Post Session: Quick Review

Extending last session’s euphoria, Indian equity markets rallied to fresh record high for second consecutive session on Monday on hopes that exit polls would show Bharatiya Janata Party (BJP) and its allies winning a majority in five-week long elections, the results of which would be finally unveiled on May 16. Factoring in ‘235-245’ seats victory for the National Democratic Alliance (NDA), both Sensex and Nifty surging over two percent, settled past the life time highs 23,500 and 7,000 levels respectively. Meanwhile, broader indices also participated in the broad-based rally but not in the degree, as frontline indices, as both mid-cap and small-cap indices settled with gains of over only 3/4 of a percent. 

Notably, gains of local equity markets came amidst Ukraine anxiety after anti-Kiev rebels declared victory in a referendum on self-rule and also ahead of the release of crucial Consumer Price Inflation (CPI) data and Industrial Production (IIP) data due later in the session, the latest one before the RBI’s next monetary policy on June 3. While, CPI is estimated to have quickened to 8.48 per cent in April from 8.31 per cent in March, factory output in March probably contracted for the fifth time in six months.

Sentiment was also underpinned by better than expected trade deficit data, which was the first piece of good news for the economy in new financial year. Reversing two months of decline, India's exports grew 5.26% in dollars terms in April 2014 from a year ago, raising hopes that the improvement in the Current Account Deficit (CAD) in the last financial year will continue in the New Year.

On the global front, Asian stocks ended mixed on Monday, weighed down by Ukraine anxiety and after Chinese President Xi Jinping said the country needs to adapt to a “new normal” in the pace of economic growth. Over the weekend, pro-Russian separatists in eastern Ukraine declared victory in a secession referendum, increasing tensions between the West and Moscow. On the flip side, European shares were trading mostly into positive terrain, but tensions in Ukraine are likely to limit the market's strength.

Closer home, majority of the sectoral indices on BSE settled into positive territory, except for stocks from defensive Healthcare counters. Nonetheless, prominent gainers were stocks from PSU, Oil & Gas and Power counters, which rallied over 2.5% in the sanguine session of trade. Bank stocks gained across the board on renewed buying with HDFC Bank, IndusInd Bank, Kotak Mahindra Bank and Axis Bank hitting record high. ICICI Bank and Bank of Baroda hit 52-week high. Meanwhile, Oil marketing companies zoomed, with BPCL hitting record high level and HPCL rallying to 52 weeks high on hopes that these companies may soon hike diesel prices. Besides, IT stocks which ebbed in intra-day on rupee’s strength, too recouped all its losses and ended positive with gains of over half a percent. The overall market breadth on BSE settled in the favour of declines which thumped advances in the ratio of 1408:1364; while 157 shares remained unchanged. (Provisional)

The BSE Sensex settled at 23551.00, up by 556.77 points or 2.42% after trading in a range of 23572.88 and 23008.65. There were 25 stocks advancing against 5 stocks declining on the index. (Provisional)

The broader indices too settled with good gains; the BSE Mid cap index was up by 0.73%, while Small cap index was up by 0.51%.(Provisional)

The gaining sectoral indices on the BSE were PSU up by 3.18%, Oil & Gas up by 3.07%, Power up by 2.98%, Auto up by 2.88% and Capital Goods up by 2.78%, while, HealthCare down by 0.81% was the sole loser on BSE. (Provisional)

The top gainers on the Sensex were Coal India up by 7.04%, HDFC Bank up by 4.59%, Tata Motors up by 4.09%, Hero MotoCorp up by 4.01% and Maruti Suzuki up by 3.99%. (Provisional) On the flip side, Sun Pharma down by 1.73%, Cipla down by 1.26%, Hindalco Industries down by 1.52%, Wipro down by 0.14% and TCS down by 0.07% were the losers on the index. (Provisional)

Meanwhile, easing pressure on the country’s external sector as well as the rupee, India’s trade deficit contracted to $10.01 billion in April as compared to $10.51 billion in the previous month and $17.67 billion reported in the corresponding month of the previous year.

The contraction in trade deficit was credited to high exports which increased by 5.26% to $25.63 billion in the reported month from $24.35 in April 2013 mainly on the back of healthy growth in engineering, marine and leather goods shipments. Engineering, marine and leather goods exports during April recorded growth of 21.25 %, 42.18 % and 30.42 % respectively.

Furthermore, Indian imports too witnessed strong contraction at 15% to $35.72 billion in April from $42.02 billion in the same month of previous year. Contraction in domestic import was primarily driven by weak domestic demand and restrictions on gold imports that steepened the fall in non-oil imports to 21.5% y-o-y to $22.74 billion in the reported month. Gold imports last month declined by 74.13 % to $1.75 billion from $6.78 billion in April 2013 due to the stern Government’s norms like high customs duty of 10% and existing 80/20 rule under which 20% of all gold imports by importers has to be re-exported. Oil imports for the month of April also declined by 0.6 % to $12.98 billion as compared to $13.05 billion in the corresponding month last year.

Trade deficit, being an important component of current account deficit (CAD), raised hopes that the improvement in CAD in the last financial year will continue in the new fiscal year. In the FY14, the CAD is likely to improve to around 2% of GDP level as against the record high at 4.8% of GDP in FY13 on the back of improved trade deficit figure.

India VIX, a gauge for markets short term volatility expectation lost 1.59% at 37.10 from its previous close of 37.70 on Friday. (Provisional)

The CNX Nifty closed at 7,014.25, up by 155.45 points or 2.27% after trading in a range of 7,020.05 and 6,862.90. 43 stocks advanced against 7 declining ones the index. (Provisional)

The top gainers of the Nifty were Coal India up by 6.11%, Power Grid Corporation of India up by 4.75%, Grasim Industries up by 4.75%, HDFC Bank up by 4.64% and Hero MotoCorp up by 4.14%.  On the flip side, McDowell down by 2.72%, Sun Pharma down by 1.46%, Cipla down by 1.12%, Hindalco Industries down by 1.01% and Jindal Steel down by 0.65 were the major losers on the index. (Provisional)

The European markets were trading mostly in green; France’s CAC 40 was up by 0.22%, Germany’s DAX added 0.45% and UK’s FTSE 100 lost 0.10%.  

The Asian markets concluded Monday’s trade on a mixed note, as investors took their lead from record highs on Wall Street. Bank Indonesia survey showed that Indonesian consumers were less optimistic in April due to slowing domestic consumption in Southeast Asia’s largest economy. The consumer confidence index fell to 113.9 from the previous reading of 118.2. Indonesia’s two-year bonds gained, driving the sharpest drop in the yield in three weeks, as a narrower current-account deficit boosts bets the central bank is finished raising borrowing costs. China’s new yuan-denominated lending amounted to 774.7 billion yuan in April, less than 1.05 trillion yuan in March. On a year-on-year basis, the volume was down 17.6 billion yuan. Malaysian Industrial Production fell to a seasonally adjusted annual rate of 4.3%, from 6.7% in the preceding month. Japan’s Economy Watchers Current Index fell to a seasonally adjusted 41.6, from 57.9 in the preceding month while Japan’s Current Account fell to a seasonally adjusted -0.78T, from -0.04T in the preceding month.