Benchmarks make a green start on Monday morning

Extending their previous session’s gains, Indian equity benchmarks have made a positive opening and are trading in green tailing positive global cues, which lifted both Sensex and Nifty above crucial 27,650 and 8,350 levels respectively. The sentiment got a boost with Finance Minister Arun Jaitley’s statement 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”.  However, gains remained capped on reports that Foreign portfolio investors (FPIs) sold shares worth a net Rs 465.27 crore on July 10, 2015, as per provisional data released by the stock exchanges. Furthermore, 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%), too kept pressuring the markets. Investors are likely to remain cautious ahead of the announcement of CPI data later in the day.

In scrip specific development, Ballarpur Industries was trading higher after the company’s board approved a binding offer for divestment of its entire equity stake of 98.08% in its step-down subsidiary Sabah Forest Industries in Malaysia.

On the global front, the US markets ended higher on expectations Greece would be able to secure fresh funding at an upcoming meeting. Asian markets were trading mostly in green taking cues from the Chinese market which surged, as country’s exports rose for the first time in four months in June, providing fresh evidence that growth is stabilizing.

Back home traders are seen piling position in Healthcare, IT, TECK, Oil & Gas and Consumer Durables, while selling was witnessed in Metal, Capital Goods, Bankex and Power. The market breadth on BSE was positive in the ratio of 1197: 550, while 61 scrips remained unchanged.

The BSE Sensex is currently trading at 27695.07, up by 33.67 points or 0.12% after trading in a range of 27688.08 and 27791.21. There were 16 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.39%, while Small cap index gained 0.38%.

The top gaining sectoral indices on the BSE were Healthcare up by 1.14%,  IT up by 0.71%, TECK up by 0.67%, Oil & Gas up by 0.47% and Consumer Durables up by 0.39%, while Metal down by 0.47%, Capital Goods down by 0.46%, Bankex down by 0.29% and Power down by 0.05% were the losing indices on BSE.

The top gainers on the Sensex were Sun Pharma Inds. up by 2.17%, GAIL India up by 1.43%, Cipla up by 1.00%, TCS up by 0.89% and Dr. Reddys Lab up by 0.89%. On the flip side, Hindalco down by 1.24%, BHEL down by 1.06%, Bajaj Auto down by 1.05%, Larsen & Toubro down by 0.87% and Vedanta down by 0.75% were the top losers.

Meanwhile, 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 is currently trading at 8373.80, up by 13.25 points or 0.16% after trading in a range of 8368.85 and 8404.80. There were 30 stocks advancing against 20 stocks declining on the index.

The top gainers on Nifty were Sun Pharma Inds by 2.18%, Cairn India up by 1.90%, HCL Tech. up by 1.85%, Asian Paints up by 1.63% and GAIL India up by 1.41%. On the flip side, Yes Bank down by 1.13%, Hindalco down by 1.10%, Larsen & Toubro down by 1.08%, Power Grid Corpn. down by 1.08% and Vedanta down by 0.89% were the top losers.

Asian markets were trading mostly in green; Straits Times increased 15.38 points or 0.47% to 3,295.26, KOSPI Index increased 24.91 points or 1.23% to 2,056.08, Jakarta Composite increased 29.24 points or 0.6% to 4,888.27, Hang Seng increased 62.86 points or 0.25% to 24,964.14, Shanghai Composite increased 88.32 points or 2.28% to 3,966.13, Taiwan Weighted increased 94.3 points or 1.06% to 9,008.43 and Nikkei 225 increased 278.07 points or 1.41% to 20,057.90.

On the flip side, FTSE Bursa Malaysia KLCI decreased 0.32 points or 0.02% to 1,715.26.