Markets end at intraday high levels; Nifty regains 8,350 mark

Monday’s session turned out to be a fabulous day of trade for the Indian equity markets, where frontline gauges garnered gains of over one percentage point on anticipation that Reserve Bank of India (RBI) may slash the key policy rate in the upcoming monetary policy review on June 2, 2015. Further, well-timed monsoon forecast and slowdown in foreign funds outflows lifted the trading sentiments. Sentiments remained up-beat since start as key bourses opened with decent 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 their hunt for fundamentally strong stocks. Frontline indices not only ended the session near intraday high levels but also recaptured their crucial 8,350 (Nifty) and 27,350 (Sensex) bastions as investors took to hefty across the board buying.

Sentiments got bolstered with Finance Minister Arun Jaitley’s statement that making taxation more reasonable and improving ease of doing business will be among his top priorities going ahead. Meanwhile, finance ministry announced that it has contained the fiscal deficit at four per cent of GDP for 2014-15 at Rs 5,01,880 crore, which is even lower than the stiff 4.1 per cent target set in the Budget. Some encouragement also came with the Associated Chambers of Commerce and Industry of India (Assocham) awarding the Narendra Modi government seven marks on a scale of 10 for its performance over the past year. The industry body has lauded the government for improving the macroeconomic situation, financial inclusion, Swachch Bharat initiative, coal auction, and clearing difficult legislation in Parliament.

Buying got intensified after European counters made a firm opening with energy stocks in focus after a rise in oil prices, while the dollar lifted off four-month lows it had reached on concern over the US economy. Asian markets ended mostly in the green terrain led by around one percent rise in Japanese Nikkei as Bank of Japan’s chief economist stated that the country’s economy is likely to shift to an expansionary phase this fiscal year due to improvements in domestic demand, exports and a windfall from last year’s decline in oil prices.

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. Meanwhile, oil marketing companies such as Bharat Petroleum Corporation (BPCL), Indian Oil Corporation (IOC) and Hindustan Petroleum Corporation (HPCL) edged higher on the back of fuel price hike. These three companies announced Rs 3.13-a-litre increase in the retail price of petrol and Rs 2.71-a-litre rise in diesel prices with effect from Friday midnight to align the de-regulated domestic prices with the international rates.

The NSE’s 50-share broadly followed index Nifty rose by over one hundred and ten points and ended above the psychological 8,350 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged by over three hundred and sixty points to finish above the psychological 27,650 mark. Broader markets too traded with traction throughout the trade and ended the session with a gain of around a percentage point. The market breadth remained in favor of advances, as there were 1,675 shares on the gaining side against 1,046 shares on the losing side while 123 shares remain unchanged.

Finally, the BSE Sensex surged by 363.30 points or 1.33% to 27687.30, while the CNX Nifty soared by 111.30 points or 1.35% to 8,373.65.

The BSE Sensex touched a high and a low of 27725.97 and 27370.28, respectively. The BSE Mid cap index was up by 0.98%, while Small cap index up by 0.97%.

The top gainers on the Sensex were Dr. Reddys Lab up by 3.48%, GAIL India up by 3.45%, Tata Power up by 3.08%, HDFC up by 2.34% and HDFC Bank up by 1.92%. On the flip side, Hero MotoCorp down by 0.31%, NTPC down by 0.07% and Coal India down by 0.04% were the top losers.

The gaining sectoral indices on the BSE were Consumer Durables up by 2.16%, Oil & Gas up by 2.09%, Healthcare up by 1.54%, INFRA up by 1.43% and FMCG up by 1.37% while, Realty down by 0.20% were the losing indices on BSE.

Meanwhile, the government has contained the fiscal deficit at 4 per cent of GDP for 2014-15 at Rs 5,01,880 crore, bettering its own financial targets it had inherited (4.1 per cent) in the interim Budget prepared by his predecessor P Chidambaram. Revenue deficit at the end of 2014-15 stood at Rs 3,58,306 crore which is 99 percent of the projected figure in the RE 2014-15 and is 2.8 percent of the GDP as against the RE of 2.9 percent.

