Benchmarks extend winning streak for second straight session

Monday’s trading session was of consolidation as the Indian frontline indices appeared a bit fatigued and remained in tight band for most part of the day. However, the benchmarks managed to extend the winning momentum for the second consecutive day of trade, as local sentiments continued to show signs of improvement. Investors took some encouragement with Finance Minister Arun Jaitley’s statement that the government hopes to pass the landmark Constitution Amendment Bill for national Goods and Services Tax (GST) as well as the bankruptcy and insolvency bill in the second half of the Budget session beginning April 20.  Some support also came with the report that overseas investors have bought a net $1.41 billion worth of shares so far in March, paring this year’s outflows to $1.48 billion.  However, caution prevailed in view of muted factory output data, which was released on Friday and retail inflation data, slated to be announced later in the day. India’s industrial production declined for a third month in a row, contracting by 1.5 per cent in January due to poor performance of manufacturing sector and lower offtake of capital goods. Meanwhile, buying in banking counter mainly aided sentiments after RBI governor Raghuram Rajan commented that the headline fiscal deficit target for the next financial year (at 3.5 per cent) year is a comfort for the central bank. It has already hiked hopes of a rate cut while shares of oil & gas producers such as ONGC, Reliance Industries and GAIL India also rose on the back of stability in the crude oil prices. On the flip side, metal pack remained under pressure owing to weaker-than-expected Chinese economic data.

On the global front, shares throughout Asia rallied on Monday, extending four-straight weeks of gains on expectations that central bankers meeting this week will keep intact policies supporting equity markets in some of the world's biggest economies. Chinese shares rose after the chief of the China Securities Regulatory Commission told a press conference over the weekend that it's too early to talk about winding back official support measures for the markets. Meanwhile, European markets rose in early trade, with the banking stocks among the top performers, as funding plans from the European Central Bank buoyed the sector.

Back home, the benchmark started the day on an optimistic note tracking the Asian peers which traded mostly in the green following the upbeat overnight cues from the Wall Street. The frontline indices managed to build on to the early gains in the first half of trade as they touched the intraday high level. Though investors did not show any knee-jerk reaction to the WPI inflation, which remained in the negative zone for 16 months in a row, but the indices came off the day’s high as investors gradually squared some positions in the afternoon trade. Thereafter, the bourses drifted lower to the low point of the day in the dying hour and shut shops with gain of over a quarter percent. Finally the NSE’s 50-share broadly followed index Nifty, got