Late hour buying help benchmarks to end positive

Indian equity benchmarks staged a smart recovery in last leg of trade on Monday and ended the session in green with modest gains, supported by short-covering in beaten down but fundamentally strong stocks. Nevertheless, traders remained cautious ahead of Consumer Price Index (CPI) data to be announced later in the day; however it is expected to ease to 7.2 per cent for the September as compared to 7.8 per cent reported in the month of August, helped by lower food and fuel costs. Earlier in the day, benchmark indices languished in the negative territory till early noon trades and even went on to test important psychological 26,100 (Sensex) and 7,800 (Nifty) levels, but the key gauges got solid support around those intraday low levels as they convalesced from thereon.

On the global front, European markets pared early losses and were trading in the green with marginal gains. Meanwhile, weak economic data from Germany continues to weigh on investors’ sentiment. However, Asian markets ended mostly in the red as promising trade numbers out of China failed to cheer a market still worried about faltering global growth.

Back home, appreciation in Indian rupee against dollar supported the sentiments. Some support also came after Finance Minister Arun Jaitley has given the go-ahead for a major overhaul of the current monetary policy framework wherein the Centre will specify ‘inflation targets’ for the Reserve Bank of India (RBI) to achieve and the RBI will set inflation as its top priority in its policy statements. However, gains remained capped after August industrial output disappointed street. Index of Industrial Product (IIP) rose by just 0.4 per cent in August, substantially below the expectation of 2.4 per cent. Meanwhile, JP Morgan lowered its India GDP growth forecast for 2014-15 to 5.1% from 5.3% because of weak factory output data.

Meanwhile, shares related to banking counter remained on buyers’ radar after IndusInd Bank reported better-than-expected numbers. The bank has posted a rise of 30.27% in its net profit at Rs 430.20 crore for Q2FY15 as compared to Rs 330.23 crore for the same quarter in the previous year. Total income too increased by 20.60% at Rs 2937.03 crore from Rs 2435.30 crore for the quarter ended September 30, 2013. Metal shares too edged higher on the back of encouraging trade data from China, the world’s largest consumer of metals. Additionally, Technology stocks gained for the second day after Infosys’ earnings on Friday that beat expectations. On the flip side, capital goods stocks ended lower amid weak August industrial production data. Industrial growth refused to pick up pace in August, falling to the lowest this financial year so far at 0.4% over a year earlier from a 0.5% in July.

The NSE’s 50-share broadly followed index -- Nifty -- rose by over twenty points to end near the psychological 7,900 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex – surged by over eighty points to finish near the psychological 26,400 mark. Moreover, broader markets too witnessed a volatile day of trade and ended the session with a gain of around half a percent. The market breadth remained in the favour of decliners, as there were 1,438 shares on the gaining side against 1,479 shares on the losing side while 111 shares remain unchanged.

Finally, the BSE Sensex gained 86.69 points or 0.33%, to 26384.07, while the CNX Nifty added 24.30 points or 0.31% to 7,884.25.

The BSE Sensex touched a high and a low of 26443.16 and 26092.69, respectively. The BSE Mid cap index was up by 0.48%, while the Small cap index gained 0.33%.

The top gainers on the Sensex were Tata Power up by 2.90%, Tata Steel up by 2.14%, Coal India up by 1.91%, Axis Bank up by 1.90% and TCS up by 1.54%. On the flip side, Mahindra & Mahindra down by 3.66%, Cipla down by 2.68%, Sun Pharma down by 1.86%, Dr. Reddys Lab down by 1.76% and BHEL down by 1.29% were the top losers in the index.

On the BSE Sectoral front Metal up by 1.37%, Bankex up by 1.35%, IT up by 1.17%, TECK up by 0.97% and PSU up by 0.77% were the top gainers, while Realty down by 1.79%, Healthcare down by 1.04%, FMCG down by 0.54%, Capital Goods down by 0.50% and Consumer Durables down by 0.09% were the top losers in the space.

Meanwhile, with an aim to enhance foreign investments and boost domestic manufacturing, the Government is likely to relax the foreign direct investment (FDI) policy for the cash-starved medical devices sector. An inter-ministerial panel includes members from ministries such as Commerce and Industry Ministry, Finance Ministry, the Health and Family Welfare Ministry and the Department of Pharmaceuticals are discussing views on the issue of FDI in medical devices sector.  

FDI in medical devices sector is permitted through government-approval route, however the industry has been demanding that FDI should be put under the automatic route. India badly needs foreign investments in medical devices and equipment sector. 

Industry is of the view that the domestic companies are not competitive as global firms and not big like drug firms and thus there is no threat of mergers and acquisitions from multi-national firms.

Medical devices include wide range of products such as implants sutures and surgical instruments. The present market size of the industry stands at around $7 billion. As per estimates, India imports about 70 percent of its requirement of medical devices. The industry size is about $7 billion in the country.

The CNX Nifty touched a high and low of 7,901.15 and 7,796.00 respectively.

The top gainers of the Nifty were Tata Power Company up by 2.72%, NMDC up by 2.40%, IndusInd Bank up by 2.09%, Tata Steel up by 2.00% and PNB up by 1.90%. On the other hand, Mahindra & Mahindra down by 3.80%, DLF down by 3.54%, Cipla down by 2.69%, Dr. Reddy's Laboratories down by 1.96% and Sun Pharmaceuticals Industries down by 1.83% were the top losers.

European markets were trading in green, France’s CAC 40 was up by 0.19%, United Kingdom’s FTSE 100 was up by 0.06% and Germany’s DAX was up by 0.37%.

Asian markets ended mostly in red on Monday, as investors worried about global economic health. Japanese market remained shut for the trade today on account of ‘Health-Sports Day’ holiday. Chinese exports increased 15.3% from a year earlier compared with the 12% median estimate. Imports rose 7%, against projections for a 2% decline, leaving a trade surplus of $31 billion. China will release inflation data on October 15, while money supply data is scheduled for today. Indonesia’s vice finance minister stated that the country’s current account deficit shrank in the third quarter of this year to around 3% of gross domestic product. The balance of payments will be a surplus of around $6 billion. The current account deficit was 4.27% of GDP in the second quarter. The government and Bank Indonesia expects a smaller deficit for full year 2014 of around 3.2% of GDP. Chinese Trade Balance fell to 31.00B, from 49.83B in the preceding month.