Benchmarks witnesses consolidation; eke out slender gains

Key domestic benchmarks managed to keep their head slightly above water on Tuesday, extending gaining streak for the fourth straight day. The bourses went through volatility where frontline gauges, after making a gap-up opening, slipped into red and alternately moved between positive and negative zone for most part of the session. Buying which emerged in late trade mainly acted as saving grace for domestic equity markets and helped them to eke out slender gains, as rally in software and index heavyweight shares like ITC and HDFC helped offset losses in oil shares.

Earlier, after a positive opening buying momentum picked up pace on sustained foreign funds inflows after credit rating agency Moody’s said the BJP-led NDA’s victory in polls is credit positive for India, as a stable central government is expected to address economic woes. Sentiments also remained up-beat on report that foreign institutional investors (FIIs) bought shares worth a net Rs 1350.04 crore on May 19, 2014, as per provisional data from the stock exchanges. However, reversing the early trend frontline gauges entered into red terrain in afternoon trade largely on emergence of profit-booking in recent gainers.

However, reversal of trend was witnessed amid profit booking at higher levels after last three consecutive sessions’ of bull-run. Sluggish opening in European counters too dampened the sentiments. European shares declined in early deals after Vodafone reported fall in its full year revenue due to lackluster performance in the company’s European markets. Asian markets shut shop mostly in the red weighed down by developments in Thailand, following news the army had declared martial law after six months of anti-government protests.

Back home, the rupee fell to 58.70 versus its previous close of 58.59/60, snapping a four-session winning streak, as a large state-owned bank is said to be buying dollars to meet demand for oil companies. Meanwhile, software exporters firmed up on bargain hunting activities after previous sessions’ drubbing. Moreover, shares of real estate and infrastructure companies rallied on the back of heavy volumes on expectations of change in policy environment. Unity Infrasprojects, Lanco Infratech, IL&FS Engineering and Constructions, Unitech, Oberoi Realty, Housing Development and Infrastructure (HDIL), Ansal Properties, Man Infraconstructions and Kolte Patil Developers rallied more than 10% each on the Bombay Stock Exchange (BSE). Additionally, stocks related to consumer durables sector remained on the buyers’ radar on hopes of an uptick in demand with the BJP-led NDA government promising to unveil reforms to boost economic growth.

The NSE’s 50-share broadly followed index Nifty gained around twelve points to end comfortably above its psychological 7,250 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex rose by over ten points to end above the psychological 24,350 mark. The broader markets outperformed benchmarks and traded jubilantly throughout the session, ending the trade by around two percentage points. The market breadth remained in favour of advances, as there were 2143 shares on the gaining side against 742 shares on the losing side while 104 shares remain unchanged.

Finally, the BSE Sensex added 13.83 points or 0.06%, to 24376.88, while the CNX Nifty was up by 11.95 points or 0.16%, to 7,275.50.

The BSE Sensex touched a high and a low of 24587.16 and 24299.53, respectively. The BSE Mid cap index was up by 1.74%, while the Small cap index rose by 3.06%.

The top gainers on the Sensex were SSLT up by 7.95%, BHEL up by 3.60%, Mahindra & Mahindra up by 3.57%, Tata Steel up by 3.49% and Infosys up by 3.19%. While Coal India down by 5.89%, ONGC down by 3.96%, RIL down by 3.73%, Hero MotoCorp down by 3.29% and Gail India down by 2.08% were the top losers in the index.

On the BSE Sectoral front, Realty up by 4.89%, Teck up by 2.40%, Consumer Durables up by 2.37%, IT up by 2.11% and Metal up by 1.61% were the top gainers, while Oil & Gas down by 3.26%, PSU down by 1.54% and Bankex down by 0.77% were the only losers in the space.

Meanwhile, the Confederation of Indian Industry's (CII) survey report highlighted land procurement, environment clearances, construction permits, industrial safety permits and power connection as the top five obstacles in starting a business. India continues to rank low in the World Bank’s ranking on the ease of ‘Doing Business’ for 2014. India’s position slipped to 134 against 131 in 2013 and placed lower than Brazil, Russia, China and South Africa.

The CII’s survey, which carried out in association with KPMG, noted that it has become imperative for India to have an environment that facilitates entrepreneurship, promotes investments productivity and growth for improving business climate in India. Stringent labour laws, problems in securing land and tax woes are among the critical issues that need to be addressed in order to attract global investors.

The report highlighted that most companies believe that the Indian direct tax regime is not conducive to fostering growth. 90 per cent of the respondents are in favor of reduction in tax rates, while 92 per cent feel there are challenges in transfer pricing assessments. Therefore a reduction in corporate taxes could provide impetus to growth of business. The CII further noted that taxation in India needs structural, operational and administrative reforms and the burden of tax compliance should be reduced besides enabling e-filing of all taxes, the report added. On land acquisition issue, the report added that companies keen on setting up a business in India need to undergo a time-consuming and tedious process, with the average time taken to acquire land being 14 months. The report indentified key areas for reforms which will enable doing business in India easier, including setting up of land acquisition, business, taxation and contract enforcement.

The CNX Nifty touched a high and low of 7,353.65 and 7,247.70 respectively.

The top gainers of the Nifty were SSLT up by 8.01%, NMDC up by 5.11%, BHEL up by 3.64%, Tata Steel up by 3.58% and Wipro up by 3.21%. On the other hand, Coal India down by 6.41%, ONGC down by 4.43%, Hero MotoCorp down by 3.73%, Reliance Industries down by 3.58% and Bank of Baroda down by 3.12% were the top losers.

The European markets were trading in red, France's CAC 40 was down by 0.37%, Germany's DAX was down by 0.20% and United Kingdom's FTSE 100 was down by 0.44%.

The Asian markets concluded Tuesday’s trade on a mixed note, with Hang Seng Index closing at a five-week high. Shanghai’s new home market continued on a weak trajectory last week despite a rebound in sales of mid- to low-end projects. The purchases of new residential properties, excluding government-subsidized affordable housing, rose 20.6% from the previous seven-day period to 150,800 square meters. The average price for the new homes was 25,860 yuan ($4,171) per square meter, a week-on-week decline of 3.4%. Japan’s All Industries Activity Index rose to a seasonally adjusted 1.5%, from -1.1% in the preceding month. Singaporean GDP fell to a seasonally adjusted 4.9%, from 5.1% in the preceding quarter.