Indian markets extend gains; Nifty surpasses 11k level

Indian equity markets extended their gains in the early noon session with Nifty and Sensex surpassing 11,000 and 36,500 marks respectively, on sustained buying by DIIs. Sentiments on the street were positive with S&P in its report ‘APAC Economic Snapshots -- July 2018’ stating that economic data from India continues to be positive overall and the purchasing manager indices are above 50 and trending upward, suggesting a broad-based and strengthening upturn. Some support also came in with Oil Minister Dharmendra Pradhan’s statement that at $7 per million British thermal unit, India made the cheapest deal with Russia for purchasing LNG, which will save India Rs 9,500 crore. Meanwhile, the proposed new industrial policy, to be released soon, would focus on areas such as promotion of digital ports and use of big data to boost India's exports and manufacturing sector. Traders paid no attention to ICRA’s report which stated that the country’s current account deficit (CAD) is set to widen and the first quarter print may come in at $16-17 billion or 2.5 per cent of GDP.

On the global front, most of the Asian markets pared their initial losses and were trading in green. Back home, heavy buying in IT, TECK and Capital Goods helped the markets extended their gains. Amongst the individual stocks, Infosys and TCS from IT and ICICI Bank and Axis Bank from banking were witnessing maximum buying by investors. Besides, positive trend in the broader indices were also supporting the sentiments.

The BSE Sensex is currently trading at 36519.20, up by 167.97 points or 0.46% after trading in a range of 36335.61 and 36553.09. There were 19 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose by 0.43%, while Small cap index up by 0.13%.

The top gaining sectoral indices on the BSE were IT up by 1.89%, TECK up by 1.66%, Capital Goods up by 1.37%, Industrials up by 0.76% and Energy up by 0.58%, while Metal down by 0.88%, Oil & Gas down by 0.58%, PSU down by 0.48%, Basic Materials down by 0.40% and FMCG was down by 0.15% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 3.45%, Larsen & Toubro up by 2.35%, Reliance Industries up by 1.64%, ICICI Bank up by 1.45% and Adani Ports up by 1.37%. On the flip side, Vedanta down by 2.86%, ONGC down by 1.80%, Kotak Mahindra Bank down by 0.76%, Power Grid down by 0.73% and HDFC down by 0.72% were the top losers.

Meanwhile, credit rating agency, ICRA in its latest report has said that India’s current account deficit (CAD) is likely to touch $16-17 billion or 2.5 percent of gross domestic product (GDP) in the Q1 (April-June) of 2018-19. For the full year, it said that the gap may scale a six-year high of $67-72 billion. Besides, it mentioned that CAD, difference between the value of all imports and the value of all exports, was $15 billion in Q1FY18 and for the full year of FY18 it stood at 1.9 percent of the GDP.

According to the report, factoring in an average crude price of $75 a barrel in FY19 against $56 in FY18 and a 6 percent rise in net imports, net oil imports are likely to rise to $98-100 billion in FY19 from $69 billion in FY18. Given the current commodity prices, it expects merchandise exports and imports to expand by 10 percent and 13 percent, respectively, in FY19, widening the merchandise trade deficit to $187-192 billion, from $160 billion in the last fiscal year. However, it said that services trade surplus and remittances are likely to improve by 6-9 percent each, thanks to a weaker rupee.

The rating agency further stated that annualised rise in CAD is likely to continue for the seventh consecutive quarter in Q1, driven by higher commodity prices and demand for imports of machinery and electronic goods, amid a contraction in exports of readymade garments, gems and jewellery and iron ore. It also noted that following the surge in crude prices, net import bill related to petroleum products soared 50.1 percent to $22.5 billion in Q1 from $15 billion.  But, it also pointed out that merchandise trade deficit related to non-oil, non-precious items rose a moderate 11.9 percent to $15.8 billion from $14.2 billion, which was led by a sizeable spike in imports of machinery, iron & steel, coal and electronics. But this was offset by a contraction in exports of readymades and iron ore.

The report has said that a weaker rupee and higher crude prices are likely to have supported remittances which would prevent a sharper worsening of the current account deficit. It also said that the widening of the merchandise trade deficit to a 61 -month high $16.6 billion in June has fuelled concerns regarding the near-term CAD outlook. It added that unless commodity prices plunge, monthly merchandise trade deficit may average $15.5-16 billion over the rest of the fiscal, resulting in a sombre outlook for CAD.

The CNX Nifty is currently trading at 11005.30, up by 48.20 points or 0.44% after trading in a range of 10946.20 and 11017.40. There were 25 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were Bajaj Finance up by 5.05%, Bajaj Finserv up by 4.58%, Infosys up by 3.44%, Tech Mahindra up by 2.25% and Larsen & Toubro up by 2.19%. On the flip side, BPCL down by 2.81%, Vedanta down by 2.81%, HPCL down by 2.60%, Indian Oil Corporation down by 2.17% and ONGC down by 2.04% were the top losers.

Asian markets were trading mostly in green; Taiwan Weighted increased 96.73 points or 0.88% to 10,932.11, Hang Seng increased 190.70 points or 0.68% to 28,201.56, KOSPI increased 6.65 points or 0.29% to 2,288.94, Shanghai Composite increased 45.67 points or 1.62% to 2,818.22 and Straits Times increased 16.24 points or 0.49% to 3,293.82.

On the flip side, Nikkei 225 decreased 66.80 points or 0.29% to 22,697.88 and Jakarta Composite decreased 26.74 points or 0.46% to 5,844.34.