Sensex hits 10-1/2-week high

Key benchmark indices surged in morning trade, with the barometer index, the S&P BSE Sensex, hitting 10-1/2-week high. The 50-unit CNX Nifty hit its highest level in more than 10 weeks. The Sensex retained the psychological 28,000 level. Earlier, initial gains took the Sensex past the psychological 28,000 level. The broad market depicted strength. There were more than two gainers against every loser on BSE. The Sensex was currently up 180 points or 0.64% at 28,125.80. In overseas markets, Asian stocks fell as the outcome of Greece's bailout terms looks uncertain and economic data from the US failed to buoy sentiment.

Pharmaceutical shares edged higher. Capital goods shares were also in demand.

Foreign portfolio investors bought shares worth a net Rs 575.32 crore yesterday, 2 July 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) sold shares worth a net Rs 219.02 crore on yesterday, 2 July 2015, as per provisional data released by the stock exchanges.

In overseas markets, Asian stocks fell as the outcome of Greece's bailout terms looks uncertain and economic data from the US failed to buoy sentiment. US stocks edged lower yesterday, 2 July 2015, as investors grappled with heightened uncertainty tied to Greece ahead of a referendum on Sunday, 5 July 2015, to vote on the country's status as a eurozone member.

At 10:16 IST, the S&P BSE Sensex was up 180 points or 0.64% at 28,125.80. The index jumped 189.63 points at the day's high of 28,135.43 in morning trade, its highest level since 20 April 2015. The index fell 48.35 points at the day's low of 27,897.45 at the onset of trading session.

The CNX Nifty was up 51.10 points or 0.61% at 8,496.00. The index hit a high of 8,497.55 in intraday trade, its highest level since 23 April 2015. The index hit a low of 8,424.15 in intraday trade.

The BSE Mid-Cap index was up 66.11 points or 0.61% at 10,937.95, underperforming the Sensex. The BSE Small-Cap index was up 92.23 points or 0.82% at 11,392.22, outperforming the Sensex.

The market breadth indicating the overall health of the market was quite strong. There were more than two gainers against every loser on BSE. 1,444 shares rose and 537 shares fell. A total of 79 shares were unchanged.

Pharmaceutical shares edged higher. Wockhardt (up 2.48%), Cipla (up 1.88%), Aurobindo Pharma (up 1.24%), Sun Pharmaceutical Industries (up 1.01%), Piramal Enterprises (up 0.89%), Strides Arcolab (up 0.82%), Divi's Laboratories (up 0.81%), Dr. Reddy's Laboratories (up 0.73%), Glenmark Pharmaceuticals (up 0.55%), GlaxoSmithKline Pharmaceuticals (up 0.39%) and Cadila Healthcare (up 0.18%), edged higher. IPCA Laboratories was down 0.19%.

Lupin was up 2.37%. The company after market hours yesterday, 2 July 2015, announced the acquisition of 100% equity stake in ZAO Biocom in Russia subject to certain closing conditions. The acquisition marks Lupin's foray into the Russian pharmaceutical market which recorded RUB 765 billion in sales, placing it as one of the top 10 pharmaceutical markets in the world in 2014 (IMS Health).

Commenting on the acquisition, Ms. Vinita Gupta, Chief Executive Officer of Lupin said that Russia is an attractive market and this acquisition will also enable the company's expansion into neighboring markets as well as other Eastern European markets in the future.

Capital goods shares were in demand. Praj Industries (up 3.60%), Bharat Heavy Electricals (up 2.19%), Siemens (up 1.84%), BEML (up 1.22%), Alstom T&D India (up 1.08%), Larsen & Toubro (up 0.88%), Lakshmi Machine Works (up 0.85%), Bharat Electronics (up 0.77%), Suzlon Energy (up 0.66%), SKF India (up 0.51%), Punj Lloyd (up 0.41%), Jindal Saw (up 0.32%), ALSTOM India (up 0.28%), AIA Engineering (up 0.18%), Pipavav Defence and Offshore Engineering Company (up 0.17%) and Havells India (up 0.10%), edged higher. Thermax (down 0.17%) and Crompton Greaves (down 0.48%), edged lower.

ABB India was up 0.54% to Rs 1,369.80. The company after market hours yesterday, 2 July 2015, announced that the board of directors of the company at its meeting held yesterday, 2 July 2015, approved the proposal to raise money to the extent of Rs 600 crore by way of issuance of unsecured listed redeemable non-convertible debentures on private placement basis to investors on such terms and conditions as may be decided by the board. The issuance would be subject to the approval of the shareholders by way of a special resolution through postal ballot.

Meanwhile, the Reserve Bank of India (RBI) Governor Dr. Raghuram G. Rajan yesterday, 2 July 2015, said that the Indian economy was recovering and there were signs of capital investments picking up. Rajan said that the government was trying to put stalled projects back on track. He said that the monsoon, thus far, was above normal. Exports were relatively weak and the weakness was on account of global factors. The RBI governor said that the RBI will continue to do spade work for sustainable growth in the coming year. The RBI governor was speaking to the media after the conclusion of a meeting of the Central Board of Reserve Bank of India in Chennai.

