Benchmarks extend winning streak for fourth straight session
Indian equity indices ended higher on Monday, marking the fourth successive day of gains, shrugging off weak trend in Asian markets and concerns over mounting COVID-19 cases. Markets recaptured their crucial 11,000 (Nifty) and 37,400 (Sensex) levels. Key gauges made an optimistic start and traded with a positive bias throughout session, as sentiments got a boost with Reserve Bank of India (RBI) executive director M Rajeshwar Rao’s statement that future economic policies need to be modified towards supporting the economy, depending on how effects of Coronavirus disease (COVID-19) pandemic play out. Some positivity also came with the Agriculture Ministry’s statement that there has been no impact of COVID-19 pandemic on kharif (summer) sowing as the total area planted to rice and other crops has increased by 21.20% to 691.86 lakh hectare so far in the current season. Separately, the latest data from the Reserve Bank of India (RBI) showed that forex reserves rose $3.1 billion to hit a record high of $516.36 billion for the week ended July 10.
However, markets turned volatile and gave up some of gains in late morning session, as some cautiousness came with India Ratings and Research’s (Ind-Ra) report that the government's fiscal deficit is estimated to touch 7.6% in FY21, more than double the Budget Estimate (BE), as the nation spends extra to lessen the impact of the COVID-19 pandemic while facing a shortfall in incomes. But, in the final hour of trade, domestic indices gained traction and settled over a percent higher each, as traders found support with Niti Aayog CEO Amitabh Kant’s statement that clean energy has potential to shore up the Indian economy from the current downturn. He also urged investors to exploit long-term opportunities in the sector. Local investors cheered with World Federation of Direct Selling Associations’ (WFDSA) ‘The Global Direct Selling - 2019 Retail Sales report’ stating that the Indian direct selling industry has recorded sales of $2.47 billion in 2019, reporting a growth of 12.1 percent. This has helped the direct selling industry improve its ranking to the 15th from the earlier 19th a year before.
On the global front, Asian markets ended mostly in red on Monday, amid worries about the rising number of coronavirus cases around the world and on caution ahead of the release of major corporate earnings results this week. European markets were trading mostly in red, as investors turned their focus to a European Union Summit where leaders are trying to reach an agreement over a 750 billion euro stimulus package. Back home, aviation stocks were in focus with the US Transportation Department’s statement that the Narendra Modi government has agreed to allow US air carriers to resume passenger services in the US-India market starting July 23. Banking stocks were also buzzing with the RBI data showing that bank credit and deposits grew by 6.13 per cent and 11.04 per cent to Rs 102.91 lakh crore and Rs 140.75 lakh crore, respectively, in the fortnight ended July 3.
Finally, the BSE Sensex rose 398.85 points or 1.08% to 37,418.99, while the CNX Nifty was up by 120.50 points or 1.11% to 11,022.20.
The BSE Sensex touched high and low of 37,478.87 and 37,185.78, respectively and there were 21 stocks advancing against 9 stocks declining on the index.
The broader indices ended in green; the BSE Mid cap index rose 0.91%, while Small cap index was up by 1.04%.
The top gaining sectoral indices on the BSE were IT up by 2.30%, TECK up by 2.17%, Telecom up by 1.63%, Finance up by 1.62%, Bankex up by 1.38%, Consumer Durables up by 1.17% while, Healthcare down by 0.66%, Power down by 0.20%, Capital Goods down by 0.13%, Utilities down by 0.07% were the top losing indices on BSE.
The top gainers on the Sensex were Bajaj Finance up by 4.23%, Bajaj Finserv up by 4.06%, HCL Technologies up by 4.01%, Tech Mahindra up by 3.91% and Infosys up by 3.27%. On the flip side, Sun Pharma down by 3.86%, NTPC down by 1.30%, Maruti Suzuki down by 0.86%, Kotak Mahindra Bank down by 0.74% and Larsen & Toubro down by 0.66% were the top losers.
Meanwhile, Reserve Bank of India (RBI) executive director M Rajeshwar Rao has said that future economic policies need to be modified towards supporting the economy, depending on how effects of Coronavirus disease (COVID-19) pandemic play out. He said the first set of responses from the RBI was to ensure that the markets continue to function and ensure solvency in the financial sector. He stated that several measures, including reduction in Cash Reserve Ratio, special finance facility, Long Term Repo Operations (LTRO) and Targeted Long Term Repo Operations (TLTRO) were announced. As a result of various measures, he said the RBI injected around Rs 6.5 lakh crore liquidity in the banking system during the pandemic.
Going forward, Rao said ‘we need to see how the impact is going to be there on the economic activities of the various players, and once we get a fix on this issue perhaps the policy responses could be appropriately tailored. We have to see how the situation evolves and based on evolving situation the policies could be suitably modified to address concerns.’ Emphasizing that the world and India will not remain in the grip of COVID-19 forever, he said not in a distinct future this pandemic will end through combination treatment, vaccination and achievement of herd immunity.
He further said once the immediate priority of addressing the health issues is sorted out, the second step could be to ensure sustainability of existing businesses. He also said ‘we need to approach stage-by-stage, so the first priority at this juncture is going to be the health and protection of the people, once we get a certain degree of comfort on that aspect, the second segment will come into play.’ With the policy interventions, he said, the interest rate on commercial and government borrowing have hit lowest in the decade. RBI's benchmark policy rate or repo rate has been brought down to 4 per cent, the lowest ever.
The CNX Nifty traded in a range of 11,037.90 and 10,953.00 and there were 30 stocks advancing against 19 stocks declining, while 1 remain unchanged on the index.
The top gainers on Nifty were Britannia Industries up by 5.12%, Wipro up by 4.44%, Infosys up by 4.41%, Tech Mahindra up by 4.30% and HCL Technologies up by 4.21%. On the flip side, Sun Pharma down by 3.90%, Cipla down by 2.15%, Zee Entertainment down by 1.72%, BPCL down by 1.68% and Tata Motors down by 1.36% were the top losers.
European markets were trading mostly in red; UK’s FTSE 100 decreased 42.79 points or 0.68% to 6,247.51 and France’s CAC fell 8.73 points or 0.17% to 5,060.69, while Germany’s DAX increased 45.16 points or 0.35% to 12,964.77.
Asian markets ended mostly lower on Monday as uncertainty over surging corona virus cases globally kept the market sentiment cautious. Meanwhile, European Union leaders remained at odds over how to carve up a 750 billion-euro stimulus package designed to help haul Europe out of its deepest recession since World War Two. Chinese shares settled up as the country's central bank maintained its benchmark lending rate for the third straight month amid signs of economic recovery. The one-year loan prime rate was retained at 3.85 percent and the five-year loan prime rate was maintained at 4.65 percent. Japanese shares ended marginally higher amidst expectations that the central bank, Bank of Japan would purchase exchange-traded funds (ETFs) to prop up the market, despite data showed the country's exports fell more than expected in June.
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