D-Street sustains sanguine mood; surges to highest levels in 4 weeks

Strong global cues provided strength to the domestic bourses for second straight day and Indian benchmark indices started the rally from where they ended yesterday. The indices not only climbed over a percent higher in the session but also jumped to the highest levels in four weeks, re-tracing the psychological 5,300 (Nifty) and 17,600 (Sensex) levels. The markets picked up the pace on hopes that the Reserve Bank of India (RBI) will be pressured into lowering interest rates after Finance Minister P Chidambaram said high borrowing costs were burdening consumers. Sentiments also got a boost after provisional data showing continuation of buying of Indian stocks by foreign funds on August 6, 2012.

Meanwhile, infrastructure stocks also underpinned the sentiments and traded jubilantly on reports, which state that Union cabinet may introduce the final version of the much awaited Land Acquisition, Rehabilitation and Resettlement Bill in the monsoon session of Parliament. Moreover, media stocks edged higher as about 50% of Mumbai’s TV households have switched to set top boxes, indicating the pace at which digitization of cable services has picked up over the last few months.

Rally in global equity markets also supported the sentiments as Asian markets ended higher as investors’ maintained hope that Europe will take further action to tackle its debt crisis and the United States and China, too will adopt stimulus measures to boost growth. Overnight, the US markets extended the rally mood of last week on Monday. Though, European counters traded mostly in the green terrain in early trade supported by decent earnings, along with German Chancellor Angela Merkel's backing of the European Central Bank's bond-buying plan.

Back home, the sentiments also remained jubilant after Finance Minister P Chidambaram promised corrective and remedial measures to revive confidence in the sputtering Indian economy. High on the FM’s agenda are fiscal discipline and clarity on controversial tax proposals. However, one has to wait and see what the new FM will deliver in the coming weeks. Moreover, strengthening rupee too underpinned the sentiments. Rupee traded higher by 14 paise at 55.38 per dollar in the late morning trade on sustained selling of dollars from banks and exporters on persistent capital inflows from foreign funds.

On the sectoral front, IT stocks witnessed buying in trades after Cognizant Technology Solutions Corp raised its adjusted full-year profit forecast at a time when its Indian peers have been painting a gloomy picture for the rest of year on slowdown in global outsourcing spends. Moreover, rate sensitives like Auto, Banking and Realty edged higher by 1-2 percent as the new Finance Minister hinted at a possible interest rate cut. However, PSU oil marketing companies extended recent losses as US crude oil futures ended at its highest in more than two weeks yesterday.

Better than expected Q1 earnings announcement from DLF and Escorts too electrified the investors’ sentiments. Escorts has reported a growth of 103.40% in its net profit at Rs 26.89 crore for the quarter under review as compared to Rs 13.22 crore for the same quarter in the previous year. While, DLF has reported a rise of 296.32% in its net profit at Rs 367.15 crore for the quarter, as compared to Rs 92.64 crore for the same quarter in the previous year. However, Tata Chemicals and NHPC reported fall of 39% and 15% in Q1 net profit, respectively.

The NSE’s 50-share broadly followed index Nifty, zoomed by over fifty points and settled well above its psychological 5,300 support level moreover, Bombay Stock Exchange’s Sensitive Index -Sensex- soared near two hundred points and regained psychological 17,600 mark. Moreover, broader markets also traded in green through the day and ended with decent gains of 0.35% each. The market breadth was remained in the favour of advances, as there were 1,522 shares on the gaining side against 1,285 shares on the losing side while 133 shares remained unchanged.

The BSE Sensex surged 188.82 points or 1.08% to settle at 17,601.78, while the S&P CNX Nifty soared by 54.15 points or 1.03% to close at 5,336.70.

The BSE Sensex touched a high and a low of 17,641.55 and 17,417.92 respectively. However, the BSE Mid cap and Small cap index ended up by 0.35% and 0.36% respectively.

Tata Motors up by 4.42%, Gail India up by 3.21%, TCS up by 2.86%, Bajaj Auto up by 2.16% and ICICI Bank up by 2.08% were top gainers on the Sensex, while Hero MotoCorp down by 1.37%, Bharti Airtel down by 0.79%, Sun Pharma down by 0.28%, Reliance down by 0.20% and Dr Reddys Lab down by 0.01% were top losers on the index.

The major gainers on the BSE sectoral space were, IT up by 1.95%, Auto up by 1.70%, TECk up by 1.58%, Realty down 1.53% and Bankex up 1.20%, while Health Care down by 0.09% and Consumer Durables down by 0.04% were major losers on the BSE sectoral space.  

Meanwhile, on the backdrop of recent fall in volumes of apparel exports to the US and the European Union, the centre is all set to take expedite measures to boost the textile industry, while the government has expressed confidence to attain its $18 billion target or Rs 99, 000 crore for this FY 2012-13, which is about 32% rise year-on-year to that of $13.6 billion achieved in FY 2011-12.

Union Joint Secretary, Ministry of Textiles, V Srinivas urged the industry to explore the duty benefit to Japan and EU markets and also to focus on market penetration to the existing markets. The ministry confirmed that it is planning out two-efficient strategies so as to accelerate apparel exports in the short-term and medium-term, keeping in view that readymade garments segment has a huge potential to increase the market share in traditional and new markets worldwide.

The sector has the potential to create one million jobs for an investment of $1 billion (Rs 5, 500 crore). The ministry has also affirmed that the enhancement of technology up gradation funding scheme to Rs 15,808 crore in the sector is in pipeline, anticipating an investment of Rs 150,000 crore over the next five years. An integrated skill development scheme will also be launched to train the workforce for operating sewing machines, it added.

The government had also ensured expansion of capacities around the apparel hub of Tirupur in Tamil Nadu as well as in Ludhiana and Kolkata. It also agreed to make labor laws more flexible so as to scale up manufacturing base.

The S&P CNX Nifty touched a high and low of 5,350.10 and 5,281.65 respectively.

The top gainers on the Nifty were Tata Motors up by 4.15%, IDFC up by 3.59%, DLF up by 3.57%, Ambuja Cement up by 3.49% and GAIL up by 2.86%. On the flip side, Cairn down by 1.42%, Hero MotoCorp down by 1.33%, PowerGrid down by 1.20%, BPCL down by 1.06%, and Ranbaxy down by 0.89% were the major losers.

The European markets were trading mixed, France's CAC 40 was up 0.48, Germany's DAX was down 0.24% and United Kingdom’s FTSE 100 was up 0.26%.

Most of the Asian markets extended their recent gains on the back of sustained hope that Europe will take further action to tackle its debt crisis and the United States and China will adopt stimulus measures to support recovery. However, opposition from German leaders for bond buying programmes capped the gains. Meanwhile, some important triggers for market this week will be China’s inflation reports and trade balance, among other Chinese data, due on Thursday and Friday.