Benchmarks end near day’s high; Nifty closes above 10,800 level

Indian equity benchmarks have showcased a strong performance on Thursday, by gaining over a percent in the session and settling above the psychological 10,800 (Nifty) and 36,700 (Sensex) levels. Markets made an optimistic start and stayed in green for whole day, as traders took encouragement as Cabinet approved the development of affordable rental housing complexes (ARHCs) for urban migrants and poor as a sub-scheme under the Pradhan Mantri (PM) Awas Yojana. This initiative was first announced by Finance Minister Nirmala Sitharaman as part of the Atmanirbhar Bharat package in May. Sentiments remained up-beat with a private report that hiring activities in June remained muted on a year-on-year basis, but registered an increase over the previous month amid nationwide relaxations of coronavirus-induced lockdown norms.

Markets extended their northward moment in the last leg of trade, taking support from Prime Minister Narendra Modi’s statement that Indian economy has started seeing ‘green shoots’ of recovery and that the country remains one of the most open economies in the world. He said that in these times when the world is battling the COVID-19 pandemic, it is natural to talk about revival and there is faith that the story of global revival will have India playing a leading role. Adding to the optimism, Union Cabinet has given its approval to new pan India Central Sector Scheme-Agriculture Infrastructure Fund, in order to provide a medium - long term debt financing facility for investment in viable projects for post-harvest management Infrastructure and community farming assets through interest subvention and financial support. Traders took note of report that the National Association of Software and Services Companies (Nasscom) has launched Nasscom Launchpad in New Jersey, to promote cross border trade through partnerships.

Asian markets ended mostly higher on Thursday, as hopes of a robust economic recovery offset concerns over flare-ups in the coronavirus pandemic, and as investors looked ahead to earnings season. Besides, the National Bureau of Statistics said in a report that consumer prices in China were up 2.7 percent year on year in June. That exceeded expectations for 2.5 percent and was up from 2.4 percent in May. The stats bureau also stated that producer prices tumbled an annual 3.7 percent - unchanged from the previous month's reading and missing expectations for a drop of 3.2 percent. European markets were trading mostly in red, as virus worries persisted and relations between the United States and China continued to deteriorate. Investors also awaited a crucial meeting of euro zone finance ministers as the continent faces the worst recession in EU history. Back home, auto stocks were in focus with ratings agency Crisil’s statement that two consecutive years of double-digit decline in sales volume and a 50-100 basis points moderation in already thin operating profitability are expected to materially dent the credit metrics of automotive dealers this fiscal. Select stocks related telecom sector ended higher as India Ratings’ report stated that fundamentals of the country's telecom sector improved in the March quarter on the back of price hikes in December, ability among telcos to reduce the churn of customers and more subscribers opting for 4G.

Finally, the BSE Sensex gained 408.68 points or 1.12% to 36,737.69, while the CNX Nifty was up by 107.70 points or 1.01% to 10,813.45.  

The BSE Sensex touched high and low of 36,806.30 and 36,422.30, respectively and there were 22 stocks advancing against 8 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.07%, while Small cap index was up by 0.49%.

The top gaining sectoral indices on the BSE were Metal up by 2.13%, Finance up by 1.59%, Bankex up by 1.47%, Basic Materials up by 1.42%, Energy up by 0.95% and Telecom up by 0.89%, while FMCG down by 0.35%, Power down by 0.34%, Capital Goods down by 0.32%, Oil & Gas down by 0.09% were the top losing indices on BSE.

The top gainers on the Sensex were Bajaj Finance up by 3.93%, SBI up by 3.72%, Tata Steel up by 3.05%, HDFC up by 3.05% and Bajaj Finserv up by 2.63%. On the flip side, ONGC down by 1.66%, Tech Mahindra down by 1.22%, Maruti Suzuki down by 0.66%, TCS down by 0.60% and Hindustan Unilever down by 0.45% were the top losers.

Meanwhile, State Bank of India (SBI) in its research report – Ecowrap has stated that India needs a calibrated approach to reduce its import dependency on China as the neighbouring country has slowly and steadily built a solid base in both high and low-value imports into India. It noted that China has spread out in all other categories, including low value manufacturing to high-value capital and electrical goods imports to India. It added that the government’s decision to restrict access to 59 Chinese apps from India will provide space to the domestic IT sector to develop its own capabilities.

According to the report, the data on services and merchandise trade exports shows that India can definitely compete with China on the services front. It also said India exports a far greater amount of telecommunications, computer, and information services than China. However, it said China is rapidly catching up and India needs to buckle up and there is now a huge clamour about banning imports from China, after the border standoff. It also stated that ideally, India must go for imposing restrictions on certain products in which it has a Revealed Comparative Advantage over China, and which will provide support to MSMEs.

However, the report said ‘demanding to curtail all imports at one go from a country which is so entrenched in our economic system is unreasonable and might disrupt the local supply chain when looked at, either from the producers' side or consumers' side’. As per the report, India is dependent on China for a lot of products at the lower end of manufacturing. It said with its huge IT base, India can focus more on services while building capabilities in goods exports to improve its overall trade balance with China. It added that China is already coming under fire due to its aggressive stance and it gives other Asian nations an opportunity to look at the share that China has captured in services exports of telecommunications, computer, and information services.

The CNX Nifty traded in a range of 10,836.85 and 10,733.00 and there were 35 stocks advancing against 15 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 6.58%, HDFC up by 4.26 %. SBI up by 4.14%, Bajaj Finance up by 3.81% and Tata Steel up by 3.23%. On the flip side, Bharti Infratel down by 1.94%, Coal India down by 1.54%, Tech Mahindra down by 1.20%, ONGC down by 0.98% and Hero MotoCorp down by 0.85% were the top losers.

European markets were trading mostly in red; UK’s FTSE 100 decreased 40.10 points or 0.65% to 6,116.06 and France’s CAC fell 0.46 points or 0.01% to 4,980.67, while Germany’s DAX increased 151.43 points or 1.21% to 12,646.24.

Asian markets ended mostly higher on Thursday, despite concerns over the surging corona virus cases worldwide. Chinese shares ended with strong gains following the release of China’s June inflation data. The Chinese Consumer price index grew 2.5 percent year on year last month, expanding from the 2.4 percent gain in May, according to data from the National Bureau of Statistics. The bureau also stated that producer price index slipped 3 percent year-on-year in June. Meanwhile, its state-run media warned that investors should still pursue rational investments and manage risks. In addition, China’s securities regulator published a list of 258 illegal margin lending platforms and their operators to try to tame a bull run on the country's stock markets. Moreover, Japanese shares ended up as the yen eased on the back of better than expected machinery orders data. The total value of core machine orders in Japan was up a seasonally adjusted 1.7 percent in May after a 12.0% slump in April, the fastest drop since 2018.