Benchmarks start FY16 on strong note

First day of FY16 turned out to be a fabulous day of trade for the Indian equity markets, where frontline gauges garnered gains of over a percentage point. Hectic buying activity which took place during second half of trade mainly drove the markets higher, with frontline gauges ending at intraday high levels, recapturing their crucial 28,250 (Sensex) and 8,550 (Nifty) bastions. Earlier, domestic bourses traded listless for first half of the day’s trade near their previous closing levels as sentiments remained dampened on report that core sector growth dipped to a 17-month low in February at 1.4 per cent compared to 1.8 per cent in January, pulled down by contraction in the production of steel, fertilisers and refinery products.

However, sentiments took U-turn in later half of the session as market-participants opted to take positions in beaten down but fundamentally strong stocks. Some solace came with report that the government is believed to have met the fiscal deficit target of 4.1 percent of GDP for 2014-15, helped by last minute payment of Rs 10,808 crore by telecom companies for spectrum and tax receipts in March.

Positive opening in European counters too supported the sentiments. CAC, DAX and FTSE indices were trading in the green terrain in early deals, helped by data showing manufacturing activity across the euro zone accelerated faster than previously thought last month. However, Asian markets ended mostly in the red terrain led by Japanese Nikkei, down by 0.90%, as the Bank of Japan’s weaker-than-expected quarterly Tankan survey results.

Back home, there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too equally participated in the rally. Some support came in with reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 356.07 crore, while Domestic institutional investors (DIIs) bought shares worth a net Rs 283.71 crore on Tuesday, as per provisional data.

Meanwhile, rally in banking and pharma counters aided the sentiments. Stocks related to infra space too edged higher, as the government has approved amendments to the Public Private Partnerships (PPP) guidelines to enhance financial support to projects in infrastructure sector. Moreover, fertiliser stocks remained on buyers’ radar after the Cabinet Committee on Economic Affairs approved to supply gas at uniform delivered price to all fertilizer plants for production of urea through a pooling mechanism. Additionally, public sector oil marketing companies (OMCs) i.e. HPCL and IOC edged higher after further slide in global crude oil prices.

The NSE’s 50-share broadly followed index Nifty ended higher by around hundred points to end above its psychological 8,550 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex edged higher by over three hundred points to regain the psychological 28,250 mark. The broader markets too traded in-line with benchmarks and ended the session with a gain of around one and a half percent. The market breadth remained in favour of advances, as there were 2,009 shares on the gaining side against 695 shares on the losing side while 96 shares remain unchanged.

Finally, the BSE Sensex soared by 302.65 points or 1.08% to 28260.14, while the CNX Nifty surged by 95.25 points or 1.12% to 8,586.25.

The BSE Sensex touched a high and a low of 28298.34 and 27889.02, respectively. The BSE Mid cap index was up by 1.49%, while Small cap index was up by 2.35%.

The top gainers on the Sensex were Sun Pharma up by 5.51%, Tata Motors up by 2.65%, SBI up by 2.42%, ICICI Bank up by 2.41% and Hindalco up by 2.32%. On the flip side, Infosys down by 2.00%, Maruti Suzuki down by 1.53%, BHEL down by 1.34%, GAIL India down by 1.09% and Cipla down by 0.25% were the top losers.

The gaining sectoral indices on the BSE were Bankex up by 2.37%, Healthcare up by 2.31% Realty up by 1.62%, Infrastructure up by 1.59% and FMCG up by 1.34% while, IT down by 1.11% and TECK down by 0.50% were the losing indices on BSE.

Meanwhile the Commerce Ministry has initiated the exercise to facilitate ease of doing business for special economic zones (SEZs) to revive the interest of investors after Finance Ministry in the budget turned down request for removal of minimum alternate tax (MAT) and dividend distribution tax (DDT). Among several measures being contemplated, the Ministry plans to empower the Development Commissioners (DCs) of such zones to reduce paper work. The Ministry for this is also mulling to empower the unit approval committees (UACs) so that a developer or unit would not have to approach the Board of Approval (BoA) for permissions and approvals every time.

Currently, unit in SEZs have to approach the BoA, chaired by the Commerce Secretary, for small things like constructing additional gates or bringing a new co-developer. Nevertheless, these efforts by the ministry would definitely help in further strengthening the single window clearance mechanism of UACs headed by DCs.

Further, the ministry for deliberating upon the slew of measures would be convening a meeting of senior officials of the states including Maharashtra, Gujarat and Tamil Nadu. So far, 491 proposals for SEZs have been formally approved by the government. Presently, 199 zones are operational. The maximum of 36 SEZs are operational in Tamil Nadu, followed by 25 each in Karnataka, Maharashtra and Telangana, 19 in Andhra Pradesh and 18 in Gujarat.

The CNX Nifty touched a high and low of 8,603.40 and 8,464.75 respectively.

The top gainers on Nifty were Sun Pharmaceuticals Industries up by 5.67%, PNB up by 5.26%, IndusInd Bank up by 4.81%, Bank of Baroda up by 4.22% and Yes Bank up by 4.11%. On the flip side, HCL Technologies down by 3.77%, Infosys down by 2.13%, Bharat Heavy Electricals down by 1.87%, Maruti Suzuki India down by 1.60% and BPCL down by 0.84% were the top losers.

European Markets were trading in the green; Germany's DAX was up by 1.07%, France's CAC was up by 1.42% and UK's FTSE 100 was up by 0.96%.

The Asian markets closed mostly in red on Wednesday, with Chinese stocks closing higher. Companies struggled in China and much of the rest of Asia in March amid persistently weak domestic and global demand, suggesting that policymakers may have to resort to more stimulus to spur growth. Surveys of China’s manufacturing and services sectors showed persistent weakness in the world’s second-biggest economy in March, adding to bets that Beijing will have to roll out more policy support to avert a sharper slowdown. The official Purchasing Managers’ Index (PMI), edged up to 50.1 in March from February’s 49.9. In another sign that businesses faced lackluster demand, a separate survey of China’s services sector showed the official non-manufacturing PMI fell to 53.7 from February’s 53.9, hugging a one-year low of 53.7 struck in January. Thai CPI fell to a seasonally adjusted annual rate of -0.57%, from -0.52% in the preceding month. Indonesian Inflation rose to a seasonally adjusted 6.38%, from 6.29% in the preceding month. South Korea’s inflation rate dipped further in March to the lowest level in nearly 16 years as falling oil prices stoked deflationary fears. Consumer prices rose 0.4% in March from a year earlier -- compared to February’s 0.5%.