BSE Small-Cap, Mid-Cap indices outshine Sensex

capital market | Mumbai |

BSE Small-Cap, Mid-Cap indices outshine Sensex

IT, auto stocks and index heavyweights HDFC and ITC led rally as key benchmark indices surged on first trading session of the week today, 13 July 2015. The trigger for the rally was eurozone leaders reaching an agreement today, 13 July 2015, for a third bailout deal for debt laden Greece in exchange for strict reform measures. The agreement eases the risk that Greece will be forced to leave the common euro currency union. The barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, attained their highest level in almost a week. But, the Sensex failed to retain the psychological 28,000 mark after surpassing that level in intraday trade.

The Sensex garnered 299.79 points or 1.08% to settle at 27,961.19. The BSE Mid-Cap index jumped 1.44%. The BSE Small-Cap index rose 1.27%. Both these indices outperformed the Sensex. The market breadth indicating the overall health of the market was strong.

In overseas stock markets, European stocks surged after eurozone leaders clinched a bailout deal for Greece. Trading in US index futures indicated a firm opening of US stocks later in the global day. Meanwhile, in global commodities markets, Brent crude oil prices edged lower in choppy trade as Iran and six world powers were close to nailing down a nuclear deal.

Shares of power generation and power distribution companies gained. IndusInd Bank rose after announcing good Q1 results.

On macro front, industrial production rose 2.7% in May 2015, compared with a downwardly revised 3.36% growth in April 2015, according to the data released by the government after trading hours on Friday, 10 July 2015.

Foreign portfolio investors (FPIs) sold shares worth a net Rs 339.18 crore into the secondary equity market during the previous trading session on Friday, 10 July 2015, as per data from National Securities Depository. Domestic institutional investors (DIIs) bought shares worth a net Rs 590.49 crore during the previous trading session on Friday, 10 July 2015, as per provisional data released by the stock exchanges.

The S&P BSE Sensex rose 299.79 points or 1.08% to settle at 27,961.19, its highest closing level since 7 July 2015. The index jumped 343.77 points at the day's high of 28,005.17 in late trade. The index fell 26.34 points at the day's low of 27,635.06 in early afternoon trade.

The CNX Nifty rose 99.10 points or 1.19% to settle at 8,459.65, its highest closing level since 7 July 2015. The index hit a high of 8,471.65 in intraday trade. The index hit a low of 8,355.40 in intraday trade.

The market breadth indicating the overall health of the market was strong. On BSE, 1,789 shares gained and 1,005 shares fell. A total of 126 shares were unchanged.

The BSE Mid-Cap index rose 1.44% to settle at 11,027.41. The BSE Small-Cap index rose 1.27% to settle at 11,480.12. Both these indices outperformed the Sensex.

The total turnover on BSE amounted to Rs 2476 crore, lower than turnover of Rs 2870.13 crore registered during the previous trading session.

Among sectoral indices on BSE, the S&P BSE IT index (up 1.71%), the S&P BSE Teck index (up 1.65%), the S&P BSE Auto index (up 1.6%), the S&P BSE Healthcare index (up 1.28%), the S&P BSE Oil & Gas index (up 1.27%), the S&P BSE Power index (up 1.26%), the S&P BSE FMCG index (up 1.14%) outperformed the Sensex. The S&P BSE Capital Goods index (down 0.19%), the S&P BSE Metal index (up 0.5%), the S&P BSE Realty index (up 0.72%), the S&P BSE Consumer Durables index (up 0.81%) and the S&P BSE Bankex (up 0.91%) underperformed the Sensex.

Index heavyweight and cigarette maker ITC gained 1.76% to Rs 315.40. The stock hit high of Rs 316.35 and low of Rs 309.05 in intraday trade.

Another index heavyweight Reliance Industries (RIL) rose 0.43% to Rs 1,005.90. The stock hit high of Rs 1,012.25 and low of Rs 995.40 in intraday trade.

Index heavyweight and housing finance major HDFC rose 2.81% Rs 1,319. The stock hit high of Rs 1,326.55 and low of Rs 1,282 in intraday trade.

