Sanguine global cues help Nifty to surpass 5,400 mark

Buoyed by sanguine global cues, bulls retaliated on Dalal Street after a long weekend and Indian equity markets kick started the week’s trade on a jubilant note with Nifty hitting its 5,400 milestone for the first time since March 16 while the BSE Sensex comfortably surpassed the 17,800 mark. However, the frontline gauges showed side-ways movement since the start of session and traded around the psychological 5,400 (Nifty) and 17,800 (Sensex) levels through the morning trades. But, the key gauges succeeded in coming out of their range bound trajectory in afternoon trades and trended northwards ending the session near day’s high, thanks to the rally in Software, Power, Technology and Auto counters.

The sentiments were mainly supported by software pack and stocks of Infosys, TCS, Wipro and HCL Technologies edged higher on hopes of economic recovery of the US, the biggest outsourcing market for Indian IT firms. Moreover, rise in tyre companies too aided the sentiments. Stocks like Ceat, JK Tyre & Industries, Apollo Tyres, MRF surged by 2-10 percent as lower rubber prices will boost profitability. Natural rubber is a key raw material in tyre manufacturing. Rubber futures in Tokyo plunged 59% from a record in February 2011 as the economy slowed in China, the world’s largest auto market. In addition, companies operating mutual fund business also added buoyancy in the market as shares of HDFC, Aditya Birla Nuvo, Reliance Capital, IDFC and ICICI Bank edged higher after market regulator announced a number of measures to increase the penetration of mutual fund products and energizing distribution network.

On the global front, European stock indices too supported the sentiments as investors welcomed reports on possible introduction of fresh stimulus measures by the Chinese policy makers besides persistent talk of bond buying plans in the euro zone. Moreover, most of the Asian counters ended the day’s trade in the green trajectory, supported by broker ratings and corporate updates amid continued expectations of monetary stimulus from the world's leading central banks.

Back home, India’s CPI inflation (base year 2010) moderated to 9.86% y-o-y in July from 9.93% in June. The moderation was mainly due to positive base effects on fuel inflation created by the hike in administered prices a year ago and a moderation in the miscellaneous category because of a decline in the cost of transportation services. As a result, core CPI inflation (ex-food and fuel) moderated to 8.9% y-o-y from 9.2%. Food inflation inched higher to 11.5% y-o-y in July from 10.8% in June due to rising prices of cereals and pulses.

The NSE’s 50-share broadly followed index Nifty, climbed over a percent to settle above the psychological 5,400 support level while Bombay Stock Exchange’s Sensitive Index - Sensex amassed about two hundred points to finish near the crucial 17,900 mark. Moreover, the broader markets too went home with gains in the session but failed to outperform their larger peers as they rose only by a quarter percent.

The markets gained on strong volumes of over Rs 1.60 lakh crore on Tuesday. The market breadth remained optimistic as there were 1,304 shares on the gaining side against 806 shares on the losing side while 102 shares remained unchanged.

The BSE Sensex surged 194.18 points or 1.10% to settle at 17885.26, while the S&P CNX Nifty soared by 54.70 points or 1.02% to close at 5,421.00.

The BSE Sensex touched a high and a low of 17898.35 and 17705.14 respectively. However, the BSE Mid cap index was up by 0.24% and Small cap index up by 0.52%.

Sterlite Industries up by 4.46%, NTPC up by 3.12%, HDFC up by 2.92%, Gail up by 2.58% and Tata Power up by 2.52% were top gainers on the Sensex, while Hindalco down by 1.45%, Bharti Airtel down by 1.32%, Dr Reddys Lab down by 0.66%, Tata Steel down by 0.66% and Hero MotoCorp down by 0.59% were top losers on the index.

The major gainers on the BSE sectoral space were, IT up by 1.76%, Power up by 1.66%, TECk up by 1.32%, Realty up 1.22% and Auto up 1.19%, while Health Care down 0.03% were top losers on the BSE sectoral space.  

Meanwhile, thanks to the drop in petrol prices at the pump, annual rate of inflation, based on the consumer prices index (CPI) in India, eased marginally in the month of July to 9.86 percent, however drought in parts of the country, which drove food prices higher, limited the downside. According to the data released by Central Statistics Office, provisional annual inflation rate based on all India general CPI (Combined) for July 2012 on point to point basis stood at 9.86 percent as compared to 10.02 percent for the previous month of June 2012. However, June consumer price inflation was revised lower to 9.93 percent from 10.02 percent earlier.

According to the Ministry of Statistics and Programme Implementation, which released the monthly provisional CPI on Base 2010=100 along with annual inflation rates for July 2012, all India provisional General (all groups), CPI numbers of July 2012 for rural, urban and combined were at 122.6, 119.9 and 121.4 respectively. The corresponding inflation rates for rural and urban areas for July came in at 9.76 percent  and 10.10 percent respectively as against June’s  9.65 percent  and 10.44 percent, respectively, which indicated that the rate of price rise rose in rural areas while that in the urban areas eased slightly.

In the backdrop of drought like situation, food inflation in the CPI accelerated to 11.53 percent in July from 10.71 percent in June. India has the highest retail inflation among the BRICS group of emerging economies - Brazil, Russia, China, and South Africa -- and is way above the Reserve Bank of India (RBI)’s comfort level. However, unlike most central banks, the RBI uses wholesale inflation in its policy formulation, as annual consumer price inflation data was only launched this year in January. Aided by lower increases in fuel prices, India’s wholesale price index (WPI) dropped to three year low of 6.87 percent in June, its slowest rate since January.

The S&P CNX Nifty touched a high and low of 5,425.15 and 5,368.70 respectively.

The top gainers on the Nifty were Sterlite Industries up by 4.82%, DLF up by 3.83%, Sesa Goa up by 3.71%, NTPC up by 3.36% and Ambuja Cement up by 3.36%. On the flip side, Bharti Airtel down by 1.54%, Cairn down by 1.17%, PNB down by 1.01%, Hindalco down by 0.79% and Tata Steel down by 0.71% were the major losers.

The European markets were trading in green, France's CAC 40 up by 0.66%, Germany's DAX was up by 0.38% and United Kingdom’s FTSE 100 was up by 0.32%.

Asian Markets ended mixed amid lack of strong cues from Wall Street overnight and a general sense of lack of direction in the markets. Investors traded cautiously on renewed worries over the euro zone debt crisis after Germany and the European Central Bank dampened hopes for action to drive down borrowing costs. In China, the Shanghai Composite Index jumped over 0.54%, by reports that Chongqing, a huge metropolis in southwestern China, plans to spend $236 billion to upgrade its manufacturing sector, while Tokyo's Nikkei index gave up previous day's rally, as the dollar held on to recent gains against the yen, underlining a continued shift away from the safe haven Japanese currency.

Jakarta and KLSE composite were closed for public holidays.