Realty, banking stocks firm up gains

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The Indian stock markets ended the day on a firm note as buying activity intensified during the final hour of trade. The BSE-Sensex ended higher by about 321 points or 1.3% today while the NSE-Nifty closed with gains of about 97 points or 1.3%. Gains were seen in stocks across the board, with realty and banking stocks leading the pack. Midcap and smallcap stocks were in demand today as well as the BSE Mid Cap and BSE Small Cap indices closed higher by over 1.3% and 2% respectively.

Stock markets in other parts of Asia ended the day on a mixed note with Japan and China ending lower by about 0.1% each, while Hong Kong ended higher by 0.3%. The rupee was trading at Rs 60.19 to the dollar at the time of writing.

Stocks of power companies ended the day on a firm note led by JSW Energy, Adani Power and NHPC. As reported by a leading business daily, private power player Tata Power is looking to spend Rs 18.8 bn over the next five years to strengthen its network in Mumbai. This spending is with the aim to increase its reach to south Mumbai as well as suburban Mumbai. The recent ruling by the Supreme Court and the Maharashtra Electricity Regulatory Commission (MERC) have allowed the company to provide power to low end customers having monthly consumption of 300 units or below and cater to eleven clusters situated in Mumbai suburbs respectively. While BEST, the current power supplier in the city, has opposed MERC's decision, it is believed that the company has fear of Tata Power poaching its customers as was reported by a leading business daily a few days ago. Being long term projects, the benefits of this capex will take time to come in, especially considering that setting up infra in a congested city such a Mumbai would be challenging.

Moving on, export data for the month of June 2014 was released today. And as per the data, it seems that the trade deficit expanded to US$ 11.76 bn in the month, the highest level in about a year. Growing at 10.2%, merchandise exports were up during the month. Merchandise imports on the other hand increased by 8.3% YoY to US$ 38.2 bn. It is believed that imports grew for the first time in a year. Oil imports were up by 10.9% YoY (US$ 13.3 bn) while non-oil imports were up by 7% YoY to 24.9 bn. As reported by Reuters, gold imports jumped by 65% following the ease of rules to import gold. The same is believed to have played a big role in widening the deficit level. But whether the RBI reacts to this in the next monetary policy remains to be seen.