Boisterous benchmarks stage a remarkable rally; surge over 2%

Indian benchmark equity indices staged a blockbuster performance on the first day of the week by vehemently rallying over two percentage points for the session and re-conquering their psychological levels. Sentiments got a boost with Prime Minister Narendra Modi’s statement that India is the fastest developing country among the “larger economies of the world”. He also said that India is the only economy which has not been affected by the global economic crisis that has hit the world.  Furthermore, Union Minister of State for Commerce and Industry Nirmala Sitharaman said manufacturing in the country is picking up and the perception that there is any slowdown in the sector is wrong. Some support also came with the report that India's foodgrain production can increase to 253.16 million tonnes in 2015-16 crop year on likely improvement in output of wheat and pulses despite back-to-back drought. Besides, slip in the wholesale price index (WPI)-based inflation for the fifteenth straight month further lifted the mood of the investors. Reversing four months of rising trend, WPI inflation fell to (-) 0.9 per cent in January as food articles, mainly vegetables and pulses, turned cheaper. This was further contraction to the WPI inflation reading of (-) 0.73 per cent in December 2015. Appreciation in Indian rupee too supported the sentiments. Indian rupee strengthened by 11 paise to 68.12 against the dollar on increased selling of the US currency by exporters and banks. Meanwhile, Investors didn't show much of a reaction, to the macro-economic data released by the government post market hours on Friday. The data released revealed that factory output shrunk for the second straight month in December to 1.3%. The consumer price inflation edged up to a 17-month high of 5.69 per cent in January, driven up by higher food costs.

On the global front, Asian stocks rebounded from a three-year low, led by Japanese shares, as fears over global economic slowdown eased and as US crude prices rallied from more than 12-year lows. China's central bank also fixed the yuan higher as markets in Asia's largest economy returned from a week-long holiday. Some support also came with US stocks snapping a five-day losing streak on Friday and logging their largest daily gains so far this month. Meanwhile, European stock markets rallied for a second straight session on Monday, with bank shares leading the charge after news the European Central Bank may buy Italian bad loans.

Back home, the benchmark got off to a positive start in the morning trade as investors were largely influenced by the supportive leads from Asian markets. The frontline indices soon gathered momentum and surged around two percent through the morning session of trade. Second half of the session saw the key gauges capitalize on the momentum further and spurt to session’s highest levels in dying hour. However, a mild profit booking in dying moments of trade ensured that the key indices shut shops off the intraday highs. Finally, the NSE’s 50-share broadly followed index - Nifty garnered over two and half percent to settle above the crucial 7,150 levels, while Bombay Stock Exchange’s Sensitive Index - Sensex accumulated over five hundred fifty points to settle tad above the 23,500 mark. Moreover, the broader markets too finished with strong gains and managed to outperform their larger peers. On the BSE sectoral space, buying was evident across the board and investors piled up hefty positions in the high beta Metal counter which rocketed by over eight percent while the Capital Goods, Realty and PSU pockets too gained from strength to strength and climbed by about five percent each.  Though there were no sectoral losers in the space, however individual stocks like Bharti Airtel, Hindustan Unilever and HDFC failed to enlist their names in the gainers’ list and respectively slipped by 2.03%, 0.73% and 0.13%.The market breadth remained optimistic as there were 1993 shares on the gaining side against 668 shares on the losing side, while 115 shares remained unchanged.

Finally, the BSE Sensex surged by 568 points or 2.47% to 23554.12, while the CNX Nifty rose 182 points or 2.61% to 7,162.95. 

The BSE Sensex touched a high and a low 23622.64 and 23197.67, respectively. The broader indices made a positive closing; the BSE Mid cap index ended up by 3.47%, while Small cap index gained 3.35%

The top gaining sectoral indices on the BSE were Metal up by 8.79%, Capital Goods up by 6.73%, Realty up by 6.17%, PSU up by 4.95% and Auto up by 4.27%, while there were no losers on sectoral space.

The top gainers on the Sensex were Tata Steel up by 13.01%, Larsen & Toubro up by 9.06%, SBI up by 7.94%, Adani Ports &Special up by 7.02% and Axis Bank up by 6.83%. On the flip side, Bharti Airtel down by 2.03%, Hindustan Unilever down by 0.73% and HDFC down by 0.13% were the top losers.

Meanwhile, Continuing its deflationary trend and remaining in deflation zone for 15 months in row, India's main inflation gauge based on monthly wholesale price index (WPI), stood at 0.90% for the month of January 2016 as compared to -0.73% for the previous month and -0.95% during the corresponding month of the previous year, as food articles, mainly vegetables and pulses, turned cheaper. Meanwhile, build up inflation rate in the financial year so far was -0.23% compared to a build up rate of -1.66% in the corresponding period of the previous year. The November data has been revised to -2.04% from -1.99%.

