Benchmarks resume northward journey on firm global cues

Buoyed by firm global cues, Indian equity benchmarks resumed their northward journey after a day’s break on Tuesday with frontline gauges recapturing their crucial 5,850 (Nifty) and 19,400 (Sensex) bastions. The indices traded range-bound but firmly throughout the session and ended the trade with a gain of over half a percent. The sentiments in the domestic markets remained jubilant after the Reserve Bank of India (RBI) stepped in to prevent further fall in the rupee. The rupee appreciated on Tuesday from a record low in the previous session after regulators restricted speculative trading in currency derivatives, although the measures are expected to provide only brief respite for the currency. Sentiments remained up-beat since beginning as supportive cues from US markets provided the much needed support to local markets, where sentiments remained upbeat ahead of the start of earnings season and on getting report that consumer credit increased in May by $19.6 billion to $2.8 trillion, the most in a year.

Firm opening in European counterparts, too boosted the sentiments with CAC, DAX and FTSC edging higher after the European Union and the International Monetary Fund agreed to give Greece a 6.8 billion euro lifeline to save it from bankruptcy. Moreover, Asian markets too shut shop mostly in the green with Chinese Shanghai Composite gaining about a percentage point after a choppy session as investors digested data showing an increase in consumer prices.

Back home, some support came in from rally in NBFC stocks, as RBI eased rules for NBFC-asset finance companies to raise external commercial borrowings by allowing the lenders to raise such funds through the automatic route. Some buying was also witnessed in shares of aluminium makers like Hindalco Industries and National Aluminium Company (Nalco) after Alcoa Inc, the largest US aluminum producer, reported better than expected Q2 results.

Meanwhile, sugar stocks rallied after government issued a notification to implement a hike in import duty on sugar to 15 per cent from 10 per cent, as the world’s top sugar consumer tries to prop up local prices which are falling due to ample and cheap global supplies. The education sector stocks too rallied. Everonn Education, MT Educare, Aptech, NIIT and Edserv Softsystems gained in the range of 6-15%. Educomp Solutions was locked at 10% upper circuit on approaching corporate debt restructuring forum to restructure its rupee debt.

The NSE’s 50-share broadly followed index Nifty gained about fifty points to end above its psychological 5,850 support level, while Bombay Stock Exchange’s sensitive Index - Sensex surged by over one hundred and ten points to finish over its psychological 19,400 mark. Moreover, the broader markets too traded in-line with benchmarks and ended the session with a gain of over half a percent.

The overall volumes stood at over Rs 1.40 lakh crore, which remained on the lower side as compared to that on Monday. The market breadth was in favour of advances as there were 1,307 shares on the gaining side against 1,013 shares on the losing side while 130 shares remain unchanged.

Finally, the BSE Sensex gained 114.71 points or 0.59% to settle at 19,439.48, while the CNX Nifty rose by 47.45 points or 0.82% to end at 5,859.00.

The BSE Sensex touched a high and a low of 19,486.00 and 19,380.25, respectively. The BSE Mid cap index was up by 0.73% and Small cap index was up by 0.74%.

The top gainers on the Sensex were, Sun Pharma up by 3.57%, BHEL up 2.22%, Bajaj Auto up 2.09%, Sterlite Industries up 1.88% and Dr Reddy’s up by 1.82%, while Jindal Steel down by 1.90%, Mahindra & Mahindra down 1.18%, ONGC down 0.79%, Hindustan Unilever down 0.76% and Maruti Suzuki down by 0.56% were the top losers on the index. 

The top gainers on the BSE Sectoral space were, Consumer Durables up 1.93%, Power up 1.86%, Realty up 1.65%, Capital Goods up 1.47% and HealthCare up 1.44%, while there was no loser on the sectoral space.

Meanwhile, in a move that would make the sugar dearer , the government has hiked import duty on sugar to 15% from 10% to help the industry in clearing outstanding payments to sugarcane farmers, which have mounted to Rs 9,000 crore from Rs 5,000 crore in the last one year. In a notification issued by the Central Board of Excise and Customs (CBEC), the duty of both raw and white (refined) sugar, have been raised to 15 percent.

Industry associations like ISMA and NFCSF, for long have been demanding a hike in import duty to 30-40 per cent, on the ground of the country having surplus sugar production. The sugar imports putting pressure on domestic prices have been preventing millers from clearing cane arrears to farmers.

According to reports, millers in Uttar Pradesh are selling sugar to wholesalers at rates lower than even the production cost. Currently, ex-factory price of sugar in Uttar Pradesh and Maharashtra is ruling at Rs 31 and 28.50 per kg, respectively, as against the production cost of Rs 35 and Rs 31 per kg, respectively.

The hike in duty, which is aimed at curbing import of sugar and improving the bearish sentiment in domestic market, is sure to prop up local prices which are falling due to ample and cheap global supplies.  According to the Indian Sugar Mills Association (ISMA), the country has imported nearly 6,00,000 tonnes of raw sugar and another 1,00,000 tonnes of refined sugar from Pakistan so far this marketing year.

The CNX Nifty touched a high and low of 5,864.95 and 5,834.60 respectively. 

The top gainers on the Nifty were PowerGrid up 4.37%, Kotak Bank up 3.86%, Sun Pharma up 3.30%, Reliance Infra up 2.92% and IndusInd Bank up by 2.40%.

On the flip side, the top losers of the index were, Jindal Steel down 2.37%, Bharti Airtel down 0.85%, Hindustan Unilever down 0.83%, M&M down 0.81% and ONGC down by 0.61%.

The European markets were trading in green, France’s CAC 40 up by 0.35%, the United Kingdom’s FTSE 100 up by 0.88% and Germany’s DAX up by 0.77%.

Resuming their northward journey after a day of break, all the Asian equity indices, barring Jakarta Composite, ended the session in the green terrain on Tuesday, tracking a higher finish on Wall Street overnight and better-than-expected results from Alcoa Inc. Back on regional turf, Chinese Shanghai Composite rose after a choppy session as investors digested data showing an increase in consumer prices. The nation’s June consumer prices in China rose 2.7 per cent from the year-earlier month, while producer prices continued to deflate for the 16th straight month, dropping 2.7 per cent. Moreover, Seoul shares ended with a decent gain of 0.75 percent as market heavyweight Samsung Electronics Co bounced from a 10-month closing low in the previous session, and shares in Asiana Airlines Inc recovered some ground following its aircraft's crash-landing in San Francisco.