Benchmarks soar to day’s high; rail stocks ride the Modi bandwagon

Barometer gauges, gradually picking up pace after dipping to day’s low have now escalated to day’s high on continued optimism of robust foreign fund inflows following a landslide win for the BJP. Overseas investors, who have been the key reason for the current market rally, purchased equities worth Rs 3,635 crore (net) in the cash market on Friday, their biggest one-day investment this year. Meanwhile, the gains of local equity market were against the backdrop of negative global set-up. At day’s high, while Sensex was trading above the crucial 24,250 level, Nifty was at striking distance of 7250 level, with gains of over half a percent. Meanwhile, broader indices aggressively participating into the rally, were outperforming larger counter parts and were trading with gains of over 2.5%.

On the global front, Asian pacific shares were set for negative close on Monday after data from China at the weekend showed further signs of distress in housing as price gains decelerated in April. Meanwhile, European shares got off to flat-negative start with investors looking forward to comments from ECB Governing Council member Jens Weidmann and Executive Board member Yves Mersch later in the day for signals whether the European Central Bank will add stimulus at its June meeting.

Closer home, while most of the sectoral indices participated into the rally of Indian equity markets, stocks from Information Technology, Healthcare and FMCG counters were the weak spots of trade. Shares in Information Technology (IT) pivotal slumped after the rupee hits its strongest in 11 months against the dollar. These shares also plunged as investors churned their money to sectors with a domestic focus such as banks and infrastructure on hopes the government led by Narendra Modi will spark a recovery in the domestic economy. In non-sector gauge activity, Railway stocks were riding the Modi bandwagon, with all Texmaco Rail,Kalindee Rail Nirman, Titagarh Wagons, Kernex Microsystems and Hind Rectifiers rallying in the range of %-20% . The overall market breadth on BSE was in the favour of declines which thumped advances in the ratio of 1421:426; while 8 shares remained unchanged.

The BSE Sensex is currently trading at 24282.06, up by 160.32 points or 0.66% after trading in a range of 24427.10 and 24107.99. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 2.51%, while Small cap index up by 3.90%.

The gaining sectoral indices on the BSE were Public Sector Undertaking (PSU) up by 6.22%, Power up by 5.61%, Capital Goods up by 5.22%, Metal up by 5.12% and Realty up by 4.46%. On the flip side, IT down by 5.02%, Teck down by 3.55%, Healthcare down by 3.45%, and FMCG down by 3.11% were the losing indices on BSE.   

The top gainers on the Sensex were Coal India up by 9.21%, Tata Power up by 6.13%, ONGC up by 5.99%, NTPC up by 5.38% and Hindalco Inds up by 5.14%. On the flip side, TCS down by 5.98%, Infosys and Sun Pharma down by 4.92%, ITC down by 4.36% and Wipro down by 4.21% were the top losers on the index. 

Meanwhile, the Coal Ministry has extended the deadline to June 25 for companies submitting applications to participate in the competitive bidding for three mines in the region of Jharkhand and West Bengal. These three mines have an estimated 500 million tonnes of reserves, for captive use of steel, cement and sponge iron firms. Till now, the government has received 36 applications from various companies include Tata Steel and Jindal Steel in response to the tender for allotment of mines.

With an aim to enhance the domestic coal production, the government has recently set up a nine-member panel, which will identify more blocks in addition to already selected 54 mines, for sale through competitive bidding.  Presently, Coal India (CIL) is the only producer of domestic coal accounting for around 80 percent of the domestic production. CIL is also struggling to meet domestic coal requirements and its production fell 4.21 percent short of its production target at 462.53 million tonnes in FY14 amid some mining concerns.  Indian domestic coal demand is around 35 percent higher than domestic supply, resulting into a high deficit of which a huge part is being met by costly imports from Indonesia, South Africa and Australia.

Meanwhile, in order to meet India’s growing coal demand, the government has planned to allot coal mines directly to private players under public-private partnership (PPP) mode, which would also end the monopoly of public sector unit Coal India.

The CNX Nifty is currently trading at 7,246.55, up by 43.55 points or 0.60% after trading in a range of 7,290.35 and 7,193.55. There were 35 stocks advancing against 15 declining on the index.

The top gainers of the Nifty were Coal India up by 9.22%, PNB up by 7.95%, NTPC up by 6.61%, ONGC up by 6.18% and Tata Power up by 6.18%. On the flip side, HCL Tech down by 6.38%, TCS down by 6.05%, Sun Pharma down by 5.28%, Infosys down by 4.98% and ITC down by 4.19% were the major losers on the index.

Asian equity indices were trading in red; Hang Seng down by 0.38%, Shanghai Composite plunged 0.95%, and Nikkei 225 declined by 0.64%. While, Jakarta Index up by 0.05%, Taiwan Weighted added 0.13% Straits Times recouping all the losses was trading flat, with positive bias.

European shares got off to a flat-negative start; with United Kingdom’s FTSE 100 declining by 0.33%, France’s CAC 40 gaining by 0.01% and Germnay’s  DAX sliding by 0.10%.