Benchmarks extend winning streak to 4th straight session

Indian equity benchmarks extended their winning streak to the fourth straight session and ended with gains of more than half percent on Tuesday as bulls took control amid the brighter mood in global markets. Equities opened on a strong note and maintained gain throughout the day, as sentiments got a boost with commerce and industry minister Piyush Goyal’s statement that Indian rupee has shown more resilience than most of the other currencies in recent years and the compounded average growth rate of depreciation is lower as compared to pre-2014. Some optimism also came in as India's agricultural and processed food products exports rose by 30% to $9.6 billion during April-July this fiscal. Besides, foreign fund inflows aided sentiments in markets. As per data available on the NSE, FIIs net bought shares worth Rs 2,049.65 crore on September 12.

Key gauges extended gains in late afternoon deals, taking support from the Finance Ministry has attributed the rise in inflation to base effect and increase in food and fuel prices, and stressed that initiatives taken by the government to curb price rise will be felt more significantly in the coming months. Additional support came with country's chief economic adviser, V. Anantha Nageswaran stated that ‘India does not need to defend the rupee because its economic fundamentals are such that the currency can take care of itself’. Sentiments remained upbeat even after India’s retail inflation rate rose to 7% from 6.7% in the previous month, driven by a surge in food prices. Also, India’s industrial production growth decelerated to a four-month low of 2.4% in July, mainly due to poor showing by manufacturing, power and mining sectors.

On the global front, European markets were trading higher with underlying sentiment boosted by M&A talk and hopes for a softer U.S. inflation reading. Meanwhile, the U.K. unemployment rate hit its lowest level in 48 years in three months to July, data published by the Office for National Statistics showed. The unemployment rate fell to 3.6 percent in three months to July, the lowest since May to July 1974. The rate was seen at 3.8 percent. Asian markets settled mostly higher on Tuesday as focus shifted to U.S. inflation data due later in the day that could show some signs of softening in August. The Federal Reserve, however, is expected to deliver another 75-basis-point interest rate hike next week after two such moves in June and July.

Back home, telecom companies stocks were in watch with report that telecom and satellite operators should look at using the same spectrum bands in coordination with each other and the decision on use of high-frequency range for broadband is likely to be taken in 4-5 months. Power stocks remained in focus with a private report that the power generation in first two months of the second quarter of current financial year rose marginally by 1.5 per cent on-year due to heavy rainfall during these months.

Finally, the BSE Sensex rose 455.95 points or 0.76% to 60,571.08 and the CNX Nifty was up by 133.70 points or 0.75% to 18,070.05.

The BSE Sensex touched high and low of 60,635.28 and 60,381.02, respectively. There were 24 stocks advancing against 6 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.32%, while Small cap index was up by 0.24%.

The top gaining sectoral indices on the BSE were Finance up by 0.85%, FMCG up by 0.77%, Industrials up by 0.74%, Metal up by 0.74% and Capital Goods up by 0.69%, while Oil & Gas down by 0.32%, Realty down by 0.21%, Energy down by 0.12%, Utilities down by 0.06% and Auto down by 0.03% were the top losing indices on BSE.

The top gainers on the Sensex were Bajaj Finserv up by 4.00%, Indusind Bank up by 2.48%, Bharti Airtel up by 2.04%, Titan Company up by 1.68% and Bajaj Finance up by 1.56%. On the flip side, TCS down by 0.37%, Asian Paints down by 0.29%, Tech Mahindra down by 0.20%, Dr. Reddy's Lab down by 0.15% and Sun Pharma down by 0.07% were the top losers.

Meanwhile, with poor show by manufacturing, power and mining sectors, India’s industrial production growth, measured in terms of the Index of Industrial Production (IIP), slowed down to a four-month low of 2.4 per cent in July. Factory output had expanded 11.5 per cent in July 2021. The data showed that the previous low in industrial output growth was recorded at 2.2 per cent in March this year. IIP grew 6.7 per cent in April, 19.6 per cent in May and 12.7 per cent in June. For the month of July 2022, the Quick Estimates of Index of Industrial Production (IIP) with base 2011-12 stood at 134.6. During April-July this year, IIP rose 10 per cent as against 33.9 per cent growth in the same period a year ago.

As per the data, the manufacturing sector expanded 3.2 per cent in July 2022 compared to 10.5 per cent recorded in the year-ago period. The power sector showed a growth of 2.3 per cent as against 11.1 per cent a year ago. The mining sector witnessed a contraction of 3.3 per cent in July 2022 whereas there was a growth of 19.5 per cent in the year-ago period. The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of July 2022 stood at 101.1, 135.2 and 188.9 respectively.

Capital goods output, which is a barometer of investments, rose 5.8 per cent in July 2022 as against 30.3 per cent growth in the year-ago month. The consumer durables segment grew 2.4 per cent compared to 19.4 per cent growth a year ago. The primary goods segment, which accounts for nearly 34 per cent of the index, expanded 2.5 per cent in July compared to 12.4 per cent growth in the year-ago period. As per Use-based classification, the indices stand at 148.9 for Intermediate Goods and 150.1 for Infrastructure/ Construction Goods for the month of July 2022. Further, the indices for Consumer non-durables stood at 143.0 for the month July 2022.

The CNX Nifty traded in a range of 18,088.30 and 18,015.45. There were 34 stocks advancing against 15 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Bajaj Finserv up by 4.74%, Tata Consumer Products up by 2.85%, Indusind Bank up by 2.18%, Britannia Industries up by 2.16% and Bharti Airtel up by 1.88%. On the flip side, Shree Cement down by 0.85%, Cipla down by 0.72%, Eicher Motors down by 0.54%, Divi's Laboratories down by 0.53% and BPCL down by 0.47% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 25.27 points or 0.34% to 7,498.30, France’s CAC increased 30.09 points or 0.48% to 6,363.68 and Germany’s DAX increased 67.36 points or 0.5% to 13,469.63.

Asian markets settled mostly higher on Tuesday following a rally on Wall Street overnight, despite cautious ahead of US inflation data due later in the day. The US Federal Reserve is more likely to deliver another 75-bps interest rate hike next week. Chinese shares climbed after Premier Li Keqiang vowed China will continue to roll out phased policies to stabilize its economy. Japanese shares gained as government's plan to further ease Covid-19 border controls helped lift transportation-linked issues. Seoul shares rose as investors returned to their desks following the four-day Chuseok fall harvest holiday.