Benchmarks end at day’s high; Nifty recaptures 8,300 mark

Boisterous benchmarks showcased an enthusiastic performance on Monday, by rallying one and a half percentage point amid strong global cues. Sentiments remained up-beat since start as key bourses opened with huge gap on up-side 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 8,300 (Nifty) and 28,500 (Sensex) bastions as investors took to hefty across the board buying.

A rate cut by China and uplifting US jobs data kept the momentum going for the markets. The government’s decision to ease its combative stance on MAT demand along, accompanied by a decline in global crude oil prices, hopes of a rate cut by Reserve Bank of India and the likelihood of a normal monsoon further boosted investor sentiment. Some support also came with Finance Minister Arun Jaitley’s statement that India’s economy grew an estimated 7-7.5 percent last fiscal year and will keep growing this year, but the government will have to invest more in agriculture to keep up the momentum.

On the global front, European counters were trading mostly in the red in early deals as lingering concerns over Greece’s debt situation pegged back the region's stock markets. Asian markets ended mostly in the green terrain as China announced third rate cut in six months to push forward its slowing economy. US stocks gained on stronger-than-expected jobs report for the month of April.

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. On the macro-economic front, data on inflation based on consumer price index (CPI) for April will be unveiled on Tuesday. On the same day, industrial production (IIP) data for March will also be released. Moreover, wholesale price index (WPI) data for April will be announced on Thursday.

Meanwhile, rally in shares of Metal and mining space too supported the sentiments after China cut interest rates for the third time in six months on Sunday, 10 May 2015 to stimulate growth. China is the world's largest consumer of steel, copper and aluminum. Financial shares also edged higher in today’s session on hopes of a rate cut by Reserve Bank of India (RBI) as retail inflation is expected to remain below 6% i.e. within the comfort zone of the central bank. Stocks related to Auto sector too remained on buyers’ radar on reports that domestic passenger car sales grew 18.14% to 1,59,548 units in April this year compared with 1,35,054 in the same month of 2014.

The NSE’s 50-share broadly followed index Nifty gained by over one hundred and thirty points to end above its psychological 8,300 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged by over four hundred points to end above its crucial 28,500 mark. The broader markets too traded jubilantly throughout the session and ended the session with a gain of around one and a half percentage point. The market breadth remained in favour of advances, as there were 1,760 shares on the gaining side against 969 shares on the losing side while 102 shares remain unchanged.

Finally, the BSE Sensex surged by 401.91 points or 1.48% to 27507.30, while the CNX Nifty soared by 133.75 points or 1.63% to 8,325.25.

The BSE Sensex touched a high and a low of 27544.24 and 27231.28, respectively. The BSE Mid cap index was up by 2.13%, while Small cap index up by 1.28%.

The top gainers on the Sensex were SBI up by 5.44%, Vedanta up by 5.34%, Hero MotoCorp up by 3.59%, HDFC up by 3.16% and Tata Motors up by 3.15%. On the flip side, Hindustan Unilever down by 3.34%, ITC down by 0.53%, Bharti Airtel down by 0.41% and Wipro down by 0.06% were the top losers.

The gaining sectoral indices on the BSE were Auto up by 2.52%, Metal up by 2.52%, Bankex up by 2.40%, PSU up by 2.37% and Consumer Durables up by 2.27% while, FMCG down by 0.32% was the losing on BSE.

Meanwhile, Industry body, the Associated Chambers of Commerce & Industry of India (ASSOCHAM), cautioning about the rising crude prices has said that with Indian basket of crude oil rising by 11 per cent in rupee terms in the last 8-9 days, volatility in energy prices has re-surfaced as the biggest worry for the Indian industry and the policy makers, it has said that the government needs to put in place a contingency plan to tackle volatility in rates.

The industry body further said the volatility being witnessed in crude oil prices was not a good news for India, which is on the cusp of recovery, along with the macro factors like poor outlook of Monsoon. Adding that upward revision in the pump prices every fortnight by the oil companies - if rupee further weakens and bullish sentiment returns to the energy-would not make good headlines for the economic sentiment.

Assocham, though in its paper has said that while it is early days to press the panic button, caution and a contingent plan should be in order if the situation gets worsened by Monsoon deficiency, going forward. It also said that slowdown in the Chinese economy can still be a good news for the oil prices since subdued growth in China can dampen the crude demand, thus affecting its prices.

According to industry body, while the prices were falling, the biggest producer Saudi Arabia had a game plan in the price war, so to speak. It had an eye on the capex spending in the global oil economy and the supply situation in the US, which won’t be a good news for India. In fact, one of the reasons for Saudi Arabia to increase the production is a belief that it is only through some aggressive pricing of keeping the crude oil prices below $50 per barrel that the competition from shale gas in the US can be checkmated.

The CNX Nifty touched a high and low of 8,332.75 and 8,224.65 respectively.

The top gainers on Nifty were Bank of Baroda up by 16.82%, Vedanta up by 5.23%, State Bank of India up by 5.17%, UltraTech Cement up by 4.63% and Hero MotoCorp up by 3.88%. On the flip side, Hindustan Unilever down by 3.55% and ITC down by 0.61% were the only losers.

Most of European Markets were trading in the red; France's CAC was down by 1.56% and Germany's DAX was down by 0.62%, while UK’s FTSE was up by 0.16%.

The Asian markets closed mostly in green on Monday, with shares in Hong Kong and mainland China rallied after Beijing announced another interest rate cut. The People’s Bank of China cut benchmark interest rates for a third time since November and held open the door to more cuts, as the monetary authority steps up policy easing in the face a deepening slowdown. The 25 basis point cuts bring the one-year lending rate down to 5.1% and the equivalent deposit rate to 2.25%. The central bank stated that it will continue to promote real interest rates back towards reasonable levels.  The tone of the bank’s comments is more aggressive than those of previous policy moves and suggests that the government’s appetite for these kinds of adjustments will grow so long as China’s low inflation/deflationary environment persists. Chinese Producer Price Inflation (PPI) remained unchanged at an annual rate of -4.6%, compared to the preceding month. Chinese Consumer Price Inflation (CPI) rose to an annual rate of 1.5%, from 1.4% in the preceding month.

South Korea Finance Minister Choi Kyung-hwan stated that the country is planning to announce new measures in June to help boost exports. South Korean exports in April posted their worst fall in two years. Indonesia will gradually cut its corporate tax rate to discourage companies from booking profits in lower- tax countries such as Singapore. The government will cut the rate from 25 percent currently to maybe 17.8 or 17.5 percent. The move adds to plans for a tax amnesty for citizens as the government tries to lift revenue collection.