Benchmarks settle at record closing high

Extending northward journey for third straight session, Indian equity benchmarks ended Tuesday’s trade at record closing high levels, with frontline gauges surpassing their crucial 36,800 and 11,100 marks. Markets made an optimistic start as sentiments remained upbeat with report that the overall exports from India to BRICS saw an upswing of 7.5% in Q1 2018 Y-o-Y in terms of total volumes, while the country’s imports from BRICS nations is reduced by 3.5%. Traders also took some encouragement with report that the commerce ministry is working on an export promotion strategy to boost shipments of chemicals, plastics and allied products sector to push the growth of the country's overall exports. For the formulation of the strategy, the ministry has constituted a sub-group to deliberate upon the issues of the sector. Adding to the optimism Union Finance Minister Piyush Goyal, a couple of days after goods and services tax (GST) rates were cut on 100 items, said rising tax collections will further help reduce the tariffs. He said, the Directorate General of Anti-Profiteering has been directed to keep a tab on manufacturers of sanitary napkins, so that benefits of the GST rate cut are passed on to consumers.

However, markets pared all of their early gains as sudden selloff witnessed in noon deals with traders turning cautious on Securities and Exchange Board of India’s (SEBI) data showing that investments through participatory notes into Indian capital markets plunged to over nine-year low of Rs 83,688 crore at June-end amid stringent norms put in place by the SEBI to check the misuse of these instruments. But, recovery in last leg of trade helped markets to end at record closing high levels, as traders took some support after the US Congress asked the Trump Administration to come up with a strategy that can reflect a measurable progress in its defence ties with India.

Firm opening in European markets too aided sentiments with European markets trading in green on Tuesday, as gains for UBS Group AG and other banks helped push the market toward its first advance in four sessions. Asian markets ended mostly in green, led by better-than-expected U.S. corporate earnings and a lack of bad news on trade tensions.

On the sectoral front, automobile sector remained in top gear with report that Automobile industry in India is opting for inorganic route to balance investments to support current growth cycles and prepare for future global disruptions. Shares of cement companies rallied on the BSE after ACC reported a better-than-expected consolidated net profit of Rs 3.29 billion for the June 2018 quarter. The company had profit of Rs 3.26 billion in year ago quarter. Select stocks related to banking and gems and jewellery space edged higher after the GST Council proposed that supply of warehouse goods to any person before clearance for home consumption will not be treated as supply and hence no GST is required to be paid on such transactions. The move will help banks, which used to pay GST on imports first and then used that credit later. Shares of railway related stocks such as Titagarh Wagons, Texmaco Rail & Engineering, Cimmco, Hind Rectifiers and Commercial Engineering & Body Builders Company on report that the railway is looking at 4,000 km of track renewal in each of the next two financial years -- 2018-19 and 2019-20. Its estimated cost for 2018-19 is a little above Rs 100 billion.

Finally, the BSE Sensex surged 106.50 points or 0.29% to 36,825.10, while the CNX Nifty was up by 49.55 points or 0.45% to 11,134.30.

The BSE Sensex touched a high and a low of 36,902.06 and 36,709.72, respectively and there were 20 stocks advancing against 11 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index soared 1.77%, while Small cap index was up by 2.21%.

The top gaining sectoral indices on the BSE were Basic Materials up by 3.73%, Metal up by 2.87%, Realty up by 2.80%, Capital Goods up by 2.56% and Industrials was up by 2.29%, while Bankex down by 0.13% and Energy down by 0.01% were the only losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 3.36%, Asian Paints up by 2.30%, Vedanta up by 2.17%, Adani Ports & SEZ up by 1.94% and Tata Steel up by 1.91%. On the flip side, Hero MotoCorp down by 1.97%, Kotak Mahindra Bank down by 1.71%, Bajaj Auto down by 1.42%, Hindustan Unilever down by 1.10% and Wipro down by 0.98% were the top losers.

Meanwhile, in order to boost shipments of chemicals, plastics and allied products sector to push total exports growth rate in India, the commerce ministry is working on an export promotion strategy. For the formulation of the strategy, the sub-group has been constituted to deliberate on the issues of the sector. Recently, the group discussed the constraints hampering the growth of exports of chemicals, plastics and allied sectors.

The exercise is part of the overall initiative of the ministry to work on sectoral export promotion strategy to boost the country's merchandise exports. Exports of organic, inorganic and agro chemicals grew by 38 per cent to $10.7 billion in 2017-18. Likewise, exports of plastics and its products rose to $ 5.3 billion in 2017-18 from $5.24 billion in the previous fiscal.

The main destination for these shipments include the US, China, UAE, Malaysia and Korea. Since 2011-12, India's merchandise exports have been hovering around $300 billion. In the last fiscal, the country's total merchandise exports grew by about 10 percent to $303 billion. Promoting exports helps a country to create jobs, boost manufacturing and earn more foreign exchange.

The CNX Nifty traded in a range of 11,143.40 and 11,092.50. There were 32 stocks in green as against 18 stocks in red on the index.

The top gainers on Nifty were Grasim Industries up by 8.20%, Hindalco up by 5.63%, Indiabulls Housing Finance up by 5.27%, Larsen & Toubro up by 3.74% and Ultratech Cement was up by 3.00%. On the flip side, Kotak Mahindra Bank down by 2.00%, Hero MotoCorp down by 1.81%, HCL Tech down by 1.54%, Bajaj Finance down by 1.44% and Bajaj Auto down by 1.35% were the top losers.

European markets were trading in green; UK’s FTSE 100 rose by 64.95 points or 0.84% to 7,720.74, France’s CAC surged 43.95 points or 0.81% to 5,422.20 and Germany’s DAX was up by 160.94 points or 1.27% to 12,709.51.

Asian equity markets ended mostly higher on Tuesday as investors put trade worries on the back burner and shifted focus to the earnings season. Chinese shares ended higher after the country's central bank injected record liquidity into the banking system via medium-term lending facility to alleviate funding pressure. Market sentiment also got a boost after the State Council, China's cabinet, said the country would adopt a more 'vigorous' fiscal policy to support the economy. In another development, Beijing said it has no intention to devalue the yuan to help exports. Further, Japanese shares ended higher as the yen rally lost steam and data showed the Japanese manufacturing sector continued to expand in July, but at a slower pace.