Markets extend gains for the second straight day after a rangebound trade

Indian markets witnessed another day of positive close, their second successive one after a week of continued downbeat movement. Traders once again harped on the election result outcome and went for some value buying at lower levels. However, the markets were not very confident and trade remained rangebound with low volumes and after early gains bourses slipped lower and again made a recovery attempt in the final hours of trade. Rupee volatility too weighed on the sentiments and restricted the gains of the markets.

Though, there was not much from the global markets, as the US markets after a volatile trade managed a close of modest gains, while the Asian markets lacked any major action as some of the indices in the region remained closed and others showed lackluster performance. The European markets too made a soft start, extending their last two session’s weakness.

Back home, the local markets remained in a tight range throughout the day and traders mood pessimistic, lacking any major cue. There was some early gains on C Rangarajan, Chairman, Prime Minister’s Economic Advisory Council (PMEAC) statement that the country’s current account deficit (CAD) is expected to be around 2 per cent of the GDP in the coming few years. Further, the HSBC services business activity index inched up from 47.5 in March to 48.5 in April. While, Composite Output Index, which maps both services and manufacturing, increased from 48.9 in March to 49.5 in April, but remained below the crucial 50 mark. Private sector output in India fell for the second consecutive month in April, as manufacturing production rose at a softer rate and service sector output declined further. Meanwhile, result reactions kept the markets buzzing, HDFC came up with inline expectation numbers and posted a net profit of Rs 1723 crore in the quarter ended March 31, up 11 percent from Rs 1555 crore in the year ago period, however, its net interest income (NII) was below estimates. On the other hand, Vijaya Bank’s net profit fell by 39.39% to Rs 135.84 crore for the quarter ended March 31, 2014. Back on street, on the sectoral front most of the indices ended higher, Consumer Durables gauge surged by over 3%, while some somberness was witnessed in IT, Tech and power sector stocks. Broader indices too showed some choppy move but maintained their gains till last.

Finally, the BSE Sensex gained 63.30 points or 0.28%, to 22508.42, while the CNX Nifty added 15.95 points or 0.24% to 6,715.30.

The BSE Sensex touched a high and a low of 22602.71 and 22475.65, respectively. The BSE Mid cap index was up by 0.31%, while the Small cap index gained 0.46%.

The top gainers on the Sensex were RIL up by 1.91%, ICICI Bank up by 1.63%, L&T up by 1.24%, ITC up by 1.06% and Tata Motors up by 0.98%. While Bharti Airtel down by 1.71%, Tata Power down by 1.27%, Wipro down by 1.19%, HDFC down by 1.12% and Hero MotoCorp down by 0.98% were the top losers in the index.

On the BSE Sectoral front, Consumer Durables up by 3.22%, Oil & Gas up by 1.10%, Capital Goods up by 0.99%, Bankex up by 0.54% and FMCG up by 0.46% were the top gainers, while IT down by 0.51%, Teck down by 0.46%, Power down by 0.34% and Realty down by 0.05% were the only losers in the space.

Meanwhile, in order to revive the economic growth and reduce bad loans of banks, Industry body Assocham has suggested measures such as developing a strong corporate bond market, speeding up the implementation of infrastructure projects and a single-window clearance mechanism.

Expressing concerns over the deteriorating asset quality of banks, Assocham stated that it has become imperative to bring down non-performing assets (NPAs) of banks as the huge portfolio of restructured assets and NPAs has been exerting huge pressure on the country's financial system.  Increasing number of corporate debt restructuring cases is an indication of the growing difficulties faced by companies in meeting their financial obligations, it added. NPAs of state-owned banks rose 28.5 percent to Rs 2.36 lakh crore in September 2013 from Rs 1.83 lakh crore in March last year. Prevailing economic slowdown coupled with high interest rates in order to tame the inflation has led to a sharp deterioration in asset quality for the banking sector.

Regarding the infrastructure sector, Industry chamber emphasized need to sort out the issues related with the big infrastructure projects like constraints in mobilisation of financial resources, gestation lags, land acquisition issues and hurdles in obtaining statutory clearances.  Assocham also suggested the government to develop a strong and vibrant corporate bond market which could help in widening the scope of infrastructure funding. It also recommended a single-window clearance system with specific guidelines and time-bound approvals to fast track the implementation of mega infrastructure projects.

The CNX Nifty touched a high and low of 6,743.45 and 6,701.90 respectively.

The top gainers of the Nifty were IndusInd Bank up by 2.51%, ICICI Bank up by 2.11%, Reliance Industries up by 1.93%, Larsen & Toubro up by 1.48% and Tata Motors up by 1.24%. On the other hand, Power Grid Corporation of India down by 2.81%, Ambuja Cements down by 1.85%, Bharti Airtel down by 1.81%, Tata Power Company down by 1.46% and Wipro down by 1.32% were the top losers.

The European markets were trading in red, France's CAC 40 was down by 0.08%, Germany's DAX was down by 0.04% and UK’s FTSE 100 was down by 0.18%.

The Asian markets concluded Tuesday’s trade mostly in green, despite lingering concerns about a slowdown in China and on worries about the situation in Ukraine. Hong Kong and South Korea markets remained shut for the trade today on account of Buddha’s Birthday Holiday, while the Japanese market is closed for Greenery Day. New home sales in Shanghai fell to the lowest in 11 weeks as sluggish momentum continued to prevail among home buyers and real estate developers. The purchases of new residential properties, excluding government-subsidized affordable housing, dropped 35.9% week on week to 125,900 square meters. The average cost of the new houses, meanwhile, rose 6% from the previous week to 27,933 yuan ($4,505) per square meter. Taiwanese CPI fell to a seasonally adjusted annual rate of 0.16%, from 0.30% in the preceding quarter. Philippines CPI rose to a seasonally adjusted annual rate of 0.4%, from -0.1% in the preceding quarter.