Benchmarks manage to keep head above water; Sensex recaptures 26,800 mark

Indian equity markets in the extremely volatile session of trade were just managing to hold their neck in green, with slender gains that kept Sensex and Nifty above psychologically crucial 26,800 and 8,100 levels respectively. Sentiment got a boost with report that India's economic growth is projected to remain "strong and stable" at 7.3 percent in 2015 on the back of revival in investments even as more reforms are needed to reduce uncertainties over taxation norms. Besides, gains in technology shares on declining rupee and Axis bank after the Reserve Bank of India (RBI) lifted the restrictions placed on the purchase of shares of the bank by foreign investors have lifted the indices higher. Some support also came with the statement of Agriculture Minister Radha Mohan Singh, who showing confidence over tackling deficient monsoon, minimising production losses and its possible impact on overall economy said that the government is ready with contingency plans for 580 districts and is in touch with state governments and agriculture research bodies to tackle the situation. However, gains were limited on RBI's conservative stance on rate outlook, below-normal monsoon concern and slashing of December-end target prices for major indices by brokerages. Meanwhile, the session also was fruitful for broader indices, which outperforming larger counterparts were trading with gains in the range of 0.20-0.30%.

On global front, most of the Asian stock markets were trading in negative territory, despite following the positive cues overnight from Wall Street and on optimism that Greece will finally reach an agreement with its international creditors. Further in economic readings ahead of the latest session, the Commerce Department said the US trade deficit contracted by 19.2% in April, the sharpest drop in more than six years. Back home, extending its slide for the second straight day on Thursday, the rupee breached the 64 mark by falling 35 paise to 64.25 against the dollar in early trade on sustained capital outflows by foreign funds amid appreciation of the American currency against others overseas.

Back on street, stocks from Realty, Capital Goods and IT counters were supporting the markets’ uptrend, while those from Consumer Durables, Auto and Metal counters were adding to the underlying cautious undertone. In scrip specific development, Shares of Cipla have gained after the company received approval from United States Food & Drug Administration (USFDA) for an innovative formulation Lopinavir/ritonavir. Furthermore, Axis Bank rose after the Reserve Bank of India (RBI) lifted the restrictions placed on the purchase of shares of the bank by foreign investors.

The market breadth on BSE was positive, out of 2114 stocks traded, 1119 stocks advanced, while 904 stocks declined on the BSE. 

The BSE Sensex is currently trading at 26844.11, up by 6.91 points or 0.03% after trading in a range of 26742.15 and 26948.84. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.26%, while Small cap index up by 0.32%.

The gaining sectoral indices on the BSE were Realty up by 1.57%, Capital Goods up by 0.60%, IT up by 0.51%, Oil & Gas up by 0.46% and TECK up by 0.45% while, Consumer Durables down by 0.88%, Auto down by 0.49%, Metal down by 0.39% and FMCG down by 0.17% were the losing indices on BSE.

The top gainers on the Sensex were SBI up by 1.26%, Axis Bank up by 1.09%, Wipro up by 1.08%, Infosys up by 0.94% and Reliance Industries up by 0.78%. On the flip side, ICICI Bank down by 1.77%, Tata Motors down by 1.72%, Hero MotoCorp down by 1.17%, Sun Pharma down by 1.12% and ONGC down by 0.71% were the top losers.

Meanwhile, a survey of RBI-sponsored Professional Forecasters on Macroeconomic Indicators, coming much in line with the cautiousness raised by the RBI governor during the Second Bi-monthly Monetary Policy Statement, 2015-16, has said that the economy is expected to grow at a rate of 7.8 percent in the current fiscal, a shade lower than earlier forecast of 7.9 percent.

Twenty seven professional forecasters who participated in the latest survey round (Round 34) conducted in May 2015, expect real Gross Value Added at basic price (GVA) to increase by 7.8 percent in 2015-16, and ‘Agriculture and Allied Activities’ and ‘Services’ to grow by 2.2 percent and 10 percent, respectively.” The survey released in April had projected the GVA to increase by 7.9 percent in 2015-16. The professionals in the latest survey viewed that the 'industry' would grow by 6.2 percent in the current fiscal.

As per the survey, Central Government’s gross fiscal deficit (GFD) is projected at 3.9 per cent of GDP in 2015-16 and is expected to moderate to 3.5 per cent of GDP in 2016-17. The combined GFD of Central and State Governments is projected at 6.5 per cent of GDP in 2015-16 and is expected to improve to 6.2 per cent of GDP in 2016-17.

The forecasters expects that the private final consumption expenditure at current prices to increase by 12.7 per cent in 2015-16 and further by 13.1 per cent in 2016-17, while the Gross Saving rate is projected at 30.8 per cent of Gross National Disposable Income (GNDI) in 2015-16 and 31.0 per cent of GNDI in 2016-17. The forecasters expect Gross Fixed Capital Formation rate at 28.8 per cent of GDP in 2015-16, which is expected to improve to 29.4 per cent of GDP in 2016-17.

Regarding inflation, the forecasters expect core CPI (excluding food and fuel) to remain above 5.0 per cent from Q3:2015-16. CPI (Combined) headline inflation forecast has been cut between 20 bps to 40 bps in the current round from the previous round. Headline inflation is expected to increase from 5.0 per cent in Q1:2015-16 to 5.5 per cent in Q1:2016-17. Forecasters assigned maximum probability of 70 per cent (based on average of individual forecasts) that CPI headline inflation will be in the range 5.0-5.9 per cent in March 2016. Based on this probability distribution, the implicit CPI inflation rate for March 2016 is expected at 5.6 per cent.

The CNX Nifty is currently trading at 8137.30, up by 2.20 points or 0.03% after trading in a range of 8104.90 and 8160.05. There were 28 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were BPCL up by 1.60%, Tech Mahindra up by 1.53%, Bosch up by 1.49%, Bank of Baroda up by 1.40% and Ultratech Cement up by 1.37%. On the flip side, NMDC down by 2.89%, ICICI Bank down by 1.83%, Tata Motors down by 1.66%, HCL Tech down by 1.49% and Sun Pharma down by 1.29% were the top losers.

Asian markets were trading mostly in the red; Hang Seng declined 1.28 %, Shanghai Composite contracted 4.27 %, Jakarta Composite slipped 0.22 %, FTSE Bursa Malaysia KLCI decreased 0.15 % and Taiwan Weighted was down by 2.36 %.  On the flip side, Nikkei 225 rose 0.01 %, KOSPI Index surged 0.34% and Straits Times was up by 0.06%.