Benchmarks end Friday’s trade on optimistic note

Friday turned out to be a fabulous day of trade for Indian equity benchmarks with frontline gauges reversing previous session’s losses and settling above their crucial 37,900 (Sensex) and 11,450 (Nifty) levels. After a gap-up opening, market traded with traction in a very tight range and there appeared not even an iota of profit booking in the session, as investors continued hunt for fundamentally strong stocks. Sentiments remained up-beat since beginning as traders took some encouragement from Niti Aayog vice chairman Rajiv Kumar’s statement that the falling rupee is not a cause of worry as it is getting back to its natural value. The rupee rose by about 17% during the last three years. Since the beginning of this year, rupee has declined by only 9.8%. So, it has recovered. Some support also came with private report stating that India’s economy is expected to grow at a healthy 7.5% in the first quarter (Q1) of 2018-19 (FY19), lower than a seven-quarter high of 7.7% in the fourth quarter (Q4) of 2017-18 (FY18).

Traders overlooked a report that a foreign brokerage warned of worsening fiscal position due to poll-related spending spree before next May when the new Parliament has to be instituted. It has projected the consolidated fiscal deficit for FY19 at 6.5% of GDP against a budgeted 5.9%, which is only 10 bps lower than FY18. Also traders shrugged off India Ratings & Research’s report which revised down its growth estimate for Indian economy to 7.2% from its earlier projection of 7.4% for 2018-19. The downward revision comes as the rating agency expects Indian economy to face headwinds from high crude oil prices, increase in minimum support prices of kharif crops, rising trade protectionism, depreciating currency. Market participants also paid no heed towards report that investments through participatory notes into Indian capital markets plunged to over nine-year low of Rs 80,341 crore till July-end amid stringent norms put in place by the watchdog Sebi to check misuse of these instruments.

On the global front, European markets were trading in red as traders remained on sidelines ahead of final inflation and current account data from euro area as well as US reports on consumer sentiment and leading economic indicators to be released later in the day. Sentiments also remained dampened, as traders focus is largely attuned to Turkey’s ongoing currency crisis. Asian markets ended mostly in green fresh talks between China and the United States underpinning investor sentiment.

Back home, banking sector stocks edged higher with the RBI’s latest data showing that bank credit grew 12.70% to Rs 86,79,741 crore in the fortnight to August 3, while in the year-ago fortnight, bank advances was at Rs 77,01,926 crore. Steel sector stocks gained despite report that the falling rupee will adversely impact the domestic steel sector as import of various raw materials will become expensive and the cost of servicing debt would also go up. Shares of paper companies edged higher on the bourses on expectations of a positive outlook for the current July-September quarter. Breweries stocks remained in limelight on report that citing a GST Council decision, the Delhi High Court disposed off a writ petition filed by leading liquor companies challenging imposition of service tax on licence and application fee for liquor sold in retail.

Finally, the BSE Sensex surged 284.32 points or 0.75% to 37,947.88, while the CNX Nifty was up by 85.70 points or 0.75% to 11,470.75.

The BSE Sensex touched a high and a low of 38,022.32 and 37,840.16, 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 0.88%, while Small cap index was up by 0.94%.

The top gaining sectoral indices on the BSE were Basic Materials up by 2.04%, FMCG up by 1.79%, Metal up by 1.71%, Bankex up by 1.27% and Healthcare was up by 1.25%, while Oil & Gas down by 0.15% was the lone losing index on BSE.

The top gainers on the Sensex were Yes Bank up by 3.76%, SBI up by 3.18%, Vedanta up by 3.09%, Hindustan Unilever up by 2.63% and Tata Motors up by 2.47%. On the flip side, Hero MotoCorp down by 1.14%, ONGC down by 0.61%, Maruti Suzuki down by 0.58%, Coal India down by 0.44% and Power Grid Corporation down by 0.35% were the top losers.

Meanwhile, the Reserve Bank of India (RBI) in its latest data has showed that Bank credit surged by 12.70 percent to Rs 86,79,741 crore in the fortnight to August 3,2018. In the year-ago fortnight, bank advances was at Rs 77,01,926 crore. The increase in advances in the reporting fortnight was higher than the growth registered in the previous fortnight ending July 20 when it had risen by 12.44 percent to Rs 86,13,164 crore.

During the reporting fortnight, bank deposits grew by 8.21 percent to Rs 1,15,83,058 crore from Rs 1,07,04,112 crore in the period ending August 4, 2017. In June, the non-food credit rose 11.1 percent as against 4.8 percent in the same month last year. Loans to agriculture and allied activities slowed to 6.5 percent in June from 7.5 percent a year ago. Personal loan segment grew 17.9 percent in June up from 14.1 percent in June last year.

In the fortnight ended June 22, 2018, RBI’s data had highlighted that Bank credit grew by 12.84 per cent to Rs 86,16,408 crore in the fortnight ended June 22. In the year-ago fortnight, bank loans stood at Rs 76,35,689 crore. The growth in advances was slightly higher than the growth registered in the previous fortnight ended June 8. It had risen by 12.67 per cent to Rs 85,98,703 crore.

The CNX Nifty traded in a range of 11,486.45 and 11,431.80. There were 35 stocks in green as against 15 stocks in red on the index.

The top gainers on Nifty were Grasim Industries up by 4.33%, Yes Bank up by 4.31%, Lupin up by 3.55%, SBI up by 3.25% and Tata Motors up by 3.08%. On the flip side, GAIL India down by 1.37%, Eicher Motors down by 1.06%, Hero MotoCorp down by 0.99%, ONGC down by 0.76% and Bharti Airtel down by 0.60% were the top losers.

European markets were trading in red; UK’s FTSE 100 shed 7.11 points or 0.09% to 7,549.27, France’s CAC dipped 2.93 points or 0.05% to 5,346.09 and Germany’s DAX was down by 28.03 points or 0.23% to 12,209.14.

Asian markets ended the Friday’s session on an optimistic note with most of the major indices ended in green terrain, as fresh talks between China and the United States underpinning investor sentiment. Traders also took some support with the Turkish lira recovered sharply from Monday’s meltdown when it hit a record low below 7.23 to the dollar following U.S. imposed sanctions relating to the trial of an American pastor. Japanese Nikkei edged higher tracking a slightly weaker yen. On the economic front, Japan will see July figures for department store sales later in the day. However, Chinese shares hit 31-month low as healthcare firms retreated amid concerns over a widening vaccine scandal. The Indonesian market was closed for the Independence Day holiday.