Firm global cues pull benchmarks higher

Snapping two days of consolidation, Indian equity indices rallied by about two third of a percent to hit its highest close in two and a half years with frontline gauges surpassing their crucial 6,050 (Nifty) and 20,300 (Sensex) bastions. Sentiments remained up-beat since beginning as key bourses opened with a huge gap as consumer goods shares rallied to record highs with investors shifting to defensive stocks in an uncertain economic environment. Sentiments remained jubilant, after Prime Minister’s Economic Advisory Council (PMEAC) Chairman C Rangarajan said that the Indian economy will grow by 6 percent this fiscal on account of a good monsoon. The Reserve Bank of India’s (RBI) move to tighten gold imports again on Monday with an eye to cut a record current account deficit (CAD) too supported the sentiments.

Supportive cues from US markets provided the much needed support to local markets initially and sentiments remained up-beat after the weak housing sales numbers in US eased the concerns of Fed tapering its stimulus soon. Rally in Asian markets too boosted the traders’ moral with Japanese Nikkei surging about a percent after the government raised its view on the economy for a third straight month in July, saying deflation was abating as a result of the nation’s expansionary policy mix of monetary easing and generous spending. Firm opening in European counterparts too aided the sentiments.

Back home, stocks related to metal and mining counters like, NMDC, Sterlite Industries, Hindustan Zinc, JSW Steel, Tata Steel, Sesa Goa etc. remained on the buyers’ radar on expectations that Beijing will fine-tune its policies to support China’s economic growth. Sentiments also got support by buying in FMCG counters as stocks like HUL and ITC hit new highs. Meanwhile, investors continued to pile-up positions in software and technology counters after the rupee gave up all gains to trade flat for the day at 59.72 as there are no fresh dollar inflows into the market.

Additionally, shares of jewellery makers like Titan Industries, TBZ, PC Jeweller and Shree Ganesh Jewellery edged higher on hopes that the move by the RBI to withdraw restriction on import of gold on consignment basis and against letters of credit is a positive for these companies. Rebound in gold prices too supported the sudden rally in shares of gems and jewellery companies.

The NSE’s 50-share broadly followed index Nifty rose over forty points to surpass its psychological 6,050 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex rose by over one hundred and forty points to reach 20,300 mark.

The broader markets, however, struggled to get some traction and ended the session mixed. The market breadth remained equally divided as there were 1,149 shares on the gaining side against 1,150 shares on the losing side while 173 shares remained unchanged.

Finally, the BSE Sensex gained 143.01 points or 0.71% to settle at 20,302.13, while the CNX Nifty rose by 46.00 points or 0.76% to end at 6,077.80.

The BSE Sensex touched a high and a low of 20,351.06 and 20,249.98, respectively. The BSE Mid cap index was up by 0.06% and Small cap index was down by 0.10%.

The top gainers on the Sensex were, Hindustan Unilever up by 3.19%, BHEL up 2.23%, Mahindra & Mahindra up 2.11%, SBI up 2.03% and Sterlite Industries up by 1.87%, while Wipro down by 2.23%, Bharti Airtel down 1.79%, Coal India down 0.58%, Cipla down 0.56% and Jindal Steel down by 0.47% were the top losers on the index. 

The top gainers on the BSE Sectoral space were, Consumer Durables up 3.85%, FMCG up 1.53%, Realty up 1.42%, Bankex up 1.29% and PSU up 0.89%, while there was no loser on the sectoral space.

Meanwhile, buoyed by favourable monsoon condition, Indian economy will achieve a gross domestic product (GDP) growth of 6 per cent in financial year 2013-14, Prime Minister’s Economic Advisory Council (PMEAC) Chairman C Rangarajan said at an event in Tezpur University. Earlier this month, Rangarajan had said India’s economic growth rate is expected to be at least 6 percent in the 2013 -14 fiscal.

Further, Rangarajan said the government is also taking measures to control current account deficit. In this regard, the government is trying to curb demand of gold and petroleum products, which is the biggest constraint of the trade deficit. The government has further taken steps to minimise the imports of petroleum products by encouraging domestic production.

The economy grew at 4.8 percent in the fourth quarter of FY’13, while for the full year 2012-13, the economic growth was 5 percent, a decade low. Earlier, Reserve Bank of India has estimated the economy to grow at 5.7 percent in the current fiscal, while the Finance Ministry has forecast 6.1-6.7 percent growth.

The CNX Nifty touched a high and low of 6,093.35 and 6,061.30 respectively. 

The top gainers on the Nifty were Bank of Baroda up 5.23%, Kotak Bank up 4.33%, IDFC up 3.57%, Hindustan Unilever up 3.28% and DLF up by 2.85%.

On the flip side, the top losers of the index were, Asian Paints down 1.99%, Bharti Airtel down 1.90%, Ultra Tech Cement down 1.28%, Power Grid Corporation down 1.26% and Ambuja Cement down by 1.21%.

The European markets were trading in green, France’s CAC 40 up by 0.24%, the United Kingdom’s FTSE 100 up by 0.26% and Germany’s DAX up by 0.12%.

All the major Asian markets concluded Tuesday’s trade in green. China’s Shanghai Composite gained around two percent led by heavyweights in the financial sector, non-ferrous metal producers and railway firms. The Shanghai Statistics Bureau stated that Shanghai’s gross domestic product expanded 7.7% from a year earlier to 1.02 trillion yuan ($164.5 billion) in the first half of this year. The rate slowed a bit from the increase of 7.8% in the first three months but was higher than the national average of 7.6% between January and June. The bureau added that the overall economy remained stable with the service industry leading the growth. Japan’s Nikkei too ended the trade in green supported by hopes of an economic recovery in the country and a halt in the yen’s climb against the US dollar. South Korean shares gained for the second straight session as foreigners snapped up local stocks on expectations of good second-quarter earnings season. Offshore investors led the market advance by purchasing shares both on spots and futures.

Indonesia’s Jakarta Composite concluded the trade in green. The country attracted 18.9% more foreign direct investment in April-June than a year earlier, the slowest rate of increase in rupiah terms since the third quarter of 2011, and expects the pace to ease further in the second half. The latest increase was led by spending plans in mining, transportation, base metals and chemicals. Besides, Indonesia’s rupiah plunged the most in 13 months in onshore trading as Bank Indonesia allowed a more rapid slide toward levels quoted in the offshore market. The yield on 10-year government bonds fell the most since 2008. The slump in Indonesia’s rupiah this month following a 50 basis-point increase in interest rates highlights the risk for Turkey’s central bank should it fail to raise borrowing costs sufficiently to curb outflows. Turkey’s central bank will boost the top rate of its three-pronged policy by between 50 and 100 basis points, keeping the others unchanged.

Singapore's headline inflation inched slightly higher to 1.8% in June from a year-on-year rise of 1.6% in May, mainly due to petrol pump prices which increased with the recent pick-up in global oil prices.