Nifty has to stay above 8,580 for the rally to continue
We had mentioned in Tuesday’s closing report that if Nifty goes below 8,480, it will head towards 8,400. However, the market reversed direction on Wednesday from Tuesday’s losses. The gains in the indices were a little more than 1% each. The upmove is likely to continue in the medium term.
The top gainers and losers in major indices are given in the table below:
Hopes of a modified Goods and Services Tax (GST) being cleared by parliament cheered investor sentiments and buoyed a barometer index of the Indian equity markets by 323 points on Wednesday.
A day after it fell by 238 points on the back of disappointing quarterly results, the barometer 30-scrip sensitive index (Sensex) of the S&P Bombay Stock Exchange (BSE) gained by 322.79 points or 1.15%.
The wider 50-scrip Nifty of the National Stock Exchange (NSE) also made healthy gains and closed 104 points or 1.22% up at 8,633.50 points.
The S&P BSE Sensex, which opened at 28,159.42 points, closed at 28,504.93 points, up 322.79 points or 1.15% from the previous day's close at 28,182.14 points.
The Sensex touched a high of 28,546.42 points and a low of 28,070.91 points in the intra-day trade.
Investor's sentiments were buoyed after positive statements were made by the government, indicating political willingness to resolve the impasse on crucial legislations like the Goods and Services Tax (GST) and the land bill.
"Investors' confidence was boosted after positive statements were made by the government and the principal opposition party on the possibility to find a way to clear a modified GST bill as recommended by the select panel," Anand James, co-head, technical research, Geojit BNP Paribas, told IANS.
"The prime minister's assurance that states will be given autonomy to craft changes in their own version of land bill also gave hope about its passage too. Expectation that parliament will be able to clear these two legislations in the monsoon session added positive sentiments."
James pointed out that other major triggers to focus at will be the Justice AP Shah panel's report on MAT (minimum alternate tax), expected to be submitted sometime next week.
"Foreign portfolio investors' (FPIs) inflows might be impacted due to the MAT issue. The FPIs have been consistent net buyers in the Indian markets since July 13," James added.
The MAT issue on capital gains is expected to impact the margins of foreign funds.
According to Sanjeev Zarbade, vice president of Kotak Securities, the markets were also awaiting the release of housing and the non-farm payroll data in the US.
These data points are significant as they show recovery in the US economy based on which the US Fed will decide whether to raise interest rates or not.
"The US Fed had said they will raise rates in the later part of 2015, depending on the data points. Thus the upcoming US Fed's FOMC (Federal Open Market Committee) meet will give further clues as to when the rate hike might take place," Zarbade told IANS.
With higher interest rates in the US, the FPIs are expected to be led away from emerging markets such as India.
The FOMC meet is scheduled for July 29, following which the future and options (F&O) expiry will take place in the Indian equity markets. The Indian monetary policy review by the Reserve Bank of India (RBI) is scheduled for August 4.
The markets expect a rate cut by the RBI during the upcoming monetary policy review. As it may be the last time in this calendar year to cut lending rates before inflation spirals up again and the US Fed decides on its own rates in September.
This led to healthy buying in the interest rate sensitive stocks like banks, oil and gas, automobile, healthcare and metal. However, IT and technology, entertainment and media (TECK) scrip came under intense selling pressure.
The S&P BSE bank index zoomed by 311.22 points, oil and gas index jumped by 235.42 points, automobile index rose by 208.09 points, healthcare index gained 157.50 points and metal index was up 84.20 points.
The BSE S&P IT index declined by 45.08 points and TECK index was lower by 20.60 points.
Major Sensex gainers during Wednesday's trade were: Reliance, up 4.26% at Rs1,050.45; Mahindra and Mahindra, up 3.39% at Rs1,341.55; Sun Pharma, up 3.35% at Rs832.25; Bajaj Auto, up 2.93% at Rs2,619.10; and HDFC, up 2.74% at Rs1,345.55.
The major Sensex losers were: Lupin, down 3.29% at Rs1,824.05; Tata Consultancy Services (TCS), down 1.36% at Rs2,528.10; Bharti Airtel, down 1.33% at Rs439.35; Infosys, down 0.90% at Rs1,102.60; and Vedanta, down 0.37% at Rs136.10.
Among the Asian markets, Japan's Nikkei was lower by 1.19%, however China's Shanghai Composite Index rose by 0.22% and Hong Kong's Hang Seng fell by 0.99%.
In Europe, the London FTSE 100 index was lower by 1.05%, while the French CAC 40 dropped by 0.39%. Germany's DAX index fell by 0.63% at the closing bell.
The closing values of Asian indices are given in the table below:
Among European indices, the DAX was at 11,530.11, down 0.64% and FTSE 100 was at 6,695.20, down 1.11%. Athex Composite Share Price Index was at 797.52, up 2.03%.