As per government data, the Wholesale Price Index for ‘All Commodities’ (Base: 2004-05=100) for the month of January, 2016 declined by 1.0 percent to 175.7 (provisional) from 177.4 (provisional) for the previous month. WPI inflation has been in the negative zone since November 2014.

Component wise, inflation in primary articles, having weight of 20.12%, declined by 1.7 percent to 253.3 (provisional) from 257.8 (provisional) for the previous month.  In the primary article index, the index for 'Food Articles' group declined by 1.9 percent to 267.6 (provisional) from 272.7 (provisional) for the previous month. The index for 'Minerals' group declined by 6.2 percent to 199.2 (provisional) from 212.3 (provisional) for the previous month .However, the index for ‘Non-Food Articles’ group rose by 0.3 percent to 224.5 (provisional) from 223.9 (provisional) for the previous month. Fuel & Power index having weight of 14.91%, declined by 2.9 percent to 171.6 (provisional) from 176.8 (provisional) for the previous month.

Manufactured Products constituting the major portion of the index with weightage of 64.97% rose by 0.1 percent to 152.7 (provisional) from 152.6 (provisional) for the previous month. Among the manufactured products, the index for 'Food Products' group rose by 0.7 percent to 176.7 (provisional) from 175.4 (provisional) for the previous month. The index for 'Beverages, Tobacco & Tobacco Products' group rose by 0.6 percent to 206.4 (provisional) from 205.2 (provisional) for the previous month. The index for 'Paper & Paper Products' group rose by 0.5 percent to 155.7 (provisional) from 154.9 (provisional) for the previous month. The index for 'Leather & Leather Products' group rose by 0.3 percent to 144.8 (provisional) from 144.4 (provisional) for the previous month. The index for 'Non-Metallic Mineral Products' group rose by 0.6 percent to 178.6 (provisional) from 177.5 (provisional) for the previous month. The index for 'Transport, Equipment & Parts' group rose by 0.1 percent to 138.2 (provisional) from 138.0 (provisional) for the previous month.

On the other side, the index for 'Textiles' group declined by 0.2 percent to 139.4 (provisional) from 139.7 (provisional) for the previous month. The index for 'Wood & Wood Products' group declined by 0.6 percent to 195.3 (provisional) from 196.4 (provisional) for the previous month. The index for 'Rubber & Plastic Products' group declined by 0.4 percent to 145.2 (provisional) from 145.8 (provisional) for the previous month. The index for 'Chemicals & Chemical Products' group declined by 0.1 percent to 149.7 (provisional) from 149.9 (provisional) for the previous month. The index for 'Basic Metals, Alloys & Metal Products' group declined by 0.5 percent to 149.6 (provisional) from 150.3 (provisional) for the previous month.

The final Wholesale Price Index for ‘All Commodities’ (Base: 2004-05=100) stood at 177.5 as compared to 177.6 (provisional) and annual rate of inflation based on final index stood at -2.04 percent as compared to -1.99 percent (provisional) respectively.

The CNX Nifty touched a high and low 7,182.80 and 7,056.80 respectively. 

The top gainers on Nifty were Bank of Baroda up by 23.18%, Vedanta up by 17.39%, Tata Steel up by 13.56%, Hindalco up by 9.28% and Larsen & Toubro up by 9.05%. On the flip side, Bharti Airtel down by 1.80%, Hindustan Unilever down by 1.11%, Idea Cellular down by 0.78% and HDFC down by 0.16% were the few losers.

European markets were trading in green; UK’s FTSE 100 surged 99.23 points or 1.74% to 5,806.83, France’s CAC strengthened 120.03 points or 3% to 4,115.09 and Germany’s DAX was up by 223.56 points or 2.49% to 9,191.07.

Asian markets ended mostly higher on Monday, encouraged by a stronger finish in US and European markets on Friday. Japanese shares ended higher as investors bought up recently battered financial stocks and the Japanese yen continued to ease from its strongest levels against the US dollar in more than a year. Hopes for more monetary stimulus from Japan boosted investors' appetite for emerging market equities, shrugging off data that showed Japan's economy contracted more than expected in the final quarter of 2015. The Shanghai Composite, however, lost ground after re-opening post the week-long Lunar New Year holiday. This was despite the positive comments on the yuan made by Zhou Xiaochuan, governor of the People's Bank of China (PBOC).