Benchmarks end higher on good macro-economic data

Boisterous benchmarks showcased an enthusiastic performance on Monday, by rallying around a percentage point amid some good macro-economic data. Despite some initial hiccups, markets gained ground and the benchmarks managed to fervently gain from strength to strength as investors continued hunt for fundamentally strong but oversold stocks. Frontline indices not only ended the session near intraday high levels but also recaptured their crucial 7,850 (Nifty) and 25,800 (Sensex) bastions as investors took to hefty across the board buying.

Sentiments remained buoyed as industrial production expanded at better-than-estimated 4.2 per cent in July this year compared to the same month last year as manufacturing activity and offtake of capital goods improved. Sentiments further got a boost after Wholesale Price Index (WPI) inflation declined to (-) 4.95 per cent in August from (-) 4.05 per cent in July. It was primarily on account of a sharp cooling in fuel costs. The wholesale fuel prices tumbled 16.50 per cent from a year ago, while food prices dropped 1.13 per cent year-on-year. Some support also came with Minister of State for Finance Jayant Sinha stating that RBI should take into account various factors, including low inflation, while deciding on monetary policy stance. 

Buying got intensified after European made a positive start with CAC, DAX and FTSE trading in green with a gain of around half a percent in early deals ahead of Fed FOMC meet where the US Fed Chair is expected to raise the interest rates for the first time in eight years. Asian markets exhibited mixed trend after Chinese markets were hit by soft economic data.

Back home, appreciation in Indian rupee too supported the sentiments. The partially convertible rupee was trading at 66.31 per dollar at the time of equity market closing against the Friday’s close of 66.53 on the Interbank Foreign Exchange. Buying in metal counter too aided sentiments on reports that the government will soon notify a 20 per cent import tax on some hot-rolled steel products. The Directorate General of Safeguards last week recommended the duty for 200 days as it further investigates the issue.

Stocks related to infra space too edged higher, as Finance Minister Arun Jaitley promising the fairest tax regime and a stable policy environment, invited US businesses to take advantage of the huge investment opportunity in the infrastructure sector and raise bilateral trade to $500 billion. Banking and Financial shares too remained on buyers’ radar ahead of the Consumer Price Index (CPI) inflation numbers, which is expected to have cooled down further thus raising hopes of a rate cut by the central bank.

The NSE’s 50-share broadly followed index Nifty gained over eighty points to end above its psychological 7,800 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged by around two hundred and fifty points to end above its crucial 25,850 mark. The broader markets too traded jubilantly throughout the session and ended the session with a gain of around a percent. The market breadth remained in favour of advances, as there were 1,703 shares on the gaining side against 951 shares on the losing side while 107 shares remain unchanged.

Finally, the BSE Sensex surged by 246.49 points or 0.96 % to 25856.70, while the CNX Nifty soared by 82.95 points or 1.06 % to 7872.25.

The BSE Sensex touched a high and a low 25891.73 and 25531.07, respectively. The BSE Mid cap index was up by 1.27%, while Small cap index was up by 0.88%.

The top gaining sectoral indices on the BSE were Metal up by 2.70%, Power up by 2.50%, Bankex up by 1.88%, PSU up by 1.82% and Realty up by 1.62%, while Consumer Durables down by 0.13% was the lone losing index on BSE.

The top gainers on the Sensex were NTPC up by 5.06%, Vedanta up by 4.02%, Tata Steel up by 3.54%, Hindalco up by 3.42% and Axis Bank up by 3.05%. On the flip side, Bajaj Auto down by 0.35% and Maruti Suzuki down by 0.22% were the top losers.

Meanwhile, amid the flow of cheap imports from China, which can impact investments worth Rs 1.2 lakh crore, the representatives of the domestic aluminium industry have met Finance Minister Arun Jaitley urging him to raise the import duty on the metal. Primary producers are ruing that production cost of aluminium is around $2,000 per tonne, while prices at the London Metal Exchange (LME) have slumped to $1,600 a tonne. The government has asked the industry to provide the performance of various companies for it to study and to ensure whether a hike in import duty is really needed.

Aluminium industry can contribute to India's growth, but while domestic production costs are rising they are falling globally. According to data from the Aluminium Association of India, cheaper imports have badly impacted the domestic industry. The domestic capacity of 41 lakh tonnes an annum is currently operating at 50 per cent. Meanwhile, the market share of domestic manufacturers has dropped to 44 per cent in 2014-15 with imports nearly doubling to 15.63 lakh tonne from 8.81 lakh tonne in 2010-11.

India’s total imports mainly from China and Middle-Eastern countries have grown by more than 159 per cent to 1,563 kilo tonnes (KT) in 2015, compared to 881 KT in 2011.This led to imports accounting for 56 per cent of Indian aluminium consumption in 2014-15, while products of Indian producers account for only 44 per cent. Moreover, China, having more than 50 per cent of world aluminium production, is now exporting over 20 per cent of its products and their exports to India have surged by 200 per cent in FY15 as compared to FY11.

Primary aluminium producers -Vedanta, Hindalco and Nalco have invested around Rs 1.2 lakh crore to increase the production capacity from 2.1 million tonnes per annum (MTPA) to 4.1 MTPA by 2018-19 fiscal. But the falling price of the metal on the benchmark London Metal Exchange and rising imports have forced, Vedanta to shut down the rolling mill of group company BALCO and also to shut down its Lanjigarh alumina refinery process production stream, which lead to the Lanjigarh facility's output declining to half and impacting up to 2,000 jobs. In last three years, LME prices have come down by 35 per cent to $1,660 per tonne in June, 2015 from a peak of $2,555 a tonne in June, 2011.

The CNX Nifty touched a high and low 7879.95 and 7761.85 respectively.

The top gainers on Nifty were NTPC up by 5.06%, Vedanta up by 4.12%, BPCL up by 4.04%, Hindalco up by 3.75% and Tata Steel up by 3.46%. On the flip side, Cairn India down by 1.51%, Idea Cellular down by 1.07%, Bajaj Auto down by 0.35%, Maruti Suzuki down by 0.17% and TCS down by 0.16% were the top losers.

European Markets were trading in the green; France’s CAC was up by 0.37%, Germany’s DAX was up by 0.35% and UK's FTSE was up by 0.70%.

The Asian markets closed mixed on Monday, as traders digested a slew of weak Chinese data released over the weekend and tread cautiously ahead of the Federal Reserve’s policy meeting this week. China’s stocks fell after data suggesting economic growth was running below the 2015 target level of about 7 percent heightened concerns about the health of the economy. The economic concerns offset the impact of plans announced at the weekend to reform the bloated state-owned enterprise sector and produce decisive results by 2020. Underscoring the fragility of China’s financial markets even after some respite last week, currency traders suspected the central bank intervened to prop up the yuan in onshore markets, which wobbled following a report that net capital outflows in the first quarter of the year were more than $100 billion. China has unveiled details of how it would restructure its state-owned enterprises (SOEs), including partial privatization, as data pointed to a cooling in the world’s second-largest economy. Chinese Retail Sales rose to an annual rate of 10.8%, from 10.5% in the preceding month while Chinese Industrial Production rose to 6.1%, from 6.0% in the preceding month. Chinese Fixed Asset Investment fell to a seasonally adjusted 10.9%, from 11.2% in the preceding month.  Japan’s industrial production fell to a seasonally adjusted -0.8%, from -0.6% in the preceding month. Japanese tertiary industry activity index rose to a seasonally adjusted 0.2%, from 0.3% in the preceding month.