Markets stage splendid performance on firm global cues; Nifty recaptures 7,600 mark

Boisterous benchmarks showcased an enthusiastic performance on Monday, by rallying over one percentage point amid strong global cues. Sentiments remained up-beat since start as key bourses opened with decent gains 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 stocks. Frontline indices not only ended the session near intraday high levels but also recaptured their crucial 7,600 (Nifty) and 25,400 (Sensex) bastions as investors took to hefty across the board buying.

Sentiments remained jubilant on report that the new government may enhance the Plan expenditure for 2014-15 by around Rs 11,000 crore in the Budget next month, which would be about 2 per cent higher than what was provided in the previous fiscal’s budget. Some support also came from report that the CII Business Confidence Index (CII-BCI) for the April-June quarter of 2014-15 rose from 49.9 in the Q4 FY14 to 53.7 points in Q1FY15, above 50 mark that separates strong business sentiments from weak.

Global stocks surged on track for their fourth straight quarter of gains, as investors bet that a raft of U.S. and European economic data due this week will soothe recent worries over the pace of growth. European markets trade mostly in the green in early deals despite data showing that retail sales in Germany slowed unexpectedly in May to 1.9% over the last year and below expectations calling for a gain of 2.1%. Asian markets shut shop mostly in the green.

Back home, there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too participated strongly in the rally. Meanwhile, rally in shares of state-owned banks too supported the sentiments after the government decided to create a holding company structure for public sector banks before the Budget. Shares of public oil marketing companies, namely BPCL, HPCL and IOC too remained on buyers’ radar on lower Brent crude prices. Globally, Brent futures dipped towards $113 a barrel on Monday, adding to last week's fall as fears of a disruption to supplies from Iraq eased after government forces launched a pushback against a Sunni militant takeover of large areas of the country. Moreover, steel stocks too edged higher on report that Eastern region is set to push India's steel capacity with an investment of nearly Rs 9 lakh crore for creating an additional 160 million tonnes per annum (mtpa) capacity in the next 10-15 years.

The NSE’s 50-share broadly followed index Nifty gained by over one hundred points to end above its psychological 7,600 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged by over three hundred and ten points to end above its crucial 25,400 mark. The broader markets too traded jubilantly throughout the session and ended the session with a gain of over one and a half percentage points. The market breadth remained in favour of advances, as there were 2,130 shares on the gaining side against 927 shares on the losing side while 95 shares remain unchanged.

Finally, the BSE Sensex soared by 313.86 points or 1.25%, to 25413.78, while the CNX Nifty surged by 102.55 points or 1.37%, to 7,611.35.

The BSE Sensex touched a high and a low of 25460.96 and 25179.55, respectively. The BSE Mid cap index was up by 1.89%, while Small cap index gained 1.80%.

The top gainers on the Sensex were Sun Pharma up by 3.87%, Tata Power up by 3.81%, ONGC up by 3.08%, Dr Reddys Lab up by 2.43% and ICICI Bank up by 2.43%. On the flip side, the key losers were Bajaj Auto down by 1.02%, Mahindra & Mahindra down by 0.52%, Maruti Suzuki down by 0.47%, Tata Motors down by 0.25% and Wipro down by 0.16%.

On the BSE Sectoral front, Power up by 2.88%, PSU up by 2.62%, Capital Goods up by 2.18%, Infrastructure Index up 2.12% and Healthcare up by 1.80% were the top gainers in the space, while there were no losers in the space.

Meanwhile, in a move to promote pharmaceuticals industry, government is mulling reviving country's active pharmaceutical ingredient (API) or bulk drug market by formulating a separate policy, which could also cater to domestic requirements. This policy could be a shot in the arm given the timing as the demand for Indian APIs is going bigger and stronger in the US and Europe given the focus on quality and compliance. The Department of Pharmaceuticals (DoP), for this, will soon hold discussions with various stakeholders to prepare a white Paper for the policy.

While India previously was once a preferred destination for sourcing low-cost, good quality API for manufacturing pharmaceutical formulations, the global bulk drug market was globally taken over by China in the past few years by creating huge capacities. Besides, landed price of API from China in India is 15-20% less than its production cost here, making it more viable for companies to import.

Presently, the domestic API manufacturing industry, mostly based out of Hyderabad and Ahmedabad, currently accounts for 8-10% of India's Rs 79,000-crore pharmaceutical market. The rest comprises formulations.

The CNX Nifty touched a high and low of 7,623.65 and 7,531.60 respectively.

The major gainers of the Nifty were BPCL up by 5.32%, IDFC up by 5.30%, PNB up by 4.31%, Sun Pharmaceuticals Industries up by 4.03% and Tata Power Company up by 3.85%. On the flip side, the key losers were United Spirits down by 3.87%, Maruti Suzuki India down by 0.70%, Bajaj Auto down by 0.61%, Mahindra & Mahindra down by 0.48% and Tata Motors down by 0.40%.

Most of the European markets were trading in green Germany's DAX was up by 0.26% and United Kingdom's FTSE 100 was up by 0.05%, while France's CAC 40 was down by 0.18%.

The Asian markets concluded Monday’s trade mostly in green, with the regional benchmarks heading for the biggest quarterly rally since September. Shanghai Composite Index rose after the government cut reserve-requirement ratios for some banks and introduced mini-stimulus including infrastructure spending to prevent a property slowdown from endangering Premier Li Keqiang’s target of 7.5% growth this year. Annual growth in China’s industrial profits slowed to 8.9% in May to 512.7 billion yuan ($82.6 billion) from a year earlier, slowing from a 9.6% rise in April, the weakest pace this year, signaling challenges facing Chinese firms despite signs of stabilization in the economy. Taiwan’s dollar had the biggest quarterly advance in more than two years and stocks rallied as foreign investors boosted equity holdings amid optimism the island’s economic expansion is gathering pace. Thailand Trade Balance rose to a seasonally adjusted 1.63B, from 0.56B in the preceding month.

Japan’s unemployment rate hit a 16-year low in May, suggesting the economy will rebound in the third quarter from a sales tax hike and consequent slump in consumer spending. The jobless rate in the world’s third-largest economy fell to 3.5%, the lowest since 1997 and a level the Bank of Japan says is near full employment. At the same time, the availability of jobs rose to its highest level since 1992, good news for Prime Minister Shinzo Abe as he tries to cement a recovery after two decades of stagnation. Japan’s industrial production rose to a seasonally adjusted 0.5%, from -2.8% in the preceding month. Japanese Housing Starts fell to a seasonally adjusted -15.0%, from -3.3% in the preceding quarter.