Bulls come back on Dalal Street; Sensex reconquers 37,800 mark

Bulls made come back on Dalal Street after two sessions of disappointments, with frontline gauges recapturing their crucial 37,800 (Sensex) and 10,400 (Nifty) levels. Sentiments remained jubilant since beginning of the trade as traders took encouragement with better-than-expected macro-economic data. The Central Statistics Office’s (CSO) data showed that India’s Retail inflation fell to nine-month low of 4.17% in July on account of slowdown in prices of vegetables and fruits. Its previous low was in October 2017 at 3.58%. Retail inflation, measured by Consumer Price Index (CPI) had hit a five-month high of 5% in June. Traders also took some support with a private report that India’s foreign reserves are in a comfortable range and another 5-8% fall in reserves will not jeopardise the situation. Traders got some relief with a report that micro and small enterprises (MSEs) are getting more and more optimistic about their business prospects. The CriSidEx index, which measures sentiment among MSEs rose to a three-quarter high of 127 in the first quarter of the current financial year, up from 121 in the fourth quarter of the previous financial year.

Buying accelerated in later part of the trade after Wholesale price index (WPI) inflation eased to 5.09% in the month of July 2018, supported by fall in the prices of minerals, crude petroleum & natural gas. However, the markets trimmed some of their gains in dying hour of the trade, as the Reserve Bank of India (RBI) in its annual inspection of banks’ books examined 200 stressed accounts dating back to 2011. Some concerns came after the Prime Minister’s Office directs the Finance Ministry to take action against tax evaders under the GST regime.

Global cues remained supportive with European counters making an optimistic start as the Turkish lira stabilized. Some relief also came with after Turkish Finance Minister Berat Albayrak announced the government plans to calm the highly volatile financial markets. Asian markets ended mixed, after Chinese data on factory output, retail sales and fixed-asset investment all came in weaker than expected in July, adding to signs of an economic slowdown. Retail sales in China jumped an annual 8.8% on year in July, a tad below expectations for a 9.1% gain and down from 9.0% in June.

Back home, realty sector remained in limelight with private report stating that the sector needs more reforms to break free of the various ills that still plague it in order to realise its full potential as a major contributor to the country’s GDP. Aviation related stocks are exhibiting mixed trend despite ASSOCHAM’s statement that the aviation sector which was showing an immense promise till about a year ago, is facing head winds with most of the airlines battling a survival issue, hit by rising fuel costs and other expenses even as a cut - throat competition is making the aviation firms bleed. However, power sector edged lower despite report stating that the RBI has backed the idea of state-owned Rural Electrification Corporation’s proposal to form an asset reconstruction company (ARC) dedicated to take over stressed assets in the power sector.

Finally, the BSE Sensex surged 207.10 points or 0.55% to 37,852.00, while the CNX Nifty was up by 79.35 points or 0.70% to 11,435.10.

The BSE Sensex touched a high and a low of 37,932.40 and 37,689.71, respectively and there were 18 stocks advancing against 13 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index gained 0.89%, while Small cap index was up by 0.53%.

The top gaining sectoral indices on the BSE were Healthcare up by 2.48%, Realty up by 1.84%, Energy up by 1.26%, Bankex up by 0.96% and Consumer Discretionary Goods & Services up by 0.63%, while Capital Goods down by 0.51%, Telecom down by 0.34%, Industrials down by 0.22%, Power down by 0.14% and PSU was down by 0.10% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 6.91%, Yes Bank up by 2.87%, ICICI Bank up by 2.17%, Axis Bank up by 2.15% and Reliance Industries up by 2.00%. On the flip side, Hero MotoCorp down by 1.29%, Larsen & Toubro down by 1.19%, Adani Ports & SEZ down by 1.03%, Tata Motors - DVR down by 0.70% and Bharti Airtel down by 0.66% were the top losers.

Meanwhile, India Ratings and Research (Ind-Ra) in its latest report has said that India’s dependency on import of fertilizers will continue in the medium-term. However, it noted that the country’s urea imports are likely to drop as a new manufacturing capacity comes on-stream under the New Investment Policy 2012. Besides, it said that returns from the new urea manufacturing capacity coming on-stream are likely to be strong, subject to the timely receipt of subsidy and offtake above 85 percent.

The ratings agency said “We do not have domestic reserves of muriate of potash (MOP) and hence will continue to import 100 percent of potash.” It also said that globally, the potash market is controlled by five companies, given their proximity to the raw material. It pointed out that the usage of MOP in India mainly depends on the price payable by the end-user.

Ind-Ra expects lower direct imports of DAP in the country, but higher imports of RP/PA as more conversion facilities are set up in the country. Apart from urea, it noted that DAP and MOP, fertiliser companies are increasingly focusing on customised NPK fertilisers (nitrogen-phosphorus-potassium), to address the specific agro-climatic needs of farmers. It added that this benefits not only the farmers but also the manufacturers, as they earn better realisations and profitability on these customised products.

The CNX Nifty traded in a range of 11,452.45 and 11,370.80. There were 30 stocks in green as against 20 stocks in red on the index.

The top gainers on Nifty were Sun Pharma up by 7.39%, Yes Bank up by 3.45%, Lupin up by 3.30%, Cipla up by 2.81% and Bajaj Finance up by 2.53%. On the flip side, UPL down by 2.64%, Adani Ports & SEZ down by 1.27%, Hero MotoCorp down by 1.26%, Bharti Airtel down by 0.99% and HPCL down by 0.97% were the top losers.

European markets were trading in green; UK’s FTSE 100 gained 1.62 points or 0.02% to 7,644.07, France’s CAC rose 13.36 points or 0.25% to 5,425.68 and Germany’s DAX was up by 26.42 points or 0.21% to 12,385.16.

Asian equity markets ended mixed on Tuesday as Chinese data disappointed and worries about Turkey eased slightly after the country's central bank announced a raft of measures aimed at soothing markets. Chinese shares ended lower after a slew of Chinese data on industrial output, retail sales and fixed asset investment came in slightly below expectations. Retail sales in China jumped an annual 8.8 percent on year in July, a tad below expectations for a 9.1 percent gain and down from 9.0 percent in June. Industrial production advanced an annual 6.0 percent - unchanged from a month earlier but again beneath forecasts for 6.3 percent. Fixed asset investment grew 5.5 percent from a year earlier - missing expectations for 6.0 percent growth. Meanwhile, Japanese shares rose sharply and the yen pared some of Monday's rise after Turkey's central bank pledged to provide liquidity and cut reserve requirements for banks.