Post Session: Quick Review

Cautiousness which gripped Dalal Street ahead of the mega event of Prime-Minister designate Narendra Modi’s swearing in-ceremony, kept the market-participants on the tenterhooks and led to a flat session of trade on Monday. Street keenly awaiting composition of Modi's cabinet, allocation of portfolios to the prime minister's office and his choice for finance minister, which is widely expected to go to Arun Jaitley, preferred cashing in profits.

Riding high on Modi wave in first half of session, markets suddenly collapsed in the last hour of trade, though some recovery thereafter followed but that was way little to pull the benchmarks higher. Meanwhile, broader indices which had been outperforming front-line indices for previous few trading session, witnessing heavy bouts of selling pressure, ended with colossal loss of over 2%.

On the global front, Asian shares ended on mixed note on Monday despite a strong session on Wall Street and a decisive win for billionaire Petro Poroshenko in Ukraine's presidential election. Nevertheless, losses were limited to some extent  on the back of good US housing data on Friday, with sales of new single-family homes rising more than expected in April and the number of houses on the market hitting a 3-1/2 year-high. Meanwhile, European markets traded mostly positive after European Central Bank (ECB) President Mario Draghi hinted of potential easing measures next week, and on upbeat German consumer confidence news.

Closer home, while stocks from Auto, IT and Technology counter were the major pillars of strength for local equity markets, those from Realty, Power and Consumer Durables were the weak links of trade. In stock specific activity, defence stocks, vis-à-vis, BEL, BEML, Pipavav Defence ,  BHEL  and  L&T, were on fire for the session on buzz that Narendra Modi would retain one of the most crucial defence ministry with himself, given his strong call for modernization of the armed forces during his poll campaign. 

Additionally, steel sector stocks, namely, Tata Steel, JSW Steel, SSLT, which were all trading in green in early trade, giving up most of their gains ended on a mixed note. The stocks witnessed some buying in the first half of session on hopes of sector friendly reforms by the new government. Reports suggests that in a presentation for the Cabinet Secretary, the steel ministry suggested that the new government should bring down stakes in steel PSUs to 51% ensure raw material security to steel makers and take steps to boost production among a dozen suggestions. Besides, shares of road developers, namely IRB Infra, JP Infratech, Ashoka Buildcon and  IL&FS Transport  surged after National Highway Authority of India (NHAI) on Friday, 23 May 2014, approval proposals for deferment of premium to NHAI. The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 1372:1647, while 110 scrips remained unchanged. (Provisional)

The BSE Sensex gained 23.53 points or 0.10% to settle at 24716.88. The index touched a high and a low of 25175.22 and 24433.90 respectively. Among the 30-share Sensex, 12 stocks gained, while 18 stocks declined. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 2.11% and Small cap index was down by 2.24%. (Provisional)

On the BSE Sectoral front, Auto up by 1.47%, IT up by 1.46%, TECK up by 0.81%, Capital Goods up by 0.56% and FMCG up by 0.23% were the gainers while, Realty down by 5.22%, Power down by 2.94% , Consumer Durables down by 2.00%, Oil & Gas down by 1.55%  and PSU down by 1.32%, were the losers in the space. (Provisional)

The top gainers on the Sensex were Mahindra & Mahindra up 7.94%, SSLT up by 4.69%, Wipro up by 3.81%, Tata Motors up by 2.83% and L&T up by 2.08%.  On the flip side, the key losers were BHEL down by 5.89%, Gail India down by 4.22%, Tata Power down by 3.92%, NTPC down by 1.12% and Hindalco Inds down by 3.29%. (Provisional)

Meanwhile, in order to boost the Indian financial sector, Finance Ministry has prepared a reforms agenda for the new government aimed at freeing up the financial sector which will put the country back on a high-growth trajectory. The Ministry’s draft includes proposals such as new monetary policy framework, a revamp of the stock and commodities markets, and implementation of recommendations made by the Financial Sector Legislative Reforms Commission (FSLRC). FSLRC had earlier suggested a uniform Indian Financial Code and limiting RBI's role to regulating banking operations, payment systems, monetary policy management and consumer protection.

Finance Ministry is also of the view that Commodities futures markets should be able to support price discovery of various commodities particularly in country's large farm sector. Therefore, it pitched for complete revamp of commodities and stock markets to deepen them. Further, the Finance Ministry has also sought for stricter measures to deal with non-performing loans. Ministry is of the view that recovery efforts will not make much progress unless banks' books are cleaned up and some innovative ideas are in the works to achieve this.

Gross NPAs of public sector banks rose to 4.44% of advances at the end of March as compared to 2.32% in the year ago. Delays in implementation of project due to hurdles like land and environment clearances during the past few years contributed to the rise in NPAs, particularly in the infrastructure sector. The ministry also recommended the new government to take realistic decision on Urjat Patel report on inflation targeting. The RBI’s panel led by Deputy Governor Urjit Patel has outlined inflation-targeting as part of the monetary policy framework and suggested central bank to bring down retail inflation to 6% by January 2016.

India VIX, a gauge for markets short term expectation gained 12.05% at 19.84 from its previous close of 17.70 on Friday. (Provisional)

The CNX Nifty lost 8.05 points or 0.11% to settle at 7,359.05. The index touched high and low of 7,504.00 and 7,269.05 respectively. Out of 50 stocks in Nifty, 18 stocks ended in the green and 32 in red.

The major gainers of the Nifty were M&M up 7.37%, SSLT up by 4.34%, HCL Tech up by 3.93%, Wipro up by 3.89% and Tata Motors up by 2.86%.  On the flip side, the key losers were DLF down by 6.03%, BHEL down by 5.84%, IDFC down by 5.34%, Bank Baroda down by 4.58% and Tata Power down by 3.92%. (Provisional)

Most of European markets were trading in green; France’s CAC 40 was up by 0.30% and Germany’s DAX was up by 0.87%.United Kingdom’s London Stock Exchange closed due to Late May Bank Holiday.

The Asian markets concluded Monday’s trade on a mixed note, with the regional gauge poised for the highest close in almost six months, tracking US markets and after a decisive win for billionaire Petro Poroshenko in Ukraine’s presidential election. Three of the Bank of Japan’s nine board members wanted to separately revise growth and inflation outlooks, including emphasizing downside risks and setting a timeframe for easing, minutes of the April 30 policy meeting showed. Takahide Kiuchi and Takehiro Sato repeated objections to the outlook that inflation will be raised to and anchored around 2% in 2015. According to the Shanghai Statistics Bureau, foreign direct investment in Shanghai expanded 8.3% from a year earlier in April to $1.74 billion. The pace slowed from an increase of 14.2% in March but was better than the national average of a 3.4% rise last month. Singaporean Industrial Production fell to an annual rate of 4.6%, from 12.1% in the preceding month.