Benchmarks trim gains; trade continues in green

Local equity markets, after paring some gains in early deals, gained some momentum on the back of fresh buying by funds and retail investors after beginning of new settlement for July series in the derivatives segment amid easing of global crude oil prices. Sentiments got some support after Reserve Bank of India (RBI) stated that prospects of economic recovery in India look bright following the formation of a stable government, though supply side issues need to be solved to help monetary policy bring down inflation. However, a weakening trend on the other Asian markets following overnight losses on the US bourses, limited the gains on the domestic markets. Further, some traders turned cautious on report that foreign institutional investors sold shares worth a net Rs 601.89 crore on June 26, 2014.

Sensex and Nifty were trading above the crucial 25,100 and 7,500 levels respectively, with gains of over 0.30%. Moreover, broader indices too were trading with decent amount of gains. In scrip specific development, shares of Ranbaxy Laboratories and Sun Pharmaceuticals Industries gained after the U.S. Food and Drug Administration approved the company's generic version of Novartis AG's blood pressure drug Diovan. Moreover, Kesoram Industries was trading higher by 5%, extending its previous day’s 8% rally, after the company announced the appointment of a committee to go into the issue of restructuring of its businesses. On the other hand, shares of Ashok Leyland declined over 3% after the company set floor price for its qualified institutional placement (QIP) at a discount to the ruling price.

On the global front, Asian shares were mostly in the red on Friday, weighed down by a weak performance on Wall Street and doubts about the strength of the U.S. economy, which pushed bonds higher. Back home, stocks from Healthcare, Information Technology and Consumer Durables counters were supporting the markets’ uptrend, while those from Realty, Metal and Auto counters were adding to the underlying cautious undertone. The market breadth on BSE was positive, out of 2306 stocks traded, 1473 stocks advanced, while 746 stocks declined on the BSE.

The BSE Sensex is currently trading at 25147.38 up by 84.7171 points or 0.34% after trading in a range of 25209.61 and 25096.55. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.36%, while Small cap index gained 0.75%.

The gaining sectoral indices on the BSE were Healthcare up by 2.16%, IT up by 1.74%, Consumer Durables up by 1.66%, Teck up by 1.24% and Oil & Gas up by 0.34%. On the flip side, Realty down by 0.41%, Metal down by 0.39%, Auto down by 0.20%, India Infrastructure Index down by 0.09% and PSU down by 0.07% were the top losers on the sectoral index.

The top gainers on the Sensex were Sun Pharma up by 4.24%, TCS up by 2.19%, Wipro up by 1.56%, Dr Reddys Lab up by 1.37% and Bajaj Auto up by 1.18%. On the flip side, BHEL down by 1.85%, Bharti Airtel down by 1.84%, Mahindra & Mahindra down by 1.67%,  Hindalco down by 1.57% and Coal India down by 0.93%.

Meanwhile, amid fears that weak monsoon could swell inflation further, Prime Minister Narendra Modi expressed the need for close coordination between the centre and states on implementing contingency plans. Narendra Modi stated that both the centre and states need to proactively mount a coordinated effort in implementing the advance action plan for the monsoon, with districts, rather than states, being the unit of planning. Adequate water, power and seed supply to be ensured to the farmers so that the production is not affected due to scant rainfall. On weak monsoon, Narendra Modi asserted that monsoon in the country has remained weak so far, but it is likely to improve substantially in the next two months. 

Prime Minister also asked states to set up fast-track courts to deal with hoarders and black-marketers. Steps taken to contain inflation have shown positive effect with adequate rice stocks reaching the markets and there is now no shortage of onion stocks in the national capital Delhi. Prime Minister also emphasized on ensuring adequate power and seed availability for the agricultural sector.

The Indian Meteorological Department (IMD), in its second-stage long-range forecast for the 2014 southwest monsoon, has highlighted that southwest monsoon may be remain below normal with the country likely to receive 93 percent of the long-period average (LPA) rainfall. Till June 17, the country has received 45 percent less rainfall in the first spell. Weak monsoon can hamper the supply of food articles which in turn will raise inflation in the country.  WPI inflation rose to five month high at 6.01% y-o-y in the month of May as against 5.20% in April. Inflation in food articles increased by 9.50% y-o-y in May as comparison to 8.64% in April.   

The CNX Nifty is currently trading at 7,519.35 up by 26.15 points or 0.35 % after trading in a range of 7,538.75 and 7,503.80. There were 29 stocks advancing against 21 declining on the index.

The top gainers of the Nifty were Sun Pharma up by 4.35%, HCL Tech up by 2.63%, TCS up by 2.43%, Tech Mahindra up by 2.26% and Lupin up by 2.08%. On the flip side, MCDOWELL-N down by 2.38%, Bharti Airtel down by 1.79%, M&M down by 1.78%, BHEL down by 1.77% and UltraTech Cement down by 1.68% were the major losers on the index.

Asian equity indices were trading in red; Nikkei 225 tumbled by 1.23%, Hang Seng declined 0.06%, KOSPI Index dropped 0.26%, Straits Times slipped by 0.27%, Jakarta Composite contracted 0.71%, Shanghai Composite shed by 0.05%, FTSE Bursa Malaysia KLCI dipped 0.43% and Taiwan Weighted was down by 0.11%.