Late hour buying help benchmarks to eke out modest gains

Indian equity benchmarks staged a smart recovery in last leg of trade on Tuesday and ended the session slightly in the green, pairing all their early losses, supported by short-covering in beaten down but fundamentally strong stocks. Domestic bourses reeled under selling pressure during most of the session as investors turned cautious on report of poor monsoons, after weather officials highlighted that this year’s monsoon rains have been deficient so far and the rainfall between June and September could be between 90 and 96% of the long-term average. Also President Pranab Mukherjee had said that the current economic situation is extremely difficult and expressed the government's commitment to put India back on high growth path, while containing inflation and making tax regime non-adversarial.

Buying which emerged in late trade mainly acted as saving grace for domestic equity markets and helped domestic gauges to re-conquer their crucial 7,550 (Nifty) and 25,650 (Sensex) bastions. Some comfort also came after Society of Indian Automobile Manufacturers (SIAM) reported that domestic passenger car sales grew by 3.08% to 1,48,577 units last month as compared with 1,44,132 units in May 2013. Moreover, total two-wheeler sales during the month grew by 16.3% to 14,02,830 units from 12,06,173 units in the same period of the previous year. 

Positive opening in European counters too supported the sentiments. FTSE and DAX edged higher with reports showing that industrial production in the UK and France matched street estimates. In the UK, a report from the Office for National Statistics showed that industrial output in Europe’s third-largest economy climbed 0.4% in April, while in France, a release showed that industrial output rose 0.3 percent in April. Moreover, Asian markets too ended mostly in the green terrain on the back of in-line expectation Chinese inflation data. China’s CPI in May rose 2.5% year-on-year, while PPI fell 1.4%.for May.

Back home, some support also came from report that foreign institutional investors (FIIs) bought shares worth a net Rs 536.68 crore on June 9, 2014, as per provisional data from the stock exchanges. Meanwhile, stocks related to software and technology counters edged higher on the back of depreciation in rupee against dollar. Moreover, FMCG stocks, which lost steam after Indian Meteorological Department (IMD) forecasted rains to be below normal this year as the chances of El Nino occurring during monsoon being very high, too recovered by the end of trade.

On the flip side, shares of public sector undertaking (PSU) banks edged lower on profit booking. Additionally, fertilizer sector stocks witnessed selling as it has been reported that there is still no proposal to increase urea prices. There will be some buzz in infra stocks on report that the Ministry of Environment, Forests and Climate Change is in talks with at least seven States, to discuss pending infrastructure projects.

The NSE’s 50-share broadly followed index Nifty ended slightly higher to end above its psychological 7,650 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex edged marginally higher to regain the psychological 25,650 mark. The broader markets too pared most of their initial losses and ended the session mixed. The market breadth remained in favour of advances, as there were 1834 shares on the gaining side against 1272 shares on the losing side while 88 shares remain unchanged.

Finally, the BSE Sensex was up marginally by 3.48 points or 0.01% at 25583.69, after trading in a range of 25711.11 and 25347.33, while CNX Nifty settled at 7656.40, up by 1.80 points or 0.02% after trading in a range of 7683.20 and 7579.30.

The BSE Sensex touched a high and a low of 25711.11 and 25347.33, respectively. The BSE Mid cap index was down by 0.27%, while Small cap index up by 0.26%.   

The top gainers on the Sensex were Cipla up by 2.73%, Infosys up by 2.76%, Wipro up by 2.73%, TCS up by 1.98% and Coal India up by 1.78%. While BHEL down by 2.87%, ONGC down by 1.74%, Tata Steel down by 2.60%, Hero MotoCorp down by 2.32% and SSLT down by 2.29% were the top losers in the index.

On the BSE Sectoral front, Consumer Durables up by 3.55%, IT up by 2.32%, TECk up by 1.98%, Healthcare Index up by 1.97% and FMCG up by 0.12% were the top gainers, while Realty down by 2.96%, PSU down by 1.28%, Oil and Gas down by 0.96%, Capital Goods down by 0.90% and Infrastructure down by 0.90% were the only loser in the space.

Meanwhile, the Reserve Bank of India (RBI) has eased customer verification norms for opening bank accounts. As per RBI’s new norms, the customers need to submit only one documentary proof of address either current or permanent while opening a bank account or while undergoing periodic updation. The move is likely to help migrant workers and employees with transferable jobs, who at present face cumbersome procedure to access banking services.

The central bank notified that in case the address mentioned as per 'proof of address' undergoes a change, fresh proof of address may be submitted to the branch within a period of six months. If the customer is not able to furnish local proof of address, the bank may take a declaration of the local address on which all correspondence will be made by the bank with the customer. Further, the RBI’s notification added that no proof is required to be submitted for correspondence/local address and may be verified by bank through positive confirmation such as acknowledgment of receipt of letter, cheque books, ATM cards, telephonic conversation. In case, there is a change in address, customer may intimate the new address for correspondence to the bank within two weeks of such a change. The RBI has also asked banks to revise their KYC policy and ensure strict adherence to the revised guidelines.

The central bank decided to simplify the rigorous KYC norms after being approached by people facing problems while submitting current/permanent address proofs. Meanwhile, the RBI’s move is also expected to help the financial inclusion drive by banks.  Indian banking industry is the most dominant segment of the country’s financial sector and plays an important role in the economic development of the country. Banks help to boost economic growth by allocating savings to investments that have potential to yield higher returns.

The CNX Nifty touched a high and low of 7,683.20 and 7,579.30 respectively.

The top gainers of the Nifty were Infosys up by 3.17%, Tec Mahindra up by 2.72%, Wipro up by 2.69%, Cipla up by 2.64% and Cairn up by 2.28%. On the other hand, DLF down by 3.63%, Grasim down by 3.37%, Ambuja down by 3.14%, BHEL down by 3.08% and Tata Steel down by 2.91% were the top losers.

The European markets were trading mostly in green, United Kingdom's FTSE 100 was up by 0.17% and Germany's DAX was up by 0.14%, while France's CAC 40 was down by 0.45%.

The Asian markets concluded Tuesday’s trade mostly in green, after Chinese inflation quickened to the fastest pace in four months amid optimism that country's policy makers will act to counter the nation’s economic slowdown. The People’s Bank of China announced a cut in reserve requirements for some banks, with leaders in Asia’s largest economy seeking to bolster domestic demand amid slowing growth. China's consumer prices rose by 2.5% in May from a year earlier after expanding 1.8% in the previous month. The government has set a full-year target of 3.5% inflation, which leaves room for more monetary easing. Chinese PPI rose to an annual rate of -1.4%, from -2.0% in the preceding month.

Japan’s M2 Money Stock fell to a seasonally adjusted 3.3%, from 3.5% in the preceding month whose figure was revised up from 3.4%. Japanese tertiary industry activity index fell to a seasonally adjusted -5.4%, from 2.4% in the preceding month. Philippines' Industrial Production rose to a seasonally adjusted annual rate of 12.8%, from -1.1% in the preceding month.