Benchmarks bounce off from day’s low; Nifty regains 7950 level

Bouncing off day’s low, benchmark equity indices were trading in fine fettle in afternoon deals tailing a positive start of European markets amidst expectation that US Federal Reserve will stick to its pledge of keeping interest rates lower. Nevertheless support which crept into markets after benchmark indices, Sensex and Nifty, breached the crucial 26,550 and 7,950 levels respectively, also aided the recovery of Indian equity markets.

Sentiment right from the start of trade Dalal Street remained upbeat on the back of positive regional counterparts, which rallied on reports that China's central bank has pumped more than $80 billion into the country's five biggest lenders, while traders also awaited a US Federal Reserve policy decision. 

Closer home, sectorally, much of the demand was witnessed by Information Technology counter, followed by Fast Moving Consumer Goods and Auto space. On the flip side, much of the beating was taken by stocks from Infrastructure space, followed by Metal and Consumer Durable counter. Metal stocks were beaten blue in trade for yet another session as China’s factory output grew at its slowest pace in six years. China is one of largest importers of metals. According to Wood Mackenzie, a global energy, metals and mining research and consultancy group, China will account for over half of world demand by 2017. In stock- specific activities, most of tyre stocks were trading upbeat led by the gains of JK tyre stocks which rallied over 6% after the company announced that Apollo Tyres Africa Proprietary, a wholly-owned step subsidiary of the company in South Africa, has voluntarily initiated business rescue proceedings. The overall market breadth on BSE was in the favour of declines which outnumbered advances in the ratio of 1725:1017; while 91 shares remained unchanged.

The BSE Sensex is currently trading at 26581.21, up by 88.70 points or 0.33% after trading in a range of 26511.71 and 26682.64. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.68%, while Small cap index down by 0.57%.

The gaining sectoral indices on the BSE were IT up by 1.37%, TECK up by 1.01%, FMCG up by 0.66%, Auto up by 0.20% and Realty up by 0.16% while, INFRA down by 1.05%, Metal down by 1.03%, Consumer Durables down by 0.93%, PSU down by 0.74% and Capital Goods down by 0.30% were the losing indices on BSE.

The top gainers on the Sensex were Hero MotoCorp up by 1.93%, Mahindra & Mahindra up by 1.83%, Infosys up by 1.71%, Wipro up by 1.59% and TCS up by 1.55%. On the flip side, Sesa Sterlite down by 2.49%, GAIL India down by 2.33%, Cipla down by 2.03%, Coal India down by 1.64% and Hindalco down by 1.28% were the top losers.

Meanwhile, in the face of rising imports of iron ore from international markets by Steel Industry on account of dwindling domestic supplies, Steel Ministry is now contemplating an option of withdrawing import duty of iron-ore, which would give some relief to steel companies facing raw material crunch.

India's iron ore production has come down to an all-time low of 144 million tonnes (MT) in FY14 from the peak level of 218 MT in FY10. The production is expected to drop further to a level of 90-95 MT in current fiscal. On account of paucity of iron-ore in the domestic market, JSW Steel has been importing around 0.5 MT monthly, while Tata Steel, which so far had never had any crunch to run its Jamshedpur plant due to iron ore shortage, may also follow suit after its Noamundi mine in Jharkhand was recently closed by the state.

In a related development, in a memorandum to Commerce Minister Nirmala Sitharaman, industry body Assocham too highlighted that drop in domestic iron ore production was forcing steel industry to import iron ore from international markets and suggested government of reducing import duty on iron ore to zero from the current levy of 2.5%. Besides, Miners' body FIMI also estimated of country importing around 15 MT of iron ore in current fiscal and become a net importer with just 8-9 MT exports.

Lastly, paucity of iron-ore in the domestic market and consequent imports might tarnish the prospect of many firms also hitting the prospect of having 300 MT capacity by 2025 from around 100 MT presently

The CNX Nifty is currently trading at 7961.35, up by 28.45 points or 0.36% after trading in a range of 7936.95 and 7990.65. There were 30 stocks advancing against 20 stocks declining on the index.

The top gainers on Nifty were United Spirits up by 2.31%, Cairn India up by 2.05%, Hero MotoCorp up by 2.02%, Infosys up by 1.88% and Mahindra & Mahindra up by 1.86%. On the flip side, Jindal Steel & Power down by 4.44%, BPCL down by 2.46%, Sesa Sterlite down by 2.40%, GAIL India down by 2.35% and Cipla down by 2.11% were the top losers.

Asian markets were trading mostly higher; with Shanghai Composite rising by 10.06 points or 0.44% to 2,306.61; Straits Times gaining 17.4 points or 0.53% to 3,290.02; KOSPI Index advancing by 19.69 points or 0.96% to 2,062.61; Jakarta Composite rallying 61.33 points or 1.2% to 5,191.84; Taiwan Weighted adding up 61.77 points or 0.68% to 9,195.17; Hang Seng firming up by 235 points or 0.97% to 24,371.01. On the flip side, Nikkei 225 trading lower by 22.86 points or 0.14% to 15,888.67 and FTSE Bursa Malaysia KLCI inching lower by 3.24 points or 0.18% to 1,844.06.

European markets got off to a mostly higher start; with UK’s FTSE 100 trading up by 22.37 points or 0.33% to 6,814.61; France’s CAC rising by 20.8 points or 0.47% to 4,429.95, however Germany’s DAX was trading lower by 26.7 points or 0.28% to 9,632.93