Benchmarks extend gains; Sensex reclaims 24950 mark

Indian equity benchmarks extended early gains to continue firm trade in late morning session on account of buying in frontline blue chip stocks. Sentiments got a boost with the report that India's manufacturing activity unexpectedly returned to growth in January as firms raised output on stronger demand.  The Nikkei Manufacturing Purchasing Managers' Index (PMI), compiled by Markit, jumped to a four-month high of 51.1 in January after slumping to a 28-month low of 49.1 in December. Some support also came with Finance Minister Arun Jaitley’s statement that the 8% GDP growth can be achieved next fiscal on account of improved rural demand and better monsoon. Furthermore, in a discussion with Arvind Panagariya, NITI Ayog Vice-Chairman during ET Global business summit, American economist Nouriel Roubini said that India has the potential to grow above 8% if the reforms are accelerated.  However, investors remained cautious with Standard & Poor's Ratings Services stating that India will face challenges in sticking to the fiscal consolidation roadmap as the expected revenues may not be fully realised and subsidy cuts may be delayed.

On the global front, Asian markets trading mostly in red on Monday after Chinese officials reported that the country’s manufacturing purchasing managers index fell to 49.4 in January, marking the sixth-consecutive month of contraction and its lowest level since August 2012. However, japanese markets gained by 1.6% and added to its 2.8% surge on Friday, following the Bank of Japan’s surprise decision to cut interest rates to negative territory. Moreover, US markets rallied on Friday after the surprise announcement by the Bank of Japan and strong gains in technology shares led by Microsoft.

Back home, stocks from Capital Goods, IT and FMCG counters were supporting the markets’ uptrend, while those from PSU, Banking and Oil & Gas counters were adding to the underlying cautious undertone. In scrip specific development, shares of V-Guard Industries have rallied after the company reported more than doubled net profit at Rs 21.48 crore for the third quarter ended December 31, 2015. Furthermore, Marico has surged after the company posted 24% increase in net profit to Rs198 crore during the third quarter ended December even as sales grew 7% at Rs 1556 crore.

The market breadth on BSE was positive, out of 2283 stocks traded, 1495 stocks advanced, while 695 stocks declined on the BSE. 

The BSE Sensex is currently trading at 24953.20, up by 82.51 points or 0.33% after trading in a range of 24846.24 and 25002.32. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.71%, while Small cap index up by 0.92%.

The top gaining sectoral indices on the BSE were Capital Goods up by 2.80%, IT up by 0.99%, TECK up by 0.98%, FMCG up by 0.91% and Realty up by 0.62%, while PSU down by 0.43%, Bankex down by 0.40%, Oil & Gas down by 0.34%, Metal down by 0.20% and Auto down by 0.04% were the top losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 4.87%, Cipla up by 2.77%, Adani Ports &Special up by 2.49%, Bharti Airtel up by 1.98% and Asian Paints up by 1.86%. On the flip side, ICICI Bank down by 2.65%, Maruti Suzuki down by 1.84%, Hero MotoCorp down by 1.59%, SBI down by 1.58% and Coal India down by 1.22% were the top losers.

Meanwhile, in order to make the Make in India programme successful, Finance Minister Arun Jaitley reiterated that the country will have to become a low-cost manufacturing hub and also stated that there are several global factors which are beneficial for India. He stressed on making the most of the favorable low commodity prices. He further stated that to cut costs, both at micro and larger levels, there are a lot of improvement and changes required in any system.

Jaitley said that the world has never seen this kind of low price regime and India as a net buyer benefits from this low price regime. He added that India need to make use of this global situation. Speaking about the service sector, Jaitley asserted that India unquestionably has the potential to become a low-cost service provider in the world.

Highlighting the importance of cost in global market, he said everyone wants best goods and services at the cheapest rate and factors such as poor infrastructure, capital and lack of proper trade facilitation add to the cost of goods and services. Citing the example of China that the cost of wages is going up, Jaitley said that hence India is back in competition and lower commodity and oil prices are also acting as tailwinds.

The CNX Nifty is currently trading at 7590.20, up by 26.65 points or 0.35% after trading in a range of 7556.80 and 7600.45. There were 28 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were Larsen & Toubro up by 4.98%, Cipla up by 2.99%, Grasim Industries up by 2.90%, Adani Ports &Special up by 2.69% and ACC up by 2.40%. On the flip side, ICICI Bank down by 2.67%, Maruti Suzuki down by 1.85%, Hero MotoCorp down by 1.78%, Zee Entertainment down by 1.73% and SBI down by 1.58% were the top losers.

Asian markets were trading mostly in red, Hang Seng was down by 0.94%, Shanghai Composite down by 1.88%, Taiwan Weighted down by 0.27% and Jakarta Composite down by 0.58%. On the flip side, KOSPI Index was up by 0.25%, FTSE Bursa Malaysia KLCI up by 2.04% and Nikkei 225 was up by 1.6%.