Benchmarks trim gains; trade continues in green

After getting a gap-up start, Indian equities trimmed gains but continued to trade in green in the late morning session on sustained fund inflows on hopes of strong economic measures in the upcoming Union Budget. Sentiments got a boost as Manufacturing in India grew for an eighth consecutive month in June, according to the HSBC Holdings Plc and Markit Economics purchasing managers index. The gauge rose to 51.5, the highest level since February, from 51.4 in May. However, gains remained capped after output in eight important infrastructure industries, termed as the core sectors, grew at a four-month low of 2.3 per cent in May over a year before, compared to 4.2 per cent in April, with half of these seeing a contraction in production. At present, Sensex and Nifty were trading above the crucial 25,450 and 7,600 levels respectively, with gains of over 0.20%. The broader markets outperformed benchmark indices as investors turned their focus on fundamentally sound mid-cap and small-cap stocks as valuations in large-cap stocks seem stretched after yesterday’s rally.

Meanwhile, buying activity picked up in some oil marketing company stocks following a hike in petrol and diesel prices as the crisis in Iraq spooked international oil and currency markets. Moreover, stocks of power, capital goods, infrastructure and banking sectors continued to remain buyers' fancy on hopes of strong reforms for these sectors in the forthcoming Budget. In scrip specific development, L&T Finance Holdings was trading higher after the company said its board has approved to raise up to Rs 263 crore by issuing Cumulative Compulsorily Redeemable Preference Shares (CCRPS) on private placement basis. Moreover, Hindalco Industries has rallied up to 7% after CLSA upgraded the stock to buy from sell rating with a target price of Rs 215.

On global front, most of the Asian equity benchmarks were trading lower on the back of a somewhat flat close on Wall Street overnight. However, Japanese market surged over a percent on report that large Japanese companies across all industries plan to increase capital spending by 7.4 percent this fiscal year. Back home, selling witnessed in IT, teck and FMCG stocks dragged the markets lower. The market breadth on BSE was positive, out of 2383 stocks traded, 1525 stocks advanced, while 772 stocks declined on the BSE.

The BSE Sensex is currently trading at 25490.47 up by 76.69 points or 0.30% after trading in a range of 25536.22 and 25466.77. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.49%, while Small cap index up by 0.92%.

The top gaining sectoral indices on the BSE were Metal up by 2.69%, Auto up by 1.74%, Realty up by 0.97%, Capital Goods up by 0.78% and India Infrastructure Index up by 0.70%, while IT down by 0.75%, Teck down by 0.32%, Oil & Gas down by 0.19%, FMCG down by 0.10% and Healthcare was down by 0.09% were the losers on the sectoral index.

The top gainers on the Sensex were Hindalco up by 6.70%, Mahindra & Mahindra up by 3.23%,  Maruti Suzuki up by 3.11%, Tata Steel up by 2.78% and SSLT up by 2.77%. On the flip side, TCS was down by 1.05%, Wipro was down by 0.91%, Infosys was down by 0.78%, Sun Pharma was down by 0.52% and HDFC was down by 0.47% were the top losers on the Sensex.

Meanwhile, The core sector growth spike in April petered out in May as output of eight core industries decelerated to a four-month low to 2.3% from 5.9% in the same month a year ago on account of dismal performance by steel and power sector. Cumulative growth of the eight core industries during April-May rose by 3.3%.

The deterioration in performance of steel and electricity relative to the previous month were largely responsible for the drag of core sector, which has a combined weight of 37.90% in the Index of Industrial Production (IIP), in spite of improved performance of coal, fertilizers and cement. While, steel production shrank 2% as against a growth of 3.1% in April, electricity generation grew 6.3% as against 11.2% in April.

On the flip side, Fertilizer production grew by 17.6% during the month compared to 11.1% in April, similarly, coal production rose 5.5% during the month as against 3.3% a month ago and contraction of 3.3% during the same period last fiscal. Besides, Cement production also improved during the month, posting a growth of 8.7% against 6.7% in April.

The bad news on the core sector front comes at a time when rains during the month of June have been declared to be 43 per cent deficient. Notwithstanding, the poor show by the steel and electricity sector, the IIP for May is expected to do well, given the robust performance by other sectors like fertiliser and a favourable base effect.

The CNX Nifty is currently trading at 7,628.35 up by 17.00 points or 0.22% after trading in a range of 7,641.85 and 7,618.15. There were 32 stocks advancing against 18 declining on the index.

The top gainers of the Nifty were Hindalco up by 6.76%, M&M up by 3.29%, Maruti Suzuki up by 3.14%, Tata Steel up by 2.73% and SSLT up by 2.62%. On the flip side, Asian Paints down by 1.87%, TCS down by 1.29%, Wipro down by 1.23%, Infosys down by 1.10% and BPCL down by 0.84% were the major losers on the index.

Asian markets were trading mostly in the red; KOSPI Index slipped 0.26%, Straits Times declined by 0.53%, Jakarta Composite decreased 0.10%, Shanghai Composite tumbled by 0.19% and FTSE Bursa Malaysia KLCI was down by 0.27%. On the flip side, Nikkei 225 soared 1.14% and Taiwan Weighted was up by 0.56%.

The Hong Kong market remained shut for the trade today for Holiday.