BSE Sensex surges 409 points led by banking, pharma stocks; NSE Nifty above 8,500

The benchmark BSE Sensex rocketed 409 points at 28,114.56 on Friday on continued across-the-board buying by participants as the August series in the derivatives segment began on a positive note.

NSE Nifty gained 111.05 points at 8,532.85.

Market Outlook by Vinod Nair, Head-Fundamental Research, Geojit BNP Paribas Financial Services
There are two immediate factors which are causing the current market surge.  Firstly, there is the hope of a cut in interest rates in the forthcoming RBI policy meet on 4th August. Secondly there are signs given by the Q1FY16 results that the asset quality of Banks are improving. These in turn are fuelling expectations that the capex cycle in India is in the early stages of a turnaround.

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The session had been  good for pharma companies as the BSE Healthcare was up by 1.9%. Shares of all the major pharma companies were trading in the green. Shares of Dr Reddy’s Laboratories were up by 3.54% while the shares of Lupin and Sun Pharma were up by 3.35% and 0.8% respectively.

Stock of Cipla continued to RISE  raise for the second consecutive session as the shares went up by 1%. The company had announced the launch of  asthma treatment medicine in partnership with Sandoz on Thursday.

Market Wrap Up by Alex Mathews, Head Research, Geojit BNP Paribas Financial Services
Being the first day of August F&O series and on the improved global cues, the markets were up on Friday. The July Nifty rollover was seen at Better than expected quarterly numbers also supported the domestic markets along with the news that the government’s plan to infuse Rs 70000 crore in PSBs in over next four years.
Nifty closed at 8532 up around 111 points. The market breadth stood positive as there were seen 1657 stocks advancing against 1217 stocks declining. The Nifty volatility index, India VIX stood at 15.3250 down around 3.47%.   The mid-cap and small cap sectors ended up around 1.03% and 0.91% respectively.
Barring the Power and Oil & gas which closed down around 0.60% and 0.27% respectively all other sectors closed higher.  Healthcare and Auto were in the gainers zone closed up around 1.99% and 1.80% respectively.
The gainers in the stocks’ front were Bank of Baroda and SBIN, closed up around 6.41% and 4.87% respectively. Selling was seen in BHEL and Kotak Bank, which ended down around 2.96% and 2.90% respectively.
The FIIs were net sellers in the cash market segment on 30 July 2015, Thursday, sold shares worth Rs 170.68 crore. The DIIs on the other hand were buyers on 30 July, bought shares worth Rs 499.65 crore in the capital markets segment.
The European markets were little changed. The US index futures were trading in negative zone.
Monday companies like Bharat Forge, Redington, Monsanto, TBZ, BGR Energy, Berger Paint, Atul Auto, ABAN, TBZ, Hitech Plastics, HCL Tech, Tirumal Chemicals, TNPL, Kalindee and Nilkamal may announce their earnings.

Experts feel buying activity in Indian pharma shares is benefiting from the pick up in the US FDA approvals. Swiss based Investment banking firm Credit Suisse had said in an investor note published in the first week of July said that approval data for the last three months shows approvals for Indian players have picked up however, proportion of total approvals going to Indian firms has fallen due to outstanding 483s at several companies. Increase in approvals shows some benefit of GDUFA has started showing up.

The real benefit is yet to be realised as FDA has so far utilised only 55% of GDUFA funds raised over last two years.

Market View by Anand James, Co Head Technical Research Desk, Geojit BNP Paribas
Though the tepid July rollovers hinted at a cautious approach ahead of RBI’s interest rate announcement on 4th August, Friday’s opening moves were able to challenge 8500 mark in Nifty as government’s notification of new norms on multi brand retail allowing 49% investment, energised markets. The indecisiveness surrounding rate decision threatened to deflate the momentum, but the  banking stocks took initiative for further rallies, as government sought approval for an 12110 crores for recapitilization of public sector banks. Private sector banks also joined the rally as ICICI shares gained after its Q1 numbers recorded a 12.08% jump in net profit YoY.
US Dollar fell against major currencies, but failed to arrest WTI oil from slipping further away from 50, as OPEC indicated that there would be no reduction in production.  The August futures of USDINR currency cross picked up activity, and tested 64.50, the highest level since early June. This however, failed to arrest further slide in Indian gold prices.

All the major IT shares were also trading in the green as the BSE IT index went up by 0.6%. Shares of TCS and Wipro were trading 0.3% and 0.5% higher respectively while shares of Infosys were marginally up by 0.1%.US investment banking firm Jefferies  said in a research note published in the second of July that it expects IT industry revenue to pick up Quarter on Quarter due to seasonality and FX tailwinds however on Year on Year basis the results will show a slowdown.

Market View by Gaurav Jain, Director, Hem Securities
Indices welcomed the August series on a firm note. Good results from some key corporate like private banking heavyweight ICICI Bank, firm global cues after US Fed meet outcome improved the sentiments of the investors.

Shares of Kotak Mahindra Bank lost more  than 4% during the session as the bank had said that it expects its credit costs to jump during the  fiscal year as it has to make more provisions related to its purchase of ING Vysya Bank.

The Indian equity markets witness outflow of FPI funds on Thursday making it third straight session of FPI selling. FPIs have sold equities worth $372 million during the week as per Bloomberg data.