Budget bets lift Sensex to new peak at 26,000

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IT, telecom, capital goods & power stocks lead upswing

Equity benchmark Sensex extended its record-setting streak and surpassed the 26,000-mark for the first time on Monday while the broadbased Nifty hit a fresh lifetime high, as investors continued to bet on a fiscally-prudent budget that can boost growth, increase revenues and cut spending.

Strong gains in IT and pharma blue chips helped the 30-stock pack touch an intra-day high of 26,123.55 in a late surge, but it closed slightly lower at 26,100.08, a gain of 138.02 points. Nifty gained 35.55 points to close at 7,787.15, its third consecutive record high.

“The indices are precariously poised now, with the economic survey, rail budget and the Union budget on tap this week,” said Amar Ambani, head of research at IIFL.

It’s going to be an action-packed week for the equity market with the rail budget, economic survey, Union budget lined up for Tuesday, Wednesday and Thursday, respectively, while Infosys will announce its June quarter earnings on Friday.

“Investors will track the June quarter earnings, export-import data and May IIP numbers this week. Some sectoral rotation could take place, as the indices are expected to remain upbeat till the budget,” Ambani said.

IT, telecom, power and capital goods stocks led Monday’s upswing. Several midcap and smallcap stocks too notched up smart gains. However, banking, realty and oil & gas stocks came under pressure.

Stock of companies linked to Indian Railways were in demand ahead of Tuesday’s Rail Budget, which is expected to announce some bold plans to improve services but adopt a realistic approach on new trains, lines and surveys. Top gainers included Texmaco Rail & Engineering (13.03 per cent), Texmaco Infrastructure & Holdings (5.21 per cent), Titagarh Wagons (4.99 per cent), Kalindee Rail Nirman(4.96 per cent) and BHEL(0.72 per cent).

Some good news on the monsoon front also boosted sentiment. The India Meteorological Department said the southwest monsoon advanced to most parts of Vidarbha, remaining parts of east Madhya Pradesh and Uttar Pradesh, some parts of west Madhya Pradesh and parts of north Rajasthan

FIIs were net buyers of equities worth Rs 198.57 crore, while domestic institutional investors were net sellers of stocks worth Rs 85.22 crore. FIIs have pumped $10.54 billion into Indian stocks this year. Alex Mathews, head of research at Geojit BNP Paribas Financial Services, said, “Sustained buying by both foreign and retail investors helped the market touch fresh lifetime highs.”

Chris Williamson, chief economist at HSBC in a report released on July 7 said, “The HSBC emerging markets index (EMI) showed stronger output growth across emerging markets in June signalling the sharpest rate of expansion since March 2013 with the pick-up in output growth reflected in both manufacturing and services. Three of the four largest emerging markets contributed to the faster overall rise in output in June. India saw the steepest expansion since February 2013 while China posted the sharpest rise in output for 15 months,” Williamson said.

Top Sensex gainers included Tata Power (3.59 per cent), Infosys (3.23 per cent), TCS (3.06 per cent), Tata Motors (2.20 per cent), Dr Reddy’s Lab (1.95 per cent), Wipro (1.86 per cent) and Bharti Airtel (1.80 per cent). “The weakness in the bank and oil & gas stocks was overshadowed by strong gains witnessed by IT, pharma and capital goods stocks,” said Anindya Banerjee, an analyst at Kotak Securities.

The rupee weakened by 29 paise to 60.01 against the US dollar. “The rupee did not draw cues from the upswing in the domestic equity market. A firm US dollar in the global market and demand for dollars from custodian banks in the domestic market pushed the rupee below 60.00,” Banerjee said.

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