Benchmarks pare gains after a gap-up opening

Indian equity benchmarks made a gap-up opening on Friday on the back of gains in rate sensitive sectors like banks, capital goods and realty. Though, frontline gauges pared most of their initial gains and are trading slightly in the green as the global markets are not in good shape. The US markets extended their bearish trend and ended lower once again in last session on getting disappointing retail sales data amid escalating violence in Iraq. Most of the Asian equity indices were trading in the red at this point of time.

Back home, markets continued to hold their nerves as some support came in after growth of industrial production (IIP) rebounded to 13-month high of 3.4 percent in April  after contracting for two consecutive months. Industry bodies have expressed their hopes that IIP returning to positive will lead to industrial recovery which is critical to lift the economy. At the same time, subdued prices of vegetables, cereals and dairy products pulled down the Consumer Price Index (CPI) to three-month low of 8.28 percent in May. Some support also came from meteorologists statement that it is too early to be worried about a below normal monsoon because monsoon showers could pick up in the coming weeks.

On the sectoral front, realty, power and capital goods witnessed the maximum gain in trade, while software, technology and fast moving consumer goods remained the top losers on the BSE. The broader indices too were trading in-line with benchmarks, while the market breadth on the BSE was positive; there were 1237 shares on the gaining side against 724 shares on the losing side while 68 shares remain unchanged.

The BSE Sensex opened at 25677.05; around 101 points higher compared to its previous closing of 25576.21, and has touched a high and a low of 25688.31 and 25570.04 respectively. The index is currently trading at 25617.08, up by 40.87 points or 0.16%. There were 16 stocks advancing against 14 declines on the index.

The overall market breadth has made a strong start with 60.97% stocks advancing against 35.68% declines. The broader indices too were trading in the green; the BSE Mid cap and Small cap indices up by 0.65% and 0.68% respectively. 

The top gaining sectoral indices on the BSE were, Realty up by 1.51%, Power up by 1.07%, Capital Goods up by 0.97%, Consumer Durables up by 0.85% and Bankex up by 0.79% while IT down by 0.59%, TECk down by 0.45%, FMCG down by 0.33% and Oil and Gas down by 0.19% was the few losers on the sectoral index.

The top gainers on the Sensex were BHEL up by 3.09%, Coal India up by 2.23%, HDFC Bank up by 1.76%, M&M up by 1.75% and Tata Power up by 1.40%. On the flip side, TCS was down by 1.52%, HUL was down by 0.79%, Hindalco was down by 0.68%, ONGC was down by 0.66% and ITC was down by 0.55% were the top losers on the Sensex.

Meanwhile, in the first expansion since January, India’s annual industrial output growth, measured by index of industrial production (IIP), grew at 13-month high at 172.1, which is 3.4% higher as compared to the level in the month of April 2013, on the back of strong growth in output of electricity sector. The street was widely expecting the IIP to expand by around 1.5% from the year before. The cumulative growth for the period April-March 2013-14 over the corresponding period of the previous year stands at (-) 0.1%.

Better than expected expansion of India's factory output in April was on account of strong show of electricity index, which occupies 10.32% weightage in the overall index, which grew by astonishing 11.9% at 178.1. Meanwhile, manufacturing sector, which occupies 75.52% weightage in the overall index snapping its weak run, grew by 2.6% at 180.7. Additionally, mining index that weighs 14.15% in the overall index too grew by 1.2% at 122.0 for the month under review as compared to April 2013. The cumulative growth in the three sectors during April-March 2013-14 over the corresponding period of 2012-13 has been (-) 0.6%, (-) 0.8% and 6.1% respectively.

On Use-based classification, capital goods production, a barometer for investments in the economy, in an encouraging development, too grew by massive 15.7% in April as against contraction of 12.5% in previous month. Further, Consumer durables and Consumer non-durables recorded growth of - 7.6% and - 3.3% respectively, with the overall growth in Consumer goods being (-) 5.1%.

This data, will definitely be heartening development for Narendra Modi government, which is looking to revive the economy, which slowed down to a quarter-century low of 4.7% in 2013-14. Further, this data also strengthens the case for Reserve Bank of India slashing rates over the next few policies, as indicated by Governor Raghuram Rajan in the second bi-monthly policy on June 3.

The CNX Nifty opened at 7,668.20; about 20 points higher as compared to its previous closing of 7,649.90, and has touched a high and a low of 7,678.50 and 7,643.40 respectively. The index is currently trading at 7,665.10, up by 15.20 points or 0.20%. There were 29 stocks advancing against 21 declines on the index.

The top gainers of the Nifty were BHEL up by 3.30%, Ambuja Cement up by 2.15%, Coal India up by 2.09%, HDFC Bank up by 1.84% and IDFC up by 1.68%. On the flip side, BPCL down by 2.25%, TCS down by 1.84%, Hindalco down by 1.00%, HUL down by 0.90% and MCDowell down by 0.66% were the major losers on the index.

Asian equity indices were trading mostly in the red; Nikkei 225 tumbled by 52.93 points or 0.35% to 14,920.60, KOSPI Index declined 26.99 points or 1.34% to 1,984.66, Straits Times was lower by 1.95 points or 0.06% to 3,291.06, Jakarta Composite 9.76 points or 0.20% to 4,924.65 and FTSE Bursa Malaysia KLCI was down by 0.20 points or 0.01% to 1,873.67.

On the flip side, Hang Seng soared 141.29 points or 0.61% to 23,316.31 and Shanghai Composite was up by 18.56 points or 0.90% to 2,070.27.