Late hour buying help benchmarks to end flat

Indian equity benchmarks staged a smart recovery in last leg of trade on Monday and ended the session flat, pairing almost all of their early losses, supported by short-covering in beaten down but fundamentally strong stocks. Earlier, markets after a positive start entered into red terrain on the back of feeble global cues and extended their downfall to touch intraday lows. Sentiments also remained down-beat on report that foreign direct investment (FDI) in the services sector, which accounts for over 60 per cent to India’s GDP, declined by about 61 per cent year-on-year to $1.8 billion during April-January. Sentiments were also weighed down with HSBC survey report saying that private sector activity in emerging market economies fell for the fourth consecutive month in March. As per the report, while China posted a marginal decline for the second month running, India slipped back into contraction. The indices even went on to test important psychological 22,200 (Sensex) and 6,650 (Nifty) levels, but the key gauges got solid support around those intraday low levels as they convalesced from thereon.

Meanwhile, the main opposition Bharatiya Janta Party released its manifesto for the Lok Sabha polls with the pledge of ‘Ek Bharat - Shresth Bharat’. The party said its focus will be on economic growth, employment, e-governance, boosting tourism and simplification of tax regime, among other things.

Global cues remained sluggish with European markets opening mostly in the red and CAC, DAX and FTSE all were trading in the red in early deals. Most of the Asian markets ended in the red, with some of the indices snapping their nine-day gaining streak, led by Japanese market ahead of the Bank of Japan’s two-day policy meeting. Moreover, the US markets ended lower in previous session on getting mixed monthly jobs data, while the non-farm payroll employment rose, the unemployment rate remained same at previous month’s level.

Back home, buying which emerged in late trade mainly acted as saving grace for domestic equity markets and helped Sensex to re-conquer its crucial 22,300 level. Some support also came from report that Foreign Institutional Investors (FIIs) bought shares worth Rs 232.46 crore on April 4, 2014, as per provisional data from the stock exchanges. Rally in pharma space too aided the sentiments, led by over three percent rise in Sun Pharmaceutical Industries on report that the company has entered into definitive agreements to acquire 100% of Ranbaxy in a $4 billion all-stock transaction. The merger between the two companies will create India’s largest pharmaceutical company and the world’s fifth largest generics company. Shares of cement manufacturers too remained on buyers’ radar on expectations of higher profit growth for the quarter ended March 2014, on a sequential basis, due to pick-up in cement prices and demand.

The NSE’s 50-share broadly followed index Nifty edged marginally higher end just below the psychological 6,700 support level, however Bombay Stock Exchange’s Sensitive Index -- Sensex declined marginally to finish below the psychological 22,350 mark. Broader markets too struggled to get traction and ended the session mixed. The market breadth remained in favor of advances, as there were 1408 shares on the gaining side against 1,180 shares on the losing side while 103 shares remain unchanged.

Finally, the BSE Sensex lost 16.05 points or 0.07%, to settle at 22343.45, while the CNX Nifty was up by 0.70 points or 0.01% to settle at 6,695.05.

The BSE Sensex touched a high and a low of 22481.62 and 22197.51, respectively. The BSE Mid cap index was down by 0.45%, while the Small cap index gained 0.22%.

The top gainers on the Sensex were Sun Pharma up by 2.68%, SSLT up by 2.34%, Mahindra & Mahindra up by 1.26%, Tata Steel up by 1.01% and SBI up by 0.95%, while BHEL down by 3.32%, Cipla down by 1.84%, ICICI Bank down by 1.73%, Dr Reddys Lab down by 1.64% and Maruti Suzuki down by 1.20% were the top losers in the index.

On the BSE Sectoral front, Metal up by 0.24% and FMCG up by 0.14%, were the only gainers, while Realty down by 1.37%, Consumer Durables down by 1.24%, Power down by 0.69%, Bankex down by 0.40% and Healthcare down by 0.25% were the top losers in the space.

Meanwhile, allaying industry concerns over free trade agreements (FTA) with other nations, Commerce Secretary Rajeev Kher has asserted that the mega free trade agreement - Regional Comprehensive Economic Partnership (RCEP) is an important pact for India and industry should equip itself to avail the opportunities which would emerge from this agreement.

RCEP is an ASEAN-centred proposal for a regional free trade area, which would initially include the ten ASEAN member states and those countries which have existing FTAs with ASEAN - Australia, China, India, Japan, Republic of Korea and New Zealand. India has so far entered into FTAs with Japan, Singapore, South Korea, Malaysia, Asean and South Asia. RCEP negotiations were launched in Phnom Penh in November 2012 and would be implementation by the end of 2015.

Commerce Secretary stated that RECP would help the country to enhance exports and to avail the opportunities, the government in its forthcoming foreign trade policy (FTP) for the period 2014-19 would focus more on areas like standards and branding of products. Rajeev Kher also asked all the departments to get involved in the process of enhancing exports as most of the departments are not focused on exports except Department of Commerce and information technology. He further added that developed countries such as the US and Europe are coming out with new rules and norms which could acts as non-trade barriers (NTBs) for exports. During April-February FY'14, value of exports increased by 4.79% to $282.78 billion as against $269.86 billion in the same period of previous fiscal year.

The CNX Nifty touched a high and low of 6,725.15 and 6,650.40 respectively.

The top gainers of the Nifty were UltraTech Cement up by 3.11%, Ambuja Cements up by 3.02%, Sun Pharmaceuticals Industries up by 2.65%, NMDC up by 2.35% and SSLT up by 2.05%. On the other hand, Jindal Steel & Power down by 5.96%, BHEL down by 3.43%, DLF down by 3.15%, IDFC down by 2.32% and CIPLA down by 2.08% were the top losers.

The European markets were trading in red, France's CAC 40 was down by 0.60%, Germany's DAX was down by 1.07% and United Kingdom's FTSE 100 was down by 0.56%.

The Asian markets concluded Monday’s trade mostly in red tracking cues from Wall Street where stocks ended notably lower on Friday. Chinese markets remained shut for the trade today for Ching Ming Festival holiday. Japanese Prime Minister Shinzo Abe will review economic conditions in a more detailed fashion than he did last year before giving the green light for another consumption-tax increase. Japan raised its sales tax to 8% from 5% on April 1 after the PM made a final decision to do so last fall. The government plans to raise the tax further to 10% in October 2015. Indonesia’s consumer confidence index rose to its highest level since November 2012 amid expectations of an improving economy. Bank Indonesia’s consumer confidence index rose to 118.2 in March a 2-point increase from a month earlier and a 1.4-point increase from the same month last year. Taiwanese Trade Balance rose to a seasonally adjusted annual rate of 1.95B, from 1.57B in the preceding month.