IT stocks edged higher on renewed buying. HCL Technologies (up 3.84%), Wipro (up 2.17%), TCS (up 1.38%), Oracle Financial Services Software (up 1.23%), Infosys (up 1.28%) and Tech Mahindra (up 0.4%) edged higher.

Shares of power generation and power distribution companies gained. NHPC (up 0.26%), NTPC (up 2.5%), Tata Power Company (up 1.53%), Power Grid Corporation of India (up 1.16%), Reliance Infrastructure (up 2.44%) and Reliance Power (up 1.45%) gained.

Banking stocks edged higher. Among PSU bank stocks, State Bank of India (SBI) (up 1.22%), Punjab National Bank (up 0.41%), Bank of Baroda (up 0.42%), Canara Bank (up 1.56%), Bank of India (up 1.16%) and Union Bank of India (up 0.23%) gained.

Among private bank stocks, HDFC Bank (up 0.33%), Kotak Mahindra Bank (up 0.89%), ICICI Bank (up 0.99%), Axis Bank (up 0.83%) and Yes Bank (up 0.84%) rose.

IndusInd Bank rose after announcing good Q1 results. The stock was up 3.27% to Rs 923.90. The stock hit high of Rs 928 and low of Rs 895.25 in intraday trade. The bank's net profit rose 24.69% to Rs 525.04 crore on 19.97% increase in total income to Rs 3447.84 crore in Q1 June 2015 over Q1 June 2014. The Q1 result was announced during market hours today, 13 July 2015.

The bank's ratio of net non-performing assets (NPAs) to net advances stood at 0.31% as on 30 June 2015, unchanged from 0.31% as on 31 March 2015 and lower than 0.33% as 30 June 2014. The bank's ratio of gross NPAs to gross advances stood at 0.79% as on 30 June 2015, compared with 0.81% as on 31 March 2015 and 1.11% as 30 June 2014.

IndusInd Bank's provisions and contingencies rose 11.71% to Rs 123.33 crore in Q1 June 2015 over Q1 June 2014. The bank's Capital Adequacy Ratio (CAR) as per Basel III norms stood at 12.43% as on 30 June 2015 as against 12.09% as on 31 March 2015 and 13.11% as on 30 June 2014.

Auto stocks edged higher on renewed buying. Maruti Suzuki India (up 2.52%), Mahindra & Mahindra (M&M) (up 1.81%), Eicher Motors (up 1.81%), Tata Motors (up 0.02%), Ashok Leyland (up 1.81%), Bajaj Auto (up 1.14%), Hero MotoCorp (up 1.65%) and TVS Motor Company (up 5.06%) gained.

Pharma stocks gained on a weak rupee. Sun Pharmaceutical Industries (up 1.4%), Aurobindo Pharma (up 2.85%), Cipla (up 2.13%), Lupin (up 1.1%), Wockhardt (up 2.48%), Glenmark Pharmaceuticals (up 0.96%) and Cadila Healthcare (up 2.38%) gained. Weakness in rupee could boost sales of pharma companies in rupee terms as pharma firms derive substantial revenue from exports.

Dr Reddy's Laboratories (DRL) rose 0.48%. DRL announced today, 13 July 2015, that the company has launched Memantine hydrochloride tablets USP, 5 mg and 10 mg, a therapeutic equivalent version of NAMENDA tablets (mamentine HCI) in the United States on 12 July 2015. The NAMENDA (mamentine HCI) tablets brand had US sales of approximately $1.4 billion for twelve months upto May 2015, as per IMS Health data. The announcement was made after market hours today, 13 July 2015.

Asian Paints rose after the company announced that operations at its paint plant situated at Sriperumbudur, Tamil Nadu, have returned to normalcy. The stock rose 2.69%. Earlier on 29 April 2015, the company had informed of the operations at the plant was affected due to the cessation of work by the operators belonging to Asian Paints Employees' Union with effect from 28 April 2015. The announcement was made after trading hours on Friday, 10 July 2015.

Key benchmark indices edged higher for the second consecutive trading session today, 13 July 2015. The Sensex has gained 387.53 points or 1.4% in the preceding two trading sessions from a recent low of 27,573.66 on 9 July 2015. The Sensex has 180.36 risen points or 0.64% in this month so far (till 13 July 2015). The Sensex has risen 461.77 points or 1.67% in this calendar year so far (till 13 July 2015). From a 52-week low of 24,892 on 14 July 2014, the Sensex has risen 3,069.19 points or 12.33%. The Sensex is off 2,063.55 points or 6.87% from a record high of 30,024.74 hit on 4 March 2015.

