7th pay hike, global cues lift Sensex 216 pts, Nifty above 8200

Moneycontrol Bureau

The market gained strength on Wednesday following rally in global peers on easing of Brexit concerns. Cabinet's approval for 7th pay hike and Model Shop & Establishment Act also boosted sentiment in later part of the trading session as investors expect both announcements to lift consumption growth.

The 30-share BSE Sensex gained 215.84 points or 0.81 percent at 26740.39 and the 50-share NSE Nifty was up 76.15 points or 0.94 percent at 8204. The broader markets marginally outperformed benchmarks as the BSE Midcap index rose 0.98 percent and Smallcap rallied 1.31 percent.

The sharp recovery in domestic as well as global markets after fading Brexit concerns and hopes of more reforms indicated that the Nifty can reclaim 8300-8400 soon, feel experts. They expect some volatility in Thursday's session on expiry of Nifty June derivative contracts.

Independent Analyst Anand Tondon said the Pay Commission implementation will act as key for the economic growth.

Vibhav Kapoor of IL&FS expects the Nifty to trend up by 100 basis points on the back of a good monsoon and the GST Bill getting passed.

European stocks continued their rally for the second consecutive session today as global markets realise that any change to the status quo in the European Union (EU) after the Brexit vote is unlikely to change in the short-term. Britain's FTSE, Germany's DAX and France's CAC were up 1.8-2.6 percent (at 16 hours IST). In Asia, China's Shanghai, Japan's Nikkei and Hong Kong's Hang Seng ended higher by 0.7-1.6 percent. Crude oil prices also climbed over a percent.

Meanwhile, the Cabinet today approved 7th pay commission recommendations and Model Shop & Establishment Act that will boost consumption growth of the country. To increase private participation in mining sector, it also cleared National Mineral Exploration Policy. The government also announced the dates for monsoon session of Parliament that will begin on July 18 till August 12.

Parliamentary affairs minister Venkaiah Naidu after Cabinet meeting said there are 11 bills pending in Lok Sabha and 45 bills in Rajya Sabha.

Auto, consumer discretionary and FMCG stocks will get major boost from 7th pay hike. Hero Motocorp topped the buying list on Sensex, up 4 percent after 7th pay hike. Maruti Suzuki, Tata Motors, Bata India, Asian Paints, Voltas, Blue Star and Kajaria Ceramics gained 1-4 percent.

Companies that have restaurants, malls and cinema halls will benefit the most from Model Shop Act. Jubilant Foodworks, Shoppers Stop, Speciality Restaurants, INOX Leisure, PVR and Aditya Birla Fashion surged 3-7 percent.

Ashapura Minechem, Sandur Manganese, Indian Metals, Maithan Alloys, Vedanta, GMDC and Orissa Minerals Development rallied 2-8 percent on approval for Mineral Exploration Policy.

Larsen & Toubro was up 0.6 percent. Engineering and infrastructure major's subsidiary L&T Infotech has decided to launch its 1.75 crore shares IPO on July 11 and fixed price band at Rs 705-710 per share.

IT stocks like Infosys, TCS and Wipro rebounded 1-2 percent after three-day fall due to UK's vote to leave the European Union.

Realty major DLF surged nearly 8 percent on a media report that suggested likely capital infusion by promoter to make the company debt free.

Among others, HDFC, ICICI Bank, NTPC, ONGC and GAIL gained 1.5-2 percent while ITC, Lupin, Coal India and Bharti Airtel fell marginally on profit booking.

The market breadth remained strong for the entire session as about 1849 shares advanced against 755 declining shares on the Bombay Stock Exchange.