Markets scale fresh record highs; Sensex surpasses 22,700 mark

Boisterous benchmarks showcased an enthusiastic performance on Wednesday with bull taking full control of the session as investors continued hunt for fundamentally strong stocks. Earlier, markets after a gap-up opening traded in very tight-band for most part of the day but massive buying in last leg of trade mainly underpinned markets to clock record closing high. Sentiments remained up-beat as traders remained bullish about corporate India’s improvement in new orders and sales growth on a slew of project clearances undertaken by the government in recent months and the possibility of a stable government at the centre, post the Lok Sabha elections.

Marketmen also remained optimistic on International Monetary Fund’s (IMF) latest edition of the World Economic Outlook, stating that India’s growth is expected to recover from 4.4 percent in 2013 to 5.4 percent in 2014 supported by slightly stronger global growth, improving export competitiveness and implementation of recently approved investment projects. Hopes of BJP-led government coming to power too aided the sentiments.

Supportive cues from US markets too provided some support to local markets and sentiments remained up-beat on an IMF report saying that Stronger US growth this year and next will help the world economy withstand weaker recoveries in emerging markets. Asian markets too ended mostly in the green terrain, however, Japanese ended in the red after the yen surged on fading hopes of near-term stimulus from the Bank of Japan. Firm opening in European counters too supported the sentiments.

Back home, there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too participated strongly in the rally. Frontline indices ended the session near their day’s high levels with Sensex settling comfortably above their crucial 22,700 levels, while Nifty ended tad below the psychological 6,800 mark, as investors took to hefty across the board buying. The markets sentiment was also boosted by data showing that foreign funds remained net buyers of Indian stocks on April 7, 2014. Foreign institutional investors (FIIs) bought shares worth a net Rs 703.71 crore on Wednesday, as per provisional data from the stock exchanges.

Meanwhile, rally in banking stocks like Bank of Baroda, South Indian Bank, Indian Bank and Oriental Bank of Commerce supported the sentiments as certain broking firms have upgraded the banking sector to Neutral from Negative earlier on signs of a slight economic turnaround. Moreover, sugar stocks continued to remain on buyers’ radar as speculators indulged in creating positions, supported by summer season demand from bulk consumers amid fall in production. Additionally, aluminium stocks, viz Hindalco Industries, National Aluminium, Hind Aluminium Industries edged higher after global metal giant Alcoa Inc, which is also the largest US aluminium producer, forecasted stronger aluminum demand globally. Alcoa reported adjusted earnings of $0.09 cents per share, which was stronger than the $0.05 expected and $5.5 billion dollar revenue in Q1. 

The NSE’s 50-share broadly followed index Nifty rose by over hundred points to end near the psychological 6,800 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged by over three hundred and fifty points to finish above the psychological 22,700 mark. Broader markets too were traded with traction throughout the trade and ended the session with a gain of over one and a half percentage points. The market breadth remained in favor of advances, as there were 1873 shares on the gaining side against 877 shares on the losing side while 110 shares remain unchanged.

Finally, the BSE Sensex surged by 358.89 points or 1.61%, to settle at 22702.34, while the CNX Nifty gained 101.15 points or 1.51% to settle at 6,796.20.

The BSE Sensex touched a high and a low of 22740.04 and 22379.95, respectively. The BSE Mid cap index was up by 1.68%, while the Small cap index gained 2.01%.

The top gainers on the Sensex were Sun Pharma up by 6.91%, Axis Bank up by 4.44%, Tata Motors up by 4.40%, ICICI Bank up by 4.18% and Hindalco Inds up by 4.05%, while Infosys down by 1.16%, ONGC down by 0.95%, TCS down by 0.72% and Wipro down by 0.49% were the only losers in the index.

On the BSE Sectoral front, Bankex up by 3.45%, Metal up by 2.26%, Healthcare up by 2.21%, Realty up by 1.85% and Capital Goods up by 1.83% were the top gainers, while IT down by 1.09% and Teck down by 0.84% were the only losers in the space.

Meanwhile, India’s steel consumption grew at a four-year low rate of 0.6 percent in FY'14 to 73.93 million tonnes (MT) mainly impacted by a prevailing economic slowdown and high interest rates. As steel demand derived from construction and automobile sectors, the performance of the steel industry is therefore largely dependent on overall economic growth of the country. Steel consumption in the country grows by 1.2 to 1.3 percent of the GDP growth.Construction sector accounts for around 60 percent of the country's total steel demand while the automobile industry consumes 15 percent. Both sectors were plagued by a slowdown in the economy. Indian economy’s growth slowed down to a decade low at 4.5 percent in FY13 and 4.6 percent during the first three quarter of FY'14. Furthermore, financial year 2013 was also not good for the steel industry as well with steel consumption growing by a mere 3.3 percent on account of subdued demand.

However, domestic steel consumption grew by 5.5 percent in FY'12 and 9.9 percent in FY'11. Domestic steel consumption is likely to remain under pressure in coming future on account of ongoing economic downturn.

The government has been taking various measures to enhance the domestic steel demand. In previous month, it has relaxed the norms for import of steel and its products amid subdued domestic production. Over the past few years, domestic steel industry has been struggling with increased input cost, leading to decline in steel production. Further, low iron ore production, a main raw material for steel production, mainly in Goa and Karnataka region has not only hampered the capacity utilization of various steel players, but also led to significant rise in the cost of iron ore in the domestic market due to limited supplies.

The CNX Nifty touched a high and low of 6,808.70 and 6,705.10 respectively.

The top gainers of the Nifty were Sun Pharmaceuticals Industries up by 6.78%, Bank of Baroda up by 5.32%, Axis Bank up by 4.54%, Tata Motors up by 4.50% and PNB up by 4.02%. On the other hand, Tech Mahindra down by 3.01%, HCL Technologies down by 2.04%, Infosys down by 1.30%, ONGC down by 1.11% and TCS down by 0.87% were the top losers.

The European markets were trading in green, France's CAC 40 was up by 0.44%, Germany's DAX was up by 0.28% and United Kingdom's FTSE 100 was up by 0.72%.

The Asian markets concluded Wednesday’s trade mostly in green with a gauge of regional shares heading for the highest close in five months. South Korea’s won surged to the strongest level since 2008 versus the dollar. The IMF predicted global growth of 3.6% this year, compared with a January estimate of 3.7%. Japan, however, is forecast to expand just 1.4% next year, down from the IMF’s previous projection of 1.7%, and just 1% in 2015. Higher sales taxes are expected to weigh on growth. Growth in China, the world’s second-largest economy, is expected to continue its slowdown from its double-digit pace of a few years ago. That will have repercussions for many nations that export raw materials and parts to Chinese factories. China is projected to expand 7.5% in 2014 and 7.3% in 2015, down from 7.7% last year. South Korean Unemployment Rate fell to a seasonally adjusted annual rate of 3.5%, from 3.9% in the preceding month.