Markets soar to day’s high on sustained buying activities; Nifty trades past crucial 7650 mark

Local equity indices, despite weak global cues have climbed to day’s high on fresh buying by funds and retail investors ahead of industrial production data for April and Consumer Price Index Inflation (CPI) for May to be released later in the day. Additionally, sentiments also got some support from International Monetary Fund (IMF)’s report which suggested of Indian economy recovering to potential growth 6.75%-7%. At day’s high, While Sensex was trading just shy of the crucial 25,600 mark, Nifty was comfortably sailing past the crucial 7650 level, with gains in the range of 0.35%-0.50%. Meanwhile, broader indices outperforming larger peers were trading with gains of over 3/4 of a percent.

On the global front, Asian shares slipped on Thursday after a retreat on Wall Street and escalating violence in Iraq delivered a one-two punch to risk appetite, which in turn kept oil prices near three-month highs. Meanwhile, European stocks fell from a six-year high as companies including Deutsche Lufthansa and Vallourec cut their profit forecasts. The sentiment also remained sour across the globe after World Bank cut its global growth forecast amid weaker outlooks for US, Russia and China, while calling on emerging markets to strengthen their economies before the Federal Reserve raises interest rates.

Closer home, gains of bourses were led by stocks from Realty Metal and Oil & Gas counters, while those from Technology counter was the sole loser on the index. While, Oil stocks, Reliance Industries and ONGC, gained on continued hopes of policy reforms in the sector by the newly elected Narendra Modi government, Realty too continued its gaining spree. Shares of public sector oil marketing companies (PSU OMCs) rose on reports the oil ministry was preparing a fresh proposal for the Cabinet to deregulate diesel price to reduce the government's fuel subsidy burden. The overall market breadth on BSE was in the favour of advances which thumped declines in the ratio of 1682:1157; while 86 shares remained unchanged.

The BSE Sensex is currently trading at 25599.80, up by 125.87 points or 0.49% after trading in a range of 25409.7 and 25611.3. There were 21 stocks advancing against 9 stocks declining on the index.   

The broader indices were trading in green; the BSE Mid cap index was up by 0.72%, while Small cap index up by 0.79%.   

The top gaining sectoral indices on the BSE were Realty up by 1.34%, Metal up by 0.87%, Oil & Gas up by 0.79%, Healthcare up by 0.73% and Consumer Durables up by 0.68%. While, TECK down by 0.14% was the only losing index on BSE.   

The top gainers on the Sensex were Hindalco Inds up by 3.14%, HDFC Bank up by 2.34%, HDFC up by 2.05%, ONGC up by 1.74% and Sun Pharma up by 1.63%. On the flip side, Bharti Airtel down by 2.46%, Axis Bank down by 1.44%, Coal India down by 1.18%, ICICI Bank down by 0.53% and Hindustan Unilever down by 0.46% were the top losers.   

Meanwhile, according to the International Monetary Fund (IMF), Indian economy is recovering to its potential growth rate at 6.75 to 7 percent. IMF’s Senior Resident Representative Thomas J Richardson has said that increasing investment over the past few months is providing impetus to economy and potential growth rate could go up over time. However, the IMF does not see any immediate V-shaped recovery for India.

T J Richardson further stated that India need to contain high inflation, which has been impeding the business sentiments in the country. To strengthen economic growth, India should continue to gradually bring down the fiscal deficit and usher in fuel subsidy reforms. Further, IMF’s Official said that it is important for India to continue the gradual process of bringing down fiscal deficit which will help reduce vulnerability to external shocks and make India more durable for international investors as well as for domestic investors. India’s fiscal deficit is likely to contain at 4.5 percent of GDP in the financial year 14, as compared to 4.89 percent of GDP in the FY13. T J Richardson suggested that in order to bring down the fiscal deficit, India’s government should implement subsidy reform in a way that it would not aggressively affect growth and broaden the tax base without adversely affecting business climate.

The IMF has projected the Indian economy’s growth at 5.4 percent in the current financial year and pick up to 6.3 percent in the next fiscal. Presently, India's economic growth stayed below 5 percent for the second year in a row at 4.7 percent during FY14. The factors like high interest rates, low investments and slow execution of infrastructure projects have been impacting economy’s growth.

The CNX Nifty is currently trading at 7652.85, up by 26 points or 0.34% after trading in a range of 7593.8 and 7655.00. There were 29 stocks advancing against 21 stocks declining on the index.   

The top gainers on Nifty were Hindalco Industries up by 3.26%, HDFC Bank up by 2.27%, NMDC up by 2.03%, HDFC up by 1.97% and Jindal Steel up by 1.84%. On the flip side, Bharti Airtel down by 2.67%, Axis Bank down by 1.46%, Coal India down by 1.24%, Ambuja Cements down by 1.23% and Bank of Baroda down by 0.83% were the top losers.   

Asian equity indices were trading in red; Shanghai Composite down by 0.16%, Hang Seng down by 0.36%, Jakarta Stock Index down by 0.80%, Nikkei down by 0.64% and Taiwan Weighted down by 0.27% to 9,204.65. While, Straits Times up by 0.16% was the lone gainer Among Asian pack.