Post Session: Quick Review

Indian markets rallied with the start of the new week after Greek Prime Minister Alexis Tsipras achieved a settlement with his European creditors over the reforms needed to start formal negotiations over a third bailout program, after almost 17 hours of talks in Brussels and suggestion of temporary Grexit has been removed from final agreement, though Greek parliament will have to legislate on number of reforms. The local markets that made a good start, turned cautious towards the mid of the day and once even slipped into red as cautiousness of slow economic growth gripped the markets. Traders got concerned by disappointing IIP data, which grew 2.7 per cent in May, lower than the downwardly revised 3.36 per cent growth recorded in April. Also, there was expectation of some uptick in the CPI inflation numbers slated to be announced later in the day that was keeping the markets on tenterhooks. However, once the news of deal at European Union broke, markets surged instantly.

On the global front, the regional markets drawing some comfort from rally in China’s benchmark stock index for a third day, on hopes that measures taken by Beijing to prevent a full-blown market crash have worked, made a good beginning of the new week. Shanghai Composite has rebounded 14 percent over the past three days. There was some good news from economy front too, the trade data of China exceeded estimates. Exports rose 2.1 percent in June, while imports dropped 6.7 percent for a trade surplus of 284.2 billion yuan. Later the European markets too made a jubilant start after an agreement was reached at a summit on Greece’s crisis.

Back home, the Indian markets which once looked losing momentum and giving up all the gains on economic growth concern, witnessed a sudden and steep surge, taking back the benchmarks into action, with Sensex and Nifty reclaiming the crucial psychological levels of 27900 and 8450 respectively. The sectors like capital goods, metal and banking that had slipped into red too made good recovery and barring capital goods ended all in green. Initially some help came with Finance Minister Arun Jaitley expressing his confidence on the country’s economic growth and stating that tax revenues are expected to be higher this year, while improving macroeconomic fundamentals and ongoing reforms make 8-10 per cent growth “eminently achievable”. There was some good news from the revenue collection too, as the Indirect tax revenues grew 37.5 per cent to nearly Rs 1.54 lakh crore in the first quarter of the current fiscal, powered by a robust show in excise collections. In the late trade markets got an additional boost with Revenue Secretary Rajiv Mehrishi’s statement that the market condition was conducive for the government’s disinvestment. It was rally across the board with buying returning with easing concern from Greece, traders who have been staying on sidelines fearing more sell off, lapped up beaten down stocks at attractive valuation. The decline in international crude prices too supported the markets, while the weakness in rupee helped the IT and tech stocks to move higher. Auto, oil & gas and power too posted considerable gain.

The BSE Sensex ended at 27961.19, up by 299.79 points or 1.08% after trading in a range of 27635.06 and 28005.17. There were 27 stocks on gainers side against 3 stocks on decliners side on the index. (Provisional)

The broader indices outperformed the benchmarks; the BSE Mid cap index was up by 1.44%, while Small cap index was higher by 1.27%.(Provisional)

The top gaining sectoral indices on the BSE were IT up by 1.71%, TECK up by 1.65%, Auto up by 1.60%, Oil & Gas up by 1.27%, Power up by 1.26%, while Capital Goods down by 0.19% was the lone losing index on the BSE.(Provisional)

The top gainers on the Sensex were GAIL India up by 3.61%, HDFC up by 2.81%, Maruti Suzuki up by 2.52%, NTPC up by 2.43% and Wipro up by 2.17%. On the flip side, ONGC down by 0.94%, Larsen & Toubro down by 0.58% and BHEL down by 0.11% were the top losers. (Provisional)

Back home, coming as a big disappointment, the index for industrial output (IIP) for the month of May came in at 2.7%, lower than street expectation and also lower compared to downwardly revised 3.36% in April (earlier estimate of 4.1%). The decline in factory output was on the back of weakening growth in the manufacturing sector and mainly owed to poor performance from Consumer goods and Capital Goods.

The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of May 2015 stood at 128.8, 187.5 and 195.0 respectively, with the corresponding growth rates of 2.8%, 2.2% and 6.0%, as compared to May 2014. The cumulative growth in the three sectors during April-May 2015-16 over the corresponding period of 2014-15 stood at 1.5%, 3.2% and 2.8% respectively. In terms of industries, 12 out of the 22 industry groups (as per 2-digit NIC-2004) in the manufacturing sector showed positive growth during the month of May 2015, as compared to the corresponding month of the previous year.

The Quick Estimates of Index of Industrial Production (IIP) with base 2004-05 for the month of May 2015 released by the Central Statistics Office of the Ministry of Statistics and Programme Implementation, for the month of May 2015 stood at 180.0, 2.7% higher, while the cumulative growth for the period April-May 2015-16 over the corresponding period of the previous year stood at 3.0%.

As per Use-based classification, the growth rates in May 2015 over May 2014 were 6.4% in Basic goods, 1.8% in Capital goods and 1.2% in Intermediate goods. The Consumer durables and Consumer non-durables recorded growth of -3.9% and -0.1% respectively, with the overall growth in Consumer goods being -1.6%.

The latest data of IIP highlights the negative consumer demand growth, as delayed and deficient monsoon rains last year, followed by unseasonal rains that damaged winter crops this year have hurt income and adversely impacted consumer demand in rural areas, now progress of the monsoon will be key to revival of rural demand, but the development can put pressure on Reserve Bank of India (RBI) to cut interest rates in the next bi-monthly monetary policy meet on August 4, 2015.

The CNX Nifty ended at 8461.40, up by 100.85 points or 1.21% after trading in a range of 8355.40 and 8471.65. 46 stocks advanced against 3 declining stocks on the index.(Provisional)

The top gainers on Nifty were HCL Tech. up by 3.88%, BPCL up by 3.59%, Indusind Bank up by 3.58%, Zee Entertainment up by 3.50% and GAIL India up by 3.08%. On the flip side, ONGC down by 1.02%, Larsen & Toubro down by 0.82% and Bank Of Baroda down by 0.13% were the top losers.(Provisional)

European Markets were trading higher, UK’s FTSE 100 increased by 46.86 points or 0.7% to 6,720.24, France’s CAC surged by 97.93 points or 2% to 5,001.00 and Germany’s DAX gained 170.35 points or 1.51% to 11,485.98.

Asian markets closed in green on Monday, tracking another rally in China and following news Greece has finally struck a bailout reform deal with creditors that keeps it in the euro zone. China’s exports picked up unexpectedly in June but imports tumbled again, reinforcing expectations that the government may further loosen policy to lift the Chinese economy after a recent stock market rout. However, imports slid much less than forecasted, leading some to see a silver lining in the latest data. China’s June exports rose 2.8% from a year earlier, while imports fell by 6.1%.That left the country with a trade surplus of $46.54 billion for the month compared to $59.49 billion in the preceding month. Japan’s industrial production fell to a seasonally adjusted -2.1%, from -2.2% in the preceding month while Japanese tertiary industry activity index fell to a seasonally adjusted -0.7%, from -0.2% in the preceding month.