Benchmarks manage to keep head above water; Nifty recaptures 7,500 mark

Key domestic benchmarks managed to keep their head above water on Friday with nifty recapturing its crucial 7,500 mark, while Sensex ended tad below its crucial 25,100 mark as investors opted to buy beaten down but fundamentally strong stocks, after two sessions of drubbing. Overall, sentiments remained up-beat 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. Meanwhile, amid weakening monsoon, Prime Minister Narendra Modi has asked for close coordination between the centre and states on implementing contingency plans to tackle the situation and prevent rise in food prices.

Positive opening in European counters too supported the sentiments with FTSE, DAX and CAC were trading higher in early deals despite some lackluster data from the region. However, all the Asian markets shut shop in the red, 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, gains remained capped as investors remained cautious on concerns that the weak monsoon would further accelerate inflation. Monsoons remained inadequate (31% below average) till 25th of June. The shortage of rainfall is bound to hurt farm output and spur inflation, thus reducing the scope for monetary easing by the central bank. Meanwhile, select shares related to Oil and Gas counter ended in red after the Modi-led government deferred the oil price hike yesterday. Also, there was some concern after a report that at least 11 people are feared killed and 15 suffered burn injuries in a big explosion at GAIL’s pipeline at Nagaram village in East Godavari district of Andhra Pradesh.

On the flip side, investors sought refuge in the defensive Pharma space with Ranbaxy Laboratories ended over 5% on reports of receiving the US Food and Drug Administration’s (US FDA) approval to sell a generic version of Novartis’s hypertension medicine, Diovan. Moreover, stocks related to software and technology counters too edged higher on the back of improving demand environment after Accenture Plc reported better-than-expected revenue for the third quarter ended May 31, 2014 because of higher demand for its consulting services.

The NSE’s 50-share broadly followed index Nifty rose by over fifteen points to end above its psychological 7,500 level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged around forty points to end tad below the psychological 25,100 mark. Broader markets too traded in the green and ended the session with a gain of around one third of a percent. The market breadth remained in favour of advances, as there were 1,715 shares on the gaining side against 1,281 shares on the losing side, while 114 shares remained unchanged.

Finally, the BSE Sensex gained 37.25 points or 0.15%, to 25099.92, while the CNX Nifty added 15.60 points or 0.21%, to 7,508.80.

The BSE Sensex touched a high and a low of 25209.61 and 25032.94, respectively. The BSE Mid cap index was up by 0.27%, while Small cap index gained 0.41%.

The top gainers on the Sensex were Sun Pharma up by 3.97%, TCS up by 3.85%, Cipla up by 2.59%, Wipro up by 1.90% and Dr Reddys Lab up by 1.80%. On the flip side, the key losers were Hindalco Inds down by 2.63%, BHEL down by 2.57%, Bharti Airtel down by 2.08%, SSLT down by 1.78% and Mahindra & Mahindra down by 1.69%.

On the BSE Sectoral front, Healthcare up by 2.48%, IT up by 2.45%, Teck up by 1.78%, Realty up by 0.80% and Consumer Durables down by 0.77% were the top gainers in the space, while Metal down by 1.30%, Auto down by 0.54%, PSU down by 0.52%, Bankex down by 0.46% and Capital Goods down by 0.36% were the top losers in the space.

Meanwhile, Association of Mutual Funds in India (AMFI) has stated that mutual funds are working hard to increase retail investor participation above the record Rs 10-trillion mark in assets under management (AUMs), which was achieved for the first time in May, 2014.

Significant numbers of retail participation has been witnessed in equity schemes in the previous month and AMFI’s effort to reach out to the retail segment and locations beyond Tier 2 and 3 towns has started showing results.

The retail participation has increased as more investors are opting for systematic investment plans (SIPs). According to the AMFI, the AUMs of Mutual fund players surged to Rs 10.11 trillion in May from Rs 9.45 trillion in April. While, there has been a 1 percentage point increase in retail participation from beyond top 15 (B-15) towns with the industry seeing net inflows from these geographies since November (barring March). Of 7,00,000 SIP folios opened in FY14, 53 percent came from B-15 towns.

Meanwhile, Reliance Mutual Fund’s 100 percent equity funds have outperformed the benchmark indices in the last six-month period. Also, 99.7 percent of the 18 equity funds managed by the company have outperformed the corresponding benchmark indices in the past one year.

The CNX Nifty touched a high and low of 7,538.75 and 7,482.30 respectively.

The major gainers of the Nifty were Tech Mahindra up by 4.09%, TCS up by 4.01%, Sun Pharmaceuticals Industries up by 3.87%, Power Grid Corporation of India up by 3.39% and Cipla up by 3.22%. On the flip side, the key losers were United Spirits down by 3.77%, UltraTech Cement down by 3.76%, BHEL down by 2.73%, Hindalco Industries down by 2.66% and Mahindra & Mahindra down by 2.13%.

The European markets were trading in green France's CAC 40 was up by 0.22%, Germany's DAX was up by 0.12% and United Kingdom's FTSE 100 was up by 0.18%.

The Asian markets concluded Friday’s trade mostly in red, with the benchmark index paring its seventh straight weekly gain, as a Federal Reserve official stated that US may raise interest rates by March. Japanese retail sales rose to a seasonally adjusted annual rate of -0.4%, from -4.4% in the preceding month. Japanese Household Spending fell to a seasonally adjusted -8.0%, from -4.6% in the preceding month. Tokyo’s core CPI, which excludes fresh food costs remained unchanged at an annualized rate of 2.8%. Japan’s unemployment rate fell unexpectedly last month. The Statistics Bureau stated that the percentage of the total work force that is unemployed and actively seeking employment during the previous month fell to a seasonally adjusted 3.5%, from 3.6% in the preceding month. Japan’s National Core CPI rose to a seasonally adjusted 3.4%, from 3.2% in the preceding month. Thai Industrial Production fell to a seasonally adjusted -4.1%, from -3.9% in the preceding month.