Benchmarks snap four days losing streak

Snapping four days losing streak, Indian equity benchmarks staged an enthusiastic performance on Tuesday, by rallying over a percentage point and breaking lots of psychological levels in their northward rally. Sentiments remained positive since beginning of the trade and there appeared not even an iota of profit booking in the session as the benchmarks managed to fervently gain from strength to strength as investors continued hunt for fundamentally strong but oversold stocks. The rally came mainly after Brent crude slipped below $114 a barrel on Tuesday, as data showing near-record high oil exports from Iraq indicated supplies remained unaffected by the escalating violence at the OPEC’s No. 2 producer.

Rally in gas utility stocks too aided the sentiments on reports that the government may soon finalise hike in natural gas prices and that the price hike will be lower than that as per a formula adopted by the previous UPA government that recommended doubling the price. Meanwhile, government has set deadlines for inter-ministerial consultation on Cabinet and Cabinet Committee notes, in order to expedite the decision making process. The Reserve Bank of India has released timelines for regulatory approvals and a citizens’ charter for delivery of services as part of implementation of the non-legislative recommendations of the Financial Sector Legislative Reforms Commission (FSLRC).

On the global front, Asian markets rallied on Tuesday as improved manufacturing data from China, Japan and the United States augured well for global growth, despite a disappointing result from the euro zone. Though, European markets were trading mostly in the red in early deals as disappointing euro zone business surveys revived concerns about the pace of economic recovery in the region.

Back home, there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too equally participated in the rally. Frontline indices managed to settle near intraday high levels with Sensex surpassing its crucial 25,350 bastion, while Nifty ended near its crucial 7,600 mark. Recovery in Indian rupee too supported the sentiments. The rupee firmed up against the US dollar and was trading at 60.10 at the time of equity markets closing as compared to Monday’s close of 60.20, tracking gains in domestic equity markets.

Meanwhile, shares of sugar companies like Bajaj Hindustan, Shree Renuka Sugars, Balrampur Chini Mills, Oudh Sugars, Ugar Sugar Works, Ponni Sugar Erode, Simbhaoli Sugars and EID Parry continued their upward march for the second day in a row on announcement of a series of measures for the sugar industry, including an increase in the import duty from 15% to 40%, to improve its financial health. Stocks related to textile space too edged higher as Union Textiles Minister Santosh Kumar Gangwar has said that textile exports are set to touch $50-billion mark in the current fiscal. Additionally, aviation stocks flied higher as crude oil prices eased amid speculation that Iraqi oil production won't be disrupted by escalating violence in OPEC's second-largest producer.

The NSE’s 50-share broadly followed index Nifty rose by around ninety points and ended near the psychological 7,600 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex rose by over three hundred and thirty points to finish above the psychological 25,350 mark. Broader markets too were trading with traction and ended the session with a gain of over one and a half percentage point. The market breadth remained in favour of advances, as there were 2,041 shares on the gaining side against 985 shares on the losing side while 123 shares remain unchanged.

Finally, the BSE Sensex soared by 337.58 points or 1.35%, to 25368.90, while the CNX Nifty surged by 86.85 points or 1.16%, to 7,580.20.

The BSE Sensex touched a high and a low of 25414.69 and 25115.83, respectively. The BSE Mid cap index was up by 1.59%, while Small cap index gained 1.64%.  

The top gainers on the Sensex were Gail India up by 4.56%, HDFC up by 2.81%, BHEL up by 2.48%, SBI up by 2.24% and Axis Bank up by 2.19%. On the flip side, the key losers were Sun Pharma down by 0.85%, Infosys down by 0.64%, Hindustan Unilever down by 0.01% and Wipro down by 0.01%.

On the BSE Sectoral front, Realty up by 3.16%, Consumer Durables up by 2.44%, Oil & Gas up by 2.17%, India Infrastructure Index up by 2.05% and PSU down by 2.04% were the top gainers in the space, while Healthcare down by 0.09% was the only loser in the space.

Meanwhile, the Independent Evaluation Office (IEO) has recommended the government to abolish the Planning Commission and constitute Reform and Solution Commission as a government think tank through an Act of Parliament. The IEO, which was set up by the Planning Commission in the previous year, assesses the effectiveness of government programmes, institutions and policies.

The IEO, in a draft note sent to the Prime Minister’s Office (PMO), has suggested the government that the powers of disbursing funds to the state governments should be given to the finance ministry, which is accountable to Parliament unlike the Plan Panel. The IEO suggested that Finance Ministry should disburse funds on the recommendation of Finance Commission, which already existed in country and has authority bestowed upon it by the constitution. Financial commission should be a permanent body responsible for the allocation of centrally-collected revenues to the states working with the help of a panel of advisors having domain-level expertise, the notification added.

Regarding the working of planning commission, the IEO noted that Plan Panel is susceptible to pressures from the PMO and exceeds the scope of its authority which leads to partial treatment in allocation of resources amongst the states. Further, Panning Commission consist mostly IAS officer having less domain knowledge, making the panel structure same as central ministries in way of its administration.

The CNX Nifty touched a high and low of 7,593.35  and 7,515.20 respectively.

The major gainers of the Nifty were GAIL (India) up by 4.75%, BPCL up by 4.70%, DLF up by 4.70%, Bank of Baroda up by 3.22% and NMDC up by 3.20%. On the flip side, the key losers were Kotak Mahindra Bank down by 1.74%, Sun Pharmaceuticals Industries down by 1.14%, Infosys down by 0.82%, UltraTech Cement down by 0.67% and Tech Mahindra down by 0.51%.

Most of the European markets were trading in red, Germany's DAX was down by 0.01% and United Kingdom's FTSE 100 was down by 0.29% while, France's CAC 40 was up by 0.13%.

The Asian markets concluded Tuesday’s trade in green, with the regional benchmark index poised to halt a two-day loss but gains remained limited as investors continued to monitor developments in Iraq. China’s stocks rose, sending the benchmark index to its biggest gain in a week, as renewed economic optimism overshadowed concern that new equity sales will divert funds from existing shares. Hong Kong stocks gained, with the city’s benchmark index rebounding after falling the most in three months yesterday, as technology shares rose. In Tokyo, the Nikkei ended higher as investors looked ahead to Prime Minister Shinzo Abe’s press conference scheduled later in the day, where he is expected to unveil the reform plans of his ‘third arrow’ strategy.

Indonesia’s Governor Agus Martowardojo stated that Bank Indonesia will keep tightening its monetary stance to the end of the year to cap the current-account deficit. His comments indicated the central bank’s priority to bring the current-account deficit to a sustainable level by maintaining high interest rates even at the expense of hurting economic growth. The Conference Board Leading Economic Index (LEI) for China increased 0.7% in May. The index stands at 290.2, following 1% increases in both April and March. Four of the six components contributed positively to the index in May while the Conference Board Coincident Economic Index (CEI) for China, which measures current economic activity, increased 0.7% in May to 259.7, following a 0.7% increase in April and a 1.5% increase in March. All five components contributed positively to the index in May.