Benchmarks continue firm trade in late morning session

Indian equity benchmarks continued to trade firm in late morning session on the back of slight improvement in HSBC Indian Manufacturing Purchasing Manager's Index (PMI), a measure of factory production in May. Besides, a firming trend on the other Asian markets also supported the upside. However, gains on the up-side capped as investors remained cautious ahead of the RBI's bi-monthly monetary policy review. Although the central bank is likely to keep rates steady, some traders expect some other forms of easing that can help spur growth. Some support also came in from reports that foreign institutional investors (FIIs) bought shares worth a net Rs 234.50 crore on June 2, 2014. Further, Metal stocks gained after positive manufacturing data in a private survey in China, the world's biggest consumer and producer of the metal. In scrip specific development, Zee Entertainment has surged after RBI allows up to 100% FII investment. On the other hand, Ashok Leyland declined on reporting 9% drop in May sales at 6,632 vehicles.

On the global front, most of Asian markets were trading in green as China's HSBC Manufacturing Index rose to a four-month high. A Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics was at 49.4 in May, up from 48.1 in April. Moreover, US stocks has ended record highs on Monday after a closely watched read on US manufacturing was revised to show more strength than initially indicated. Back home, traders were seen piling up positions in Metal, Consumer Durables and Capital Goods stocks, while selling was witnessed in FMCG, Bankex and IT sector stocks.

The market breadth on BSE was positive, out of 2237 stocks traded, 1405 stocks advanced, while 759 stocks declined on the BSE.

The BSE Sensex is currently trading at 24750.41 up by 65.56 points or 0.27% after trading in a range of 24781.39 and 24692.06. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.56%, while Small cap index was up by 0.73%.

The gaining sectoral indices on the BSE were Metal up by 1.84%, Consumer Durables up by 1.11%, Capital Goods up by 1.03%, PSU up by 0.77% and Oil & Gas up by 0.69%. While, FMCG down by 0.67%, Bankex down by 0.15%, IT down by 0.13% and Infrastructure down by 0.02% were the losing indices on BSE.   

The top gainers on the Sensex were Coal India up by 2.91%, NTPC up by 2.80%, Tata Steel up by 2.73%, SSLT up by 2.63% and Hero MotoCorp up by 2.01%. On the flip side, Dr Reddys Lab down by 1.53%, ITC down by 1.23%, Bharti Airtel down by 0.82%, Hindustan Unilever down by 0.76% and Wipro down by 0.42%.

Meanwhile, the core sector output in the month of April has surged mainly on the back of healthy production growth in electricity, fertilisers, cement and coal. The output growth of eight core industries grew by 4.2% in the month of April on yoy basis as compared to 2.5% in March and 3.7% recorded in the same month of previous year. The eight industries - crude oil, petroleum refinery products, natural gas, fertilisers, coal, electricity, cement and finished steel - have a weight of 37.9% in the overall Index of Industrial Production (IIP). The core sector output in April has surged mainly on the back of high production of electricity, fertilisers, cement and coal.

Among core sectors, Electricity generation having 10.32% weight in index registered a growth of 11.2% in April, 2014 over the same month of corresponding period. Steel and Coal sectors having weightage of 6.68% and 4.38% respectively in IIP index, registered a growth of 3.1% and 3.3% respectively, in the month under review over April 2013. Cement production having 2.41% weight in IIP index increased by 6.7 % in April, 2014 over April, 2013. Fertilizer production having weightage of 1.25% in IIP index increased by 11.1% in April, 2014 over April, 2013.

On the flip side, Natural Gas production having weight 1.71% in IIP index declined by 7.7% in April 2014 as compared to April, 2013. Crude Oil production having weight of 5.22 % in IIP index declined by 0.1 % in April, 2014 over April, 2013. Petroleum refinery production, representing 5.94% weight in IIP index registered de-growth of 2.2% in April, 2014 over April 2013.

During FY14, core industries’ cumulative growth slowed to 2.7% from 6.5% in FY13. Over the past two fiscal years, Indian economy is struggling with slowdown and the factors like high interest rates, low investments and slow execution of infrastructure projects have been impacting economy’s growth. India's economic growth stayed below 5 percent for the second year in a row at 4.7 percent during FY14 mainly owing to the decline in manufacturing and mining output. The growth in manufacturing sector declined by 0.7% yoy in FY14 compared with de-growth of 0.2% in FY13 on account of weak domestic demand. The mining and quarrying sector, which suffered the brunt of policy delays, shrank 1.4% yoy in FY14.

The CNX Nifty is currently trading at 7,375.70 up by 13.20 points or 0.18% after trading in a range of 7,390.90 and 7,362.25. There were 30 stocks advancing against 20 declining on the index.

The top gainers of the Nifty were Tata Steel up by 2.86%, Coal India up by 2.85%, NTPC up by 2.45%, Grasim up by 2.14% and SSLT up by 2.13%. On the flip side, HCL Tech down by 2.16%, Dr. Reddy's Laboratories down by 1.72%, IndusInd Bank down by 1.35%, ITC down by 1.10% and Bharti Airtel down by 0.87% were the top losers on the index.

Most of the Asian equity indices were trading in green; Shanghai Composite increased 0.11%, Hang Seng gained 0.53%, Jakarta Composite strengthened by 0.45%, KLSE Composite rose 0.27%, Nikkei 225 soared 0.82%, Seoul Composite climbed by 0.08% and Taiwan Weighted was up by 0.20%.

On the flip side, Straits Times was down by 0.16%.