Markets pare initial gains after a good start

After making a good start, benchmarks have pared their initial gains but were managing to retain the green terrain, tracking positive global cues. Sentiments remained up-beat with the Europe India Chamber of Commerce (EICC) latest report stating that there is huge potential to boost the investment flow of European companies, who invested $198 billion in India between 2004 and 2013. Buying in IT stocks too boosted the markets sentiments after Nasdaq-listed software giant, Cognizant reported a 19.9% rise in its first quarter earnings for the quarter ending March to $2.42 billion. Further, Capital inflows by foreign funds and appreciating rupee also support the sentiments.

On the global front, the US markets made mostly a positive close in last session on easing tension in Ukraine after claims by Russian President Vladimir Putin that all Russian troops deployed along the border with Ukraine have been withdrawn. The Asian markets were trading in green taking cues from Fed chief Yellen’s remark that a high degree of monetary accommodation remains warranted in light of the considerable degree of slack that remains in labor markets.

Back home, on the sectoral front, Metal, Power and Health Care witnessed the maximum gain in trade, while Capital Goods and Consumer Durables were the top losers on the BSE. In scrip specific development, shares of FTIL and MCX were under pressure after FTIL promoter Jignesh Shah and his colleague Javalgekar were arrested last evening in connection with the Rs 5,600-crore payment fraud at National Spot Exchange (NSEL).

The market breadth on BSE remains positive with advances to declines in the ratio of 823:402. BSE Sensex and NSE Nifty were comfortably trading near their psychological 22,300 and 6,650 levels respectively.

The BSE Sensex is currently trading at 22359.33, up by 35.43 points or 0.16% after trading in a range of 22413.82 and 22354.13.There were 20 stocks advancing against 10 declines on the index. The broader indices were trading in green; the BSE Mid cap index was up by 0.36% and Small cap index up by 0.51%.

The top gaining sectoral indices on the BSE were, Metal up by 0.83%, Power up by 0.47%, Health Care up by 0.35%, Auto up by 0.30% and Realty up by 0.30%, while Capital Goods down by 0.50% and Consumer Durables down by 0.09% were the losers.

The top gainers on the Sensex were Cipla up by 2.23%, Hindalco Inds up by 2.10%, Tata Steel up by 1.20%, SSLT up by 0.78% and Tata Motors up by 0.71%. On the flip side, Gail India was down by 1.04%, L&T was down by 0.97%, Hero MotoCorp was down by 0.66%, Sun Pharma was down by 0.55% and Axis Bank down by 0.14% were the top losers on the Sensex.

Meanwhile, India’s steel consumption grew by 3.4 percent to 5.8 million tonnes in April 2014 over the same month a year ago. However, it witnessed a sharp 12.9 percent decline over the preceding month, indicating sluggish investment demand in the country. Domestic crude steel production grew by 2.7 percent to 6.8 million tonnes during the month from a year earlier. The major steel producer such as Tata Steel, SAIL, RINL, Essar Steel, JSW and JSPL together produced 3.7 million tonnes in April, while the remaining came from minor producers. Steel imports spurted by 14.1 percent to 0.494 million tonnes, whereas, exports increased by 13 percent to 0.461 million tonnes during the reported month.

As steel demand is derived from construction and automobile sectors, the performance of the steel industry is therefore largely dependent on overall economic growth of the country. Construction sector accounts for around 60 percent of the country's total steel demand, while the automobile industry consumes 15 percent of demand. Over the past two financial years, Indian steel industry is struggling with slowdown due to the weak steel demand. India’s finished steel consumption grew at a four-year low rate of 0.6 percent to 73.93 million tonnes in FY14 mainly impacted by a prevailing economic slowdown and high interest rates.

Domestic crude steel production increased marginally at 3.8 percent to 81.3 million tonnes in 2013-14. Along with weak demand, high input cost due to increased prices of raw material, such as iron ore has also become a main concern for domestic steel players, impacting their margins. The government has been taking various measures to enhance the domestic steel demand. Earlier in March 2014, it has relaxed the norms for import of steel and its products to boost domestic steel production and infrastructure development.

The CNX Nifty is currently trading at 6,666.75 up by 14.20 points or 0.21% after trading in a range of 6,680.85 and 6,661.20. There were 40 stocks advancing against 10 declines on the index.

The top gainers of the Nifty were Cipla up by 2.06%, Hindalco up by 2.03%, Tata Steel up by 1.40%, HCL Tech up by 0.93% and PNB up by 0.81%. On the flip side, GAIL down by 1.71%, L&T down by 1.15%, BPCL down by 0.77%, IDFC down by 0.46% and Sun Pharma down by 0.35% were the top losers on the index.

Most of Asian equity indices were trading in green; Shanghai Composite rose 22.32 points or 1.11% to 2,032.41, Hang Seng increased 118.04 points or 0.54% to 21,864.30, KLSE Composite jumped by 2.99 points or 0.16% to 1,863.4, Nikkei 225 spurted by 183.32 points or 1.31% to 14,216.77, Straits Times gained 13.54 points or 0.42% to 3,249.97, Seoul Composite added 3.08 points or 0.16% to 1,942.96 and Taiwan Weighted was up by 32.66 points or 0.37% to 8,925.88.

On the flip side, Jakarta Composite was down by 12.01 points or 0.25% to 4,850.06.