Benchmarks resume northward journey on firm global cues

Resuming northward journey after a day of pause, Indian equity benchmarks ended the session with a gain of around one third of a percent, supported by firm performance of realty and consumer durables sector, although markets gave up large amount of gains towards the close as investors booked profits at higher levels. Overall, sentiments remained up-beat after UN World Economic Situation and Prospects (WESP) 2014 mid-year update, said that India’s economy would grow by 5 percent in 2014 and 5.5 percent in 2015  on stronger consumption and investment, up from 4.8 percent in 2013 and 4.7 percent in 2012. Some support also came in from currency front as rupee firmed up against the US dollar tracking gains in equities. The currency was at Rs 58.49 per dollar at the time of equity markets closing as compared to the previous close of Rs 58.77.

Supportive cues from US markets provided much needed support to local markets and sentiments remained up-beat on hopes of continued robust foreign buying in equities and debt after minutes of the U.S. Federal Reserve’s last meeting backed bets of a slower withdrawal of the stimulus. Asian markets ended mostly in the green after China reported better-than-expected factory data. The HSBC Flash China Manufacturing Purchasing Managers’ Index (PMI) recovered to 49.7 in May from April's final reading of 48.1, beating a Reuters’ poll forecast of 48.1. A weaker yen also helped boost sentiment for Japanese shares. European counters too were trading mostly in the green as minutes from the latest Federal Reserve meeting showed policy makers expect the inflation rate to remain below their target.

Back home, there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too participated in the rally. Meanwhile, the finance ministry was reported to propose a new plan for the incoming government for further fiscal consolidation. According to reports, the new plan which proposes to cut subsidies and welfare spending will reduce the current year’s fiscal deficit and save Rs 25,000 crore in borrowing.

Jewellery makers like Titan Company, Gitanjali Gems, PC Jeweller, Thangamayil Jewellery, Tribhovandas Bhimji Zaveri edged higher after the Reserve Bank of India (RBI) eased gold import rules by allowing select trading houses, in addition to already permitted banks, to procure the precious metal to boost exports. Additionally, Coal India surged to hit 52-week high on reports that the newly elected PM designate Narendra Modi is exploring to break up the company and opening up the sector to foreign investment.

The NSE’s 50-share broadly followed index Nifty gained by over twenty points to end comfortably above its psychological 7,250 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged over seventy points to surpass the psychological 24,350 mark. The broader markets outperformed benchmarks and traded jubilantly throughout the session, ending the trade by over two percentage points. The market breadth remained in favour of advances, as there were 2,269 shares on the gaining side against 744 shares on the losing side while 83 shares remain unchanged.

Finally, the BSE Sensex gained 76.38 points or 0.31%, to 24374.40, while the CNX Nifty was up by 23.50 points or 0.32%, to 7,276.40.

The BSE Sensex touched a high and a low of 24524.76 and 24326.48, respectively. The BSE Mid cap index was up by 2.11%, while the Small cap index rose by 2.31%.

The top gainers on the Sensex were NTPC up by 5.31%, Coal India up by 4.78%, Maruti Suzuki up by 4.44 %, SSLT up by 3.91% and Tata Power up by 3.27%. While Hindalco Inds down by 2.79%, BHEL down by 2.75%, Bharti Airtel down by 2.44%, HDFC down by 2.23% and Wipro down by 1.74% were the top losers in the index.

On the BSE Sectoral front, Consumer Durables up by 6.78%, Realty up by 5.54%, Power up by 2.20%, Metal up by 1.80% and PSU up by 1.80% were the top gainers, while Teck down by 0.47% and IT down by 0.31% were the only losers in the space.

Meanwhile, Indian economy is likely to grow at 5 percent in 2014 and record a slightly higher expansion of 5.5 percent in 2015 on the back of stronger consumption and investment, according to the UN World Economic Situation and Prospects (WESP) 2014 report.

At present, Indian economy is struggling with slowdown and its growth slowed down to a decade low at 4.5 percent in FY13 and 4.6 percent during the first three quarter of FY14. The factors like high interest rates, low investments and slow execution of infrastructure projects have been impacting the domestic economy. Indian economy’s growth is likely to remain at sub-5% level in FY14.

The UN report highlighted that average economic growth in the South Asian region is projected to pick up gradually to 4.6 percent in 2014 and 5.1 percent in 2015, up from near a two-decade low at 3.9 percent in 2013. The report added that several of the region's economies, including India have been witnessing significant improvement on macro- economic front. Further, moderating inflation, improving external balances and strengthening currencies are likely to provide impetus to these regional economies in the coming time. External demand is also projected to improve in 2014-15 as economic activity in developed economies gains momentum. However, structural impediments, including energy and transport constraints, political unrest and violence will remain major concerns to growth for South Asian regional countries. 

Further, the report added that global economy is expected to strengthen over the next two years, despite a downgrade of growth prospects for some developing economies. Growth of world gross product (WGP) is projected at 2.8 percent in 2014 and 3.2 percent in 2015, up from 2.2 percent in 2013. It noted that for the first time since 2011, the developed economies are all aligned towards positive economic growth over the next two years. Growth in developed economies is projected at 2 percent in 2014 and 2.4 percent in 2015.

The CNX Nifty touched a high and low of 7,319.55 and 7,258.15 respectively.

The top gainers of the Nifty were DLF up by 10.06%, NTPC up by 7.31%, Coal India up by 5.37%, SSLT up by 4.84% and Maruti Suzuki India up by 4.02%. On the other hand, Hindalco Industries down by 2.57%, HDFC down by 2.17%, Bharti Airtel down by 2.15%, BHEL down by 2.10% and Wipro down by 2.05% were the top losers.

Most of the European markets were trading in green, Germany's DAX was up by 0.16% and United Kingdom's FTSE 100 was up by 0.07%, while France's CAC 40 was down by 0.16%.

The Asian markets concluded Thursday’s trade mostly in green, following a positive reaction to the minutes of the Federal Reserve's April meeting. An index measuring manufacturing activity in Japan touched a two-month high, coming in at a seasonally adjusted score of 49.9 in May, that’s up from 49.4 in April, although it remains just below the mark of 50 that separates expansion from contraction. Moody’s Investors Service revised its outlook for China’s property market to negative from stable as it sees growth in home sales to slow notably, high inventory levels and weakening liquidity over the next 12 months. Separately, Shanghai expects a notable drop in new home supply in June as fewer residential projects will release units for sale. About 35 new residential developments, comprising 29 apartment projects and the rest villa developments, are set to launch locally next month, a monthly drop of 41.7% or an annual decline of 25.5%. China added 4.73 million jobs in the first four months of 2014, slightly more than the number created in the same period of last year. At the end of March, the country’s registered urban jobless rate was 4.08%. The rate was 0.03% higher than at the end of last year, but it was still considered to be a relatively low level.