Nifty Closes On 5 Month High

With the Sensex and Nifty trading in a positive range all day, the second half of the trading session saw an upswing that had the Nifty crossing the 5400 level for the first time since Mar 16, 2012. This has been on the back of easing inflationary pressures as indicated by the CPI data dipping below 10 for July, at 9.86. This was also supported by the lack of weak global economic data. There was some positivity seen in the U.S. economy with better housing figures and there was increased hope from a positive outcome from European meetings. Moreover, reports on the Chinese stimulus for the second half of the year boosted the Shanghai Composite and the European markets.

There has been growing optimism over the ECB taking steps to bring down borrowing costs for European governments though Bundesbank reiterated its opposition to any further bond buying effort. While this leaves room for action to take any direction, investors have been treating it positively. The FTSE, DAX and CAC have been trading higher since opening and are currently higher by 0.29%, 0.27% and 0.59% respectively. Among Asian stocks, the Shanghai Composite closed higher by 0.54% while the Hang Seng was flat at -0.02%. Nikkei saw a decline of 0.16% in today’s trading session.

On the domestic front the Sensex closed 194.18 points higher at 17885.26, up by 1.10% and the Nifty closed 54.70 points higher at 5421, up by 1.02%. Among the sectors, IT was the top gainer and was higher by 1.76%. This was pushed higher because of the massive upward movement seen in both, Infosys and TCS. Infosys surged by 2.38% because of the dismissal of the lawsuit filed by a former employee in the district court of Alabama. TCS has been gaining since the announcement of the acquisition of Pune-based CRL for Rs 188 crore. The shares of TCS were higher today by 1.64%. Auto too was among the top gainers throughout the day, closing 1.19% higher. M&M saw an upswing because of the corrective path taken by the monsoons leading to lesser worries on the tractor sales front. Among other gainers were Power and Realty, gaining 1.66% and 1.22% respectively.

Among other individual stocks, Claris Lifesciences gained 1.75% because the USFDA lifted its ban on the company’s products which was imposed in 2010 over quality issues. Sesa Goa gained 3.64% after the company announced the successful commissioning of its third blast furnace with a 450 m3 capacity. With this, Sesa's pig iron plant becomes the largest producer of low phosphorous pig iron in India, with an installed capacity of 0.625 million tonnes per annum (mtpa), an increase from its earlier capacity of 0.250 mtpa, the company said.

We expect today’s gains to continue over tomorrow as well. Moreover, the global cues continue to remain flat to positive, which will benefit the Indian markets. There would be increased optimism with the relaxing inflation and with the Nifty crossing the 5400 level.