Benchmarks end near intraday highs on late buying

Indian equity benchmarks ended the Tuesday’s trade in green terrain, with frontline gauges recapturing their crucial 11,000 (Nifty) and 36,500 (Sensex) levels. Despite cautious start, markets gained momentum and traded in positive trajectory for most part of the day’s trade, as sentiments remained up-beat with report that India Inc said the spike in inflation, which rose to over 4-year high of 5.77% in June, was temporary as it is caused by disruptions in supply chain, and inflation is expected to be benign on the back of a good monsoon in the near future. Some support also came with report stating that corporate India announced deals worth $74.8 billion in the January-June period, registering a 90% jump over last year, largely driven by big ticket consolidations. Traders also took note of a report that the Indian government on July 16 invited Omani companies to invest in India and benefit from Make in India programme aimed to encourage manufacturing. Markets changed gear in last leg of trade to end near intraday highs as traders took encouragement with some better-than-expected Q1FY19 numbers posted by bluechip companies. Some optimism also spread among the local traders with private report projecting the Indian economy to record 7.4% growth in 2018-19.

Traders shrugged off report stating that the International Monetary Fund (IMF) trimmed India’s growth projection by 0.1 percentage point to 7.3% for 2018-19 against the earlier estimate of 7.4%, owing to high oil prices and a tight monetary policy regime. IMF said that India’s growth rate is expected to rise to 7.3% in 2018 (2018-19) and 7.5% in 2019 (2019-20), the projection is 0.1 and 0.3 percentage point lower for 2018 and 2019, respectively. Traders also paid no heed towards IHS Markit Business Outlook survey stating that the Indian business sentiment regarding future activity remained subdued in June amid intense competition, high fuel prices and strong cost pressures. Meanwhile, Niti Aayog CEO Amitabh Kant said that For India to grow at 9-10% for three decades consistently and reap the dividend of demographic advantage, promoting entrepreneurship among women has to be the key strategy.

Firm trade in European counters too aided sentiments and are trading in green in early deals on Tuesday amid optimism about growth after the International Monetary Fund kept its forecast for global economic growth unchanged at 3.9 percent this year despite proliferating trade conflicts. Asian equity markets ended mostly lower as oil prices extended declines for a second straight session, worries over the US-China trade war persisted and investors looked ahead to a Congressional testimony from Fed chair Jerome Powell for clues on rate outlook.

Back home, shares of state-run oil marketing companies such as HPCL, BPCL and IOC zoomed, supported by a sharp fall in crude prices. Besides, Airline stocks such as Jet Airways and SpiceJet gained after a global aircraft leasing firm stating that the passenger aircraft fleet in India is set to nearly double to 1,100 planes by 2027, from around 600 at present. Stocks related to auto components sector remained in focus with Crisil’s latest report that the growth prospects for the Indian auto components sector are bright over the next two-three years. It said that the ancillary industry will clock healthy growth steered by product changes (replacing metal with plastic or high-grade and lighter metals, increasing electronic content) and regulations (emission and safety norms).

Finally, the BSE Sensex surged 196.19 points or 0.54% to 36,519.96, while the CNX Nifty was up by 71.20 points or 0.65% to 11,008.05.

The BSE Sensex touched a high and a low of 36,549.55 and 36,261.78, respectively and there were 22 stocks advancing against 9 stocks declining on the index.
The broader indices ended in green; the BSE Mid cap index soared 2.14%, while Small cap index was up by 1.12%.

The top gaining sectoral indices on the BSE were PSU up by 2.32%, Oil & Gas up by 2.19%, Metal up by 1.91%, Energy up by 1.84% and Basic Materials was up by 1.52%, while FMCG down by 0.80% and IT was down by 0.07% were the only losing indices on BSE.

The top gainers on the Sensex were SBI up by 2.98%, Sun Pharma up by 2.97%, ICICI Bank up by 2.70%, Axis Bank up by 2.66% and Tata Steel up by 2.54%. On the flip side, Hindustan Unilever down by 4.00%, Bharti Airtel down by 1.14%, Indusind Bank down by 0.94%, ITC down by 0.63% and Infosys down by 0.42% were the top losers.

Meanwhile, the IHS Markit Business Outlook survey has highlighted that business confidence regarding future activity in India remained subdued in the month of June amidst intense competition, high fuel prices and strong cost pressures. It pointed out that only 20% of Indian businesses expect output growth over the next 12 months, unchanged from February. It noted that the business confidence reading for India was below the average recorded for BRIC (Brazil, Russia, India and China) nations at 23% and globally at 31%.

The report stated that sentiment surrounding new business and revenue expectations is at the highest level seen since October 2016, as survey respondents forecast further improvements in client demand and market conditions. It noted that at the sector level, Indian manufacturing companies signalled a stronger degree of positive sentiment, while service providers are less upbeat than in the prior survey period.

As per the report, although, Indian companies expressed concerns that high crude oil prices may fuel inflationary pressures, the survey report signals that this has not deterred company plans to expand capacity in the year ahead, as hiring intentions and capex plans were both revised up in June.

The CNX Nifty traded in a range of 11,018.50 and 10,925.60. There were 39 stocks in green as against 11 stocks in red on the index.

The top gainers on Nifty were HPCL up by 7.15%, Indian Oil Corporation up by 4.89%, BPCL up by 3.07%, Hindalco up by 3.03% and Axis Bank up by 3.01%. On the flip side, Hindustan Unilever down by 3.61%, Bharti Airtel down by 1.40%, Dr. Reddy’s Lab down by 1.14, Tech Mahindra down by 1.11% and Eicher Motors down by 1.00% were the top losers.

European markets were trading in green; UK’s FTSE 100 increased 8.23 points or 0.07% to 12,569.25, France’s CAC added 2.21 points or 0.04% to 5,411.64 and Germany’s DAX was up by 5.68 points or 0.07% to 7,606.13.

Asian equity markets ended mostly lower on Tuesday as oil prices extended declines for a second straight session, worries over the US-China trade war persisted and investors looked ahead to a Congressional testimony from Fed chair Jerome Powell for clues on rate outlook. Chinese and Hong Kong shares ended lower, dented by energy firms following a sharp decline in crude oil prices. However, Japanese shares hit a one-month high as a weak yen helped lift exporters, offsetting weakness in machinery stocks on concerns over slowing growth in China. China reported on Monday that its economic growth slowed in the second quarter and that factory output growth in June weakened to a two-year low, a worrying sign for investment and exporters as a trade war with the United States intensifies.