The on-going rally may pause for breath but the trend is up
In our Thursday’s report, we mentioned that as long as the NSE’s CNX Nifty remains above the days’ low of 7,739, the uptrend will continue. On Monday, 18 August 2014, though the 50-share Nifty opened slightly in the negative, it was well above the previous day’s low of 7,739. The Nifty came out of the red within the first 30 minutes of day’s trade and continued its upward momentum. The Nifty closed at 7,874 (up 82.55 points or 1.06%), an all-time closing high, minutes after hitting its all-time intra-day high of 7,880.
The BSE’s S&P Sensex opened at 26,123 and hit a low of 26,075, after which it rose 315 points to end the day at an all-time closing high of 26,390 (up 288 points or 1.10%), 23 points below its all-time intra-day high of 26,413.
On the Nifty, as many as 42 stocks advanced while eight closed in the negative. Among the 30 stocks on the Sensex, 24 stocks closed with a gain, while five declined and one remained unchanged. Of the 3,031 scrips traded on the BSE, 1,930 advanced while 1,003 declined and about 98 remained unchanged.
Among the top gainers on the Nifty were oil stocks such as BPCL (5.42%) and ONGC (4.80%), gaining on lower crude oil prices. Crude oil declined by 1% to $94 per barrel in international markets from a close of $95 on 15 August 2014. Crude oil has eased considerably from a peak of $106 seen on 20 June 2014.
Among other gainers on the Nifty were Cipla (5.05%), Axis Bank (4.78%) and Tata Motors (4.22%). Cipla’s June quarter results reported that its operating margins increased by 4 percentage points to 20% sequentially. The management maintained its revenue guidance for FY2015-16. Tata Motors reported a 12.24% increase in sales, year-on-year for luxury brand Jaguar Land Rover, in the month of July.
Software and IT stocks declined on fears of the appreciation of the rupee. Three software stocks were among the bottom five losers on the Nifty. ITC (-1.86%), Infosys (-1.51%), HDFC (-1.09%), HCL Technologies (-1.04%) and TCS (-0.75%) were at bottom of the 30-share list. The rupee closed on a strong note on Thursday, below the Rs61 per dollar level.
Delivering his first Independence Day speech on Friday, Prime Minister Narendra Modi emphasised the need for better governance. He further mentioned that he wanted to turn India into a manufacturing and export powerhouse, coupled with employment generation. Modi also proposed an ambitious financial inclusion plan, to enable the poor to open bank accounts, with an insurance cover of Rs1 lakh.
Among the NSE’s sector indices, the CNX PSE (Public Sector Enterprise) index, and the CPSE index were the biggest gainers, rising 2.92% and 2.72%, respectively. The gains were also supported by a rally in the stocks of oil marketing companies as well. The government is also said to be planning to launch a new exchange traded fund with SUUTI and PSU stakes.
A new set of guidelines is expected to be announced shortly for appointment of independent directors on bank boards. According to newspaper reports, the government wants to split the role of the chairman and managing director of the PSU banks. It says that the chairman would be a reputed person from the industry while the managing director-CEO will run the daily functioning of the bank. The MD would have a fixed term of three years, which could be extended by two more years. The Bank Nifty gained 2.92% while the CNK PSU Bank index gained 2.22%.
Among the losers were the CNX FMCG index and the CNX IT Index which declined by 0.45% and 0.47% respectively.
Trading volumes on the NSE was lower compared to that on 14th August. The exchange recorded a trading volume of 793 million shares on Monday compared to 903 million shares traded on Thursday. Foreign investors had pumped in Rs625 crore on Thursday, marking the third day of consecutive inflows.
In the world market, a few Asian indices closed the day’s trade in the red. The benchmark indices of Taiwan, Singapore and South Korea closed lower. China’s Shanghai Composite index closed in the black even though China’s new-home prices declined in July. Prices fell in 64 of the 70 cities last month from June, according to the National Bureau of Statistics.
Later in the day, European stocks rallied on expectations of easing measures by the European Central Bank (ECB). The ECB is speculated to begin quantitative easing to strengthen the faltering recovery in the region. The US is to report private sector data on the housing market later in the day. US index futures were trading sharply higher in premarket trading.