Markets continue their strong run; Nifty sails comfortably past 7,300 levels

Steadily gaining ground, local equity markets have escalated to day’s high on sustained buying activities by funds and retail investors thanks to good macro-economic report which suggested of improved operating conditions for Indian manufacturers. Overlooking Q4 GDP data released on Friday evening, Indian equity markets have been on fire since early deals, with Sensex and Nifty now sailing past the crucial 24,500 and 7,300 levels respectively with gains of close to 1.50%. Meanwhile, broader indices also inline with larger counterparts are trading with profits of over 1.50%.

Markets have got boost from positive start of European markets, which have been buoyed by strong macro data from China that helped to allay concerns surrounding economic growth in the world's biggest metals consumer. Meanwhile, Asian markets were trading muted at this point of time, with most of the markets remaining shut for trade today for the Dragon Boat Festival.

Closer home, with the exceptions of stocks from Fast Moving Consumer Goods and Healthcare counters, most of the sectoral indices are trading positive. Nevertheless, prominent gainers are stocks from Capital Goods, PSU and Banking counters. Shares of state run banks witnessed some buying interest after reports suggested of Finance Ministry considering the option of transferring all PSU banks equity into a holding company. Additionally, Public oil marketing companies stocks, BPCL, HPCL and IOC are trading in green after diesel prices were hiked by 50 paise a litre, excluding state levies, the second increase in rates three weeks. The overall market breadth on BSE is in the favour of advances which have thumped declines in the ratio of 1732: 871; while 107 shares remained unchanged. 

The BSE Sensex is currently trading at 24552.93, up by 335.39 points or 1.39% after trading in a range of 24592.72 and 24270.20. There were 21 stocks advancing against 9 stocks declining on the index.

The broader indices continued to trade sanguine; the BSE Mid cap index was up by 1.68%, while Small cap index up by 1.52%.

The gaining sectoral indices on the BSE were Capital Goods up by 4.63%, PSU up by 2.45%, Banking up by 2.40%, India Infrastructure and Oil & Gas were up by 1.85%, Capital Goods up by 4.82%, Power up by 1.78%. While, FMCG down by 0.95% and Healthcare down by 0.57% were the losing indices on BSE.   

The top gainers on the Sensex were L&T up by 5.90%, SBI up by 3.55%, Axis Bank up by 2.83%, HDFC up by 2.67% and HDFC Bank up by 2.53%. On the flip side, HUL down by 1.44%, Sun Pharma down by 1.22%, ITC down by 1.10%, Wipro down by 1.01% and TCS down by 0.85%.

Meanwhile, in some encouraging news from India's factories, May data pointed to a slight improvement in operating condition as the production volumes at Indian manufacturers continued to rise, leading to further job creation across the sector. The HSBC India Manufacturing Purchasing Managers' Index (PMI), a measure of factory production, which is based on data from monthly survey of purchasing executives in over 500 manufacturing companies, stood higher at 51.4 in May from 51.3 in April, little higher reading above 50 water shed mark that segregates growth from contraction. The activity in the sector expanded for the seventh consecutive month in May, though the rate of expansion was unchanged from the modest pace registered in April.

Growth in both total new orders and new export business led to this small uptick, with the new orders sub-index, including domestic demand as well as orders from abroad, rising to 53.2 in May, a three-month high, from 52.5. Notably, the pace of incoming work marking a seven-month sequence of expansion, accelerated to the quickest since February. Meanwhile, new export business rose at a solid rate that was quicker than in April. Encouragingly, staffing levels were raised in May, amid evidence of increased production requirements.

On the inflation front, while the input costs continued to rise in May, albeit at the weakest rate in one year, output charges increased further. The rate of charge inflation was, however, marginal and weaker than the series average.

Manufacturing output in India, which accounts for about 16% of the overall economy, has been languishing of late. A prolonged slowdown in output from mines, utilities and factories has severely hurt growth. However, the recent momentum in the manufacturing sector albeit marginal, which points to improving operating condition, is on account of higher domestic and export order flows. But the latest PMI data show that India, now growing below 5 percent on an annual basis, is still grappling with an inflation challenge with output pricing still rising, making it difficult for Reserve Bank of India (RBI) to take down its inflation guard just yet.  

The CNX Nifty is currently trading at 7,331.25, up by 101.30 points or 1.40% after trading in a range of 7,342.70 and 7,239.50. There were 36 stocks advancing against 14 declining on the index.

The top gainers of the Nifty were L&T up by 6.34%, BPCL up by 4.27%, NMDC up by 3.85%, SBI up by 3.82% and PNB up by 3.23%. On the flip side, HUL down by 1.88%, Sun Pharma down by 1.62%, Wipro down by 1.44%, HCL Tech down by 1.25% and DR Reddy’s Lab down by 1.23% were the major losers on the index.

Asian equity indices were trading in green; Straits Times up by 0.11%, and Nikkei 225 spurted by 2.07%. While, Jakarta Index down by 0.03%. Taiwan, China and Hong Kong markets remained shut for the trade today for the Dragon Boat Festival.

European markets got off to positive start; with FTSE 100 gaining by 0.29%, DAX rising by 0.48% and CAC 40 adding 0.14%.