Meanwhile, in global commodities markets, Brent crude oil prices edged lower as Iran and six world powers were close to nailing down a nuclear deal. A nuclear deal with Iran would lead to an easing of sanctions against Tehran and to higher crude exports from Iran. Brent for August settlement was currently off 41 cents at $58.32 a barrel. The contract had gained 12 cents or 0.2% to settle at $58.73 a barrel during the previous trading session. Brent for September settlement was currently off 35 cents at $58.65 a barrel.

India imports about 80% of its crude requirements and a decline in crude eases concerns on fiscal deficit, inflation and gives more room for the government to boost growth through spending on infrastructure. However, a weakness in rupee against the dollar will restrict the benefit of falling global crude oil prices to that extent. A weak rupee raises the cost of imports.

In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was currently hovering at 63.4975, compared with its close of 63.38 during the previous trading session on Friday, 10 July 2015.

On macro front, industrial production rose 2.7% in May 2015, compared with a downwardly revised 3.36% growth in April 2015, according to the data released by the government after trading hours on Friday, 10 July 2015. The manufacturing sector registered a growth of 2.2% in May 2015. The mining sector clocked 2.8% growth and electricity generation rose 6% in May 2015. In terms of industries, twelve out of the twenty two industry groups in the manufacturing sector have shown positive growth during the month of May 2015 as compared to the corresponding month of the previous year.

As per use-based classification, the production of basic goods rose 6.4% in May 2015, capital goods production rose 1.8% and the production of intermediate goods rose 1.2% in May 2015. The production of consumer goods registered a decline of 1.6% in May 2015. Within the consumer goods segment, the production of consumer durables dropped 3.9% in May 2015 and production of consumer non-durables dropped 0.1% in May 2015.

The cumulative growth in industrial production for the period April-May 2015 over the corresponding period of the previous year stands at 3%.

The government is scheduled to release data on inflation based on the consumer price index (CPI) for the month of June 2015 at 17:30 IST today, 13 July 2015. The CPI inflation moved up slightly to 5.01% in May 2015 from 4.87% in April 2015.

The government is scheduled to release data inflation based on the wholesale price index (WPI) for June 2015 at around 12:00 noon tomorrow, 14 July 2015. WPI inflation stood at negative 2.4% in May 2015, compared with a reading of negative 2.65% in April 2015.

Meanwhile, the finance ministry on Saturday, 11 July 2015, announced that the Centre's indirect tax revenue jumped 37.4% to Rs 1.53 lakh crore in Q1 June 2015 over Q1 June 2014. The indirect tax collections jumped 33.3% in June 2015 over June 2014. These increases were spread across all three tax categories viz. customs, central excise and service tax. These collections reflect in part additional measures taken, including the excise increases on diesel and petrol, the increase in clean energy cess, the withdrawal of exemptions for motor vehicles and consumer durables and in June 2015, the increase in service tax from 12.36% to 14%. Stripped of all these additional measures, indirect tax collections rose 10.8% in June 2015 over June 2014 and 14.5% in Q1 June 2015 over Q1 June 2014. These collections indicate that the underlying momentum in the economy is improving, across all sectors, including manufacturing, reflected in healthy excise tax collections, the finance ministry said in a statement. The growth in underlying indirect tax collections of 14.5% suggests a healthy increase in nominal GDP growth which constitutes the tax base for indirect tax collections, the finance ministry said.

Meanwhile, the weekly data released by the Ministry of Agriculture after trading hours on Friday, 10 July 2015, showed that the sowing of Kharif crops is gathering pace. The total sown area for Kharif crops as on 10 July 2015 stood at 445.11 lakh hectares compared with 275.10 lakh hectares at this time last year. Significant increase has been recorded in oilseeds sowing this season; it has reached 101.26 lakh hectares compared with 22.24 lakh hectares at this time last year. Similarly pulses sowing have touched 32.61 lakh hectares this season compared with 22.71 lakh hectares at this time last year. July is a crucial month for the sowing of Kharif crops.