Rajan said in response to a query from the media that Greece was an evolving situation. Direct exposure to Greece for India was limited as indicated by a few reports done by the Reserve Bank of India, he said. There might be initial burst of volatility in financial markets if there are untoward developments in Greece, after which discerning investors will be able to distinguish the India's story which is of growth and stability, the RBI governor said. Rajan also said that India's macro policies were good and that India had enough buffers, including foreign exchange reserves to protect against any possible eventuality.

Meanwhile, the India Meteorological Department (IMD) said in its weekly monsoon report issued yesterday, 2 July 2015, that the rainfall was below normal by 14% over the country as a whole during the period from 25 June 2015 to 1 July 2015. Region wise, the rainfall was 45% below the Long Period Average (LPA) in Central India, 27% below the LPA in South Peninsula, 17% below the LPA in East & Northeast India and 79% above the LPA in Northwest India during that period.

The IMD expects rainfall to be above normal over northwest, central and over some parts of east India during the period from 6 to 10 July 2015. Rainfall activity may remain above normal over west India during 11-15 July 2015 and over northern plains during 16-20 July 2015, as per IMD's Extended Range Forecast. The IMD has forecast below normal rainfall activity over interior Peninsular India.

Separately, the IMD said in its daily monsoon update issued yesterday, 2 July 2015, that the Southwest Monsoon was normal over Andaman & Nicobar Islands, Arunachal Pradesh, Jharkhand, Bihar, Uttarakhand, Rajasthan, East Madhya Pradesh, Marathawada, Vidarbha, Chhattisgarh, Telangana and North Interior Karnataka during past 24 hours until 8:30 IST.

For the country as a whole, the cumulative rainfall during this year's monsoon season was 10% above the Long Period Average (LPA) until 2 July 2015. Region wise, the southwest monsoon was 23% above the LPA in Northwest India, 15% above the LPA in Central India, 12% above the LPA in South Peninsula and 3% below the LPA in East & Northeast India until 2 July 2015.

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, Asian stocks fell today, 3 July 2015, as the outcome of Greece's bailout terms looks uncertain and economic data from the US failed to buoy sentiment. Key benchmark indices in Hong Kong, Japan, South Korea and Taiwan were off 0.23% to 0.46%. Key benchmark indices in Indonesia and Singapore were up 0.28% to 0.29%.

China's Shanghai Composite slumped 3.25%, extending recent losses amid a fresh wave of panic selling, as a flurry of recently released measures by the Chinese government and the central bank failed to bolster investor confidence. The China Securities Regulatory Commission yesterday, 2 July 2015, announced that it would launch an investigation into suspected manipulation of shares and futures.

The HSBC China Services Purchasing Managers' Index fell to 51.8 in June from 53.5 in May, HSBC Holdings PLC said Friday, suggesting activity outside the nation's factories remains under pressure. China's service sector activity growth also eased to a five-month low in June, HSBC and Markit said in the statement. The HSBC China Services PMI is based on data compiled from monthly replies to questionnaires sent to purchasing executives at more than 400 private service-sector companies. China's official nonmanufacturing PMI, a competing a gauge, rose to 53.8 in June from 53.2 in May, according to the China Federation of Logistics and Purchasing.

US stocks edged lower yesterday, 2 July 2015, as investors grappled with heightened uncertainty tied to Greece ahead of a referendum on Sunday, 5 July 2015, to vote on the country's status as a eurozone member. The US stock market is closed today, 3 July 2015, for the Independence Day holiday.

Investors digested reports on the health of the labor market with monthly jobs report and weekly unemployment claims coming in softer than expected. Government data for June showed the economy added 223,000 new jobs. However, May and April numbers were cut. The unemployment rated ticked down to 5.3%, mostly due to more people leaving the labor force. Separately, weekly jobless claims climbed 10,000 to 281,000.

In Europe, Greece's Finance Minister Yanis Varoufakis reportedly said yesterday, 2 July 2015, that he will resign if Greece votes "yes" in a referendum on Sunday, 5 July 2015. Greece and its lenders failed to reach an agreement over bailout funds, resulting in a missed payment to the International Monetary Fund (IMF) on Tuesday, 30 June 2015. Greece will hold a referendum Sunday, 5 July 2015, on whether to accept the reform proposals put forward by its international lenders to unlock more aid. A "no" vote by Greeks could force the country out of the eurozone and push the country into what could be the darkest chapter of its six-year debt crisis. A "yes" vote could cause the Syriza party led coalition government to collapse.

The closure of Greece's banking system entered the 4th day yesterday, 2 July 2015. After the collapse of the bailout talks, Greece ordered the shut down of its banking system for six days from 29 June 2015 to avoid a run on the country's banks and the nation's central bank moved to impose controls to prevent money from flooding out of the country.

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