Fiscal deficit, the gap between the government's expenditure and revenue, remained lower than the downwardly revised estimate of 4.1 per cent provided by the Modi government's first full Budget announced in February. To meet the steep ask of containing the fiscal deficit Jaitley followed the precedent set by his predecessor for 2013-14 and had slashed the allocation for plan expenditure by Rs 1,07,066 crore to Rs 4,67,934 crore for 2014-15 from Rs 5,75,000 crore in the revised estimate towards the fag end of the year.

As per the ministry, Plan Expenditure at the end of 2014-15 stood at Rs 4,35,621 crore while Non-Plan Expenditure during the same year has been Rs 11,91,140 crore (99.8 percent of RE). The gross tax collection registered a growth of 9 percent in 2014-15 and stood at Rs 12,45,037 crore. The Non Tax Revenue stood at Rs 1,96,959 crore (90 percent of Revised Estimate).

Although, the provisional accounts for the year ended 31st March, 2015, have been complied on the basis of March data and anticipated adjustments received from the different ministries. These are the provisional figures and may undergo certain changes during the final compilation of accounts after audit. Figures compiled by the Controller General of Accounts had put the fiscal deficit during April-December period at Rs 5.32 lakh crore mainly because of subdued tax realisation in a slowing economy. As per the fiscal consolidation road map outlined in the Budget 2015-16, fiscal deficit is to be brought down to 3.9 percent of GDP in the current fiscal, then to 3.5 percent in 2016-17 and further to 3 percent by 2017-18.The 3 percent target would now be reached a year later than planned.

The CNX Nifty touched a high and low of 8,384.60 and 8,271.95 respectively.

The top gainers on Nifty were Zee Entertainment Enterprises up by 3.75%, Dr. Reddy's Laboratories up by 3.68%, GAIL (India) up by 3.51%, Bharat Petroleum Corporation up by 3.41% and UltraTech Cement up by 3.37%. On the flip side, Asian Paints down by 3.25%, Tech Mahindra down by 0.68%, Hero MotoCorp down by 0.35%, Coal India down by 0.27% and Tata Steel down by 0.16% were the top losers.

European Markets were trading in the green; Germany's DAX gained 0.80%, France's CAC rose 0.22% and UK's FTSE was up by 0.3%

The Asian markets closed mostly in green on Monday, tracking the gains in US shares as weaker-than-expected economic data spurred bets the Federal Reserve won’t rush to raise interest rates. Bank of Japan’s chief economist stated that the country’s economy is likely to shift to an expansionary phase this fiscal year due to improvements in domestic demand, exports and a windfall from last year’s decline in oil prices. Japan’s industrial production fell to a seasonally adjusted -0.8%, from -0.3% in the preceding month. Japan’s core machinery orders increased 2.9 percent in March from the previous month, rising for the first time in two months, in a sign of a pick-up in business investment. The rise in core orders, a highly volatile data series regarded as an indicator of capital spending in the coming six to nine months, compared with the median estimate of a 1.8 percent increase. In January-March, core orders rose 6.3 percent from the prior three months. Compared with a year earlier, core orders in March rose 2.6 percent.

As China’s economy slows and Beijing becomes more relaxed about letting its companies fail, a rising number of foreign bondholders risk being caught up in the country’s unpredictable court system.  As China’s slowdown continues, lawyers expect to see an uptick in bankruptcy filings, but warned that the outcome of these proceedings would continue to be distorted by political factors. China’s new home prices fell for the eighth consecutive month in April from a year earlier but were flat from March, adding to hopes that a property downturn which is weighing heavily on the economy is beginning to bottom out. Average new home prices in China’s 70 major cities dropped 6.1 percent last month from a year ago, the same rate of decline as in March. But nationwide prices steadied from March, further narrowing from a 0.1 percent fall in the previous month.