higher on Tuesday as higher oil prices and optimism about the upcoming corporate earnings season helped investors brush aside trade and Brexit-related concerns. Japanese shares ended higher, with overnight gains on Wall Street and a weaker yen boosting sentiments. Further, Chinese shares ended higher after official data showed consumer prices in China grew an annual 1.9 percent in June, matching expectations and up from 1.8 percent in May. While, the producer prices index jumped an annual 4.7 percent versus expectations for 4.5 percent and up from 4.1 percent a month earlier.