Benchmarks resume northward journey; Sensex recaptures 25,550 level

Indian equity benchmarks, resuming their northward journey after a day of pause, staged a decent performance on Thursday by rallying around half a percent, as investors opted to buy fundamentally strong but oversold stocks. Though, bouts of volatility were witnessed during the session with key benchmark indices slipping into the red couple of times, but indices managed to end comfortably above their previous closing levels. Overall, sentiments remained optimistic on report where IMF stated that increasing investment over the past few months is providing impetus to Indian economy and potential growth rate could go up over time. Indian economy is recovering to its potential growth rate at 6.75 to 7 percent.

Moreover, hopes of good macro-economic data too aided to the sentiments. The industrial production (IIP) is expected to rise in April to around 2 per cent from 0.5 per cent recorded in the month of March, while for the consumer inflation the street is expecting a marginal ease in May from 8.59 per cent recorded in April. However, gains remained capped on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 313.40 crore on June 11, 2014, as per provisional data from the stock exchanges. Sentiments were also weighed down after Indian Meteorological Department reported that monsoon rains were 48% below average levels in the week to June 11, reflecting the late onset of the annual rains over the southern Kerala coast.

On the global front, European counters made a firm start with CAC, DAX and FTSE all trading higher in early deals ahead of data on US retail sales and jobless claims data to gauge the health of world’s economy. However, Most of the Asian equity benchmarks ended the session in the red, led by the Japanese market after yen gained a third day amid speculation the Bank of Japan will refrain from expanding stimulus.

Back home, buying in oil and gas counter aided sentiments with Reliance Industries and ONGC, gaining on continued hopes of policy reforms in the sector by the newly elected Narendra Modi government. Additionally, shares of public sector oil marketing companies (PSU OMCs) edged higher on reports that the oil ministry was preparing a fresh proposal for the Cabinet to deregulate diesel price to reduce the government’s fuel subsidy burden.

On the flip side, select stocks from mining sector edged lower after a report released by Reserve Bank of India (RBI) stated that the mining sector experienced a marked fall in output growth rate in the 2000s, which is traceable to incremental domestic demand for crude oil being met from imports rather than domestic production. Moreover, sugar stocks viz. Triveni Engineering, Shree Renuka Sugar, EID Parry declined after a report that the Commerce Ministry is not looking at hiking import duty on sugar as it has not yet received any proposal in this regard.

The NSE’s 50-share broadly followed index Nifty ended higher by over twenty points to end tad below its psychological 7,650 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex edged higher by over one hundred points to regain the psychological 25,550 mark. The broader markets too were traded in-line with benchmarks and ended the session with a gain of around half a percent. The market breadth remained in favour of advances, as there were 1746 shares on the gaining side against 1356 shares on the losing side while 87 shares remain unchanged.

Finally, the BSE Sensex was up by 102.32 points or 0.40% at 25576.21, while CNX Nifty settled at 7,649.90, up by 23.05 points or 0.30%.

The BSE Sensex touched a high and a low of 25611.32 and 25409.69, respectively. The BSE Mid cap index was up by 0.52% and Small cap index was up by 0.36%.   

The top gainers on the Sensex were Hindalco up 3.78%, Sun Pharma up by 2.80%, HDFC up by 2.62%, HDFC Bank up by 2.37% and Maruti Suzuki up by 1.33%. On the flip side, the key losers were Bharti Airtel down by 3.57%, Coal India down by 2.31%, Axis Bank down by 1.90%, BHEL down by 1.17% and SSLT down by 0.75%.

On the BSE sectoral front, Healthcare up by 1.39%, Auto up by 0.60%, FMCG up by 0.46%, Realty up by 0.39% and Power up by 0.35% were the gainers while, Infrastructure down by 0.33%, PSU down by 0.20%, TECk down by 0.19%, Oil and gas down by 0.15% and Consumer Durables down by 0.02%, were the top losers in the space.

Meanwhile, India’s mining sector witnessed a marked fall in output during 2000s on account of country’s rising dependence on crude oil imports. The Reserve Bank of India (RBI) report, which is based on trends in output growth and labour productivity growth during 1980-2008 in six broad sectors, has highlighted that the output of mining sector has declined during the period 2000-2008 as increased domestic demand for crude oil was being met trough the imports rather than domestic production. 

Further, the RBI’s report noted that the sector like agriculture, mining and quarrying witnessed decline in productivity during period 2000-2008 as compared to period 1980-1999.   However, there has been a revival of productivity growth in many industries since 2000. Sectors such as manufacturing, electricity, gas & power and services showed improvements in total factor productivity (TFP), the report added. The growth of manufacturing sector stood at 6.13 percent per annum during the period under study.

The report further highlighted that the gross value added (GVA), which is the value of output minus the value of intermediate inputs, rose by about 2 percentage points between 1980-99 and 2000-08, showing a rise to 7.6 percent per annum during 2000-08 from 5.2% per annum during 1980-99. The broad sector such as manufacturing, construction and services experienced acceleration in value added growth rate between 2000 and 2008. Among these three sectors, construction sector showed high acceleration in value added growth with trend growth rate in real gross value added of construction increasing from 4.7% per annum during 1980-99 to close to 10% per annum from 2000- 08. Further, the report also found that during the period 1980-2008, the growth in persons employed was driven mainly by construction and the services sectors.

The CNX Nifty touched a high and low of 7,641.30 and 7,658.00 respectively.

The major gainers of the Nifty were Hindalco up 4.09%, Sun Pharma up by 2.95%, Power Grid up by 2.80%, HDFC Bank up by 2.49% and HDFC up by 2.21%. On the flip side, the key losers were Bharti Airtel down by 4.31%, Axis Bank down by 1.86%, Bank of Baroda down by 1.83%, Coal India down by 1.81% and BPCL down by 1.10%.

European markets were trading in red; UK’s FTSE 100 up by 0.16%, Germany’s DAX up by 0.11% and France’s CAC 40 was up by 0.21%.

The Asian markets concluded Thursday’s trade mostly in red, tailing cues from Wall Street where stocks ended weak overnight after the World Bank lowered its global growth forecast. Indonesia’s central bank will review interest rates today whereby Bank Indonesia is expected to keep its benchmark policy rate unchanged in order to maintain economic growth amid growing pressure on its exports. Japan’s currency held gains amid speculation that BOJ will refrain from expanding stimulus at a meeting that started today, after the European Central Bank introduced negative rates last week. Japan’s Core Machinery Orders fell to -9.1% compared to 19.1% in the preceding month.