Meanwhile, India's weather office, the India Meteorological Department (IMD), said in its daily monsoon update issued yesterday, 12 July 2015, that the Southwest Monsoon was vigorous over West Uttar Pradesh and Jammu & Kashmir and active over East Uttar Pradesh, Haryana, Chandigarh & Delhi and Punjab during past 24 hours until 8:30 IST.

For the country as a whole, cumulative rainfall during this year's monsoon season was 2% below the Long Period Average (LPA) until 12 July 2015. Region wise, the southwest monsoon was 25% above the LPA in Northwest India, 5% below the LPA in East & Northeast India, 6% below the LPA in Central India and 11% below the LPA in South Peninsula and until 12 July 2015.

The quantum of and the spatial distribution of rainfall this month holds key, with July being a crucial month for the sowing of Kharif crops. The June-September southwest monsoon is critical for the country's agriculture because a considerable part of the country's farmland is dependent on the rains for irrigation.

In overseas markets, European stocks surged today, 13 July 2015, after eurozone leaders reached an agreement over a third bailout for Greece. Key indices in UK, France and Germany were up 0.79% to 2.05%. In Spain, the IBEX 35 index was up 1.56%. In Italy, the FTSE MIB index was up 1.4%.

There will be no eurozone exit for Greece after eurozone leaders today, 13 July 2015, agreed on a third bailout deal for cash-strapped Greece in exchange for strict reform measures. Speaking after a marathon weekend summit, President of the European Council Donald Tusk today, 13 July 2015, said the leaders had reached an agreement in principle to start negotiations on financial aid through the eurozone's bailout fund, the European Stability Mechanism, or the ESM. Tusk said that the decision gives Greece the chance to get back on the track for support from European partners. It also avoids the social, economical and political consequences that a negative outcome would have brought, Tusk said.

By Wednesday, 15 July 2015, Greece's Parliament has to pass pension overhauls and sales tax increases that voters overwhelmingly rejected in a referendum held on 5 July 2015. Parliaments in several eurozone nations also have to approve any new bailout deal for Greece.

To help Greece meet its short-term financing needs, eurozone finance ministers will discuss so-called bridge financing, Tusk said. Eurogroup head Jeroen Dijsselbloem also touched on the issue of Greece's future financing needs, saying a fund will be set up to tackle the debt and recapitalization of the country's banks. Greek Prime Minister Alexis Tsipras defended the deal after the all-night meeting, saying it allows his country to stand on its own feet again.

Asian stocks edged higher today, 13 July 2015, after eurozone leaders reached an agreement over a third bailout for Greece. Key benchmark indices in Japan, Taiwan, Singapore, Indonesia and South Korea were up 0.72% to 1.57%.

China shares edged higher as Beijing's efforts to reverse a massive stock selloff appear to be holding up. In mainland China, the Shanghai Composite rose 2.39%. In Hong Kong, the Hang Seng index jumped 1.3%.

China's exports rose 2.8% in June from a year earlier in dollar terms, reversing a 2.5% drop in May, data from the General Administration of Customs showed today, 13 July 2015. Imports in June fell 6.1% from a year earlier compared with a 17.6% drop in May. China's trade surplus narrowed in June to $46.5 billion from $59.49 billion in May.

Trading in US index futures indicated that the Dow could rise 119 points at the opening bell today, 13 July 2015. US stocks rallied during the previous trading session on Friday, 10 July 2015, on renewed hopes that debt-laden Greece will reach a deal with its creditors and stave off an exit from the eurozone.

Federal Reserve Chairwoman Janet Yellen on Friday, 10 July 2015, said she saw signs the economy was improving and said she expects a rate hike to be needed this year. In a speech to The City Club of Cleveland, Yellen was upbeat about the outlook, laying out her view of a US economy close to the point of achieving a virtuous circle, where job gains lead to stronger consumer spending which then sparks more employment and wage gains. The Fed chairwoman did not seem in a rush to move and her remarks also suggest a preference for one rate move this year. She noted that the labor market has improved but still has not fully recovered and the course of the economy and inflation remained highly uncertain and something unexpected could delay or accelerate the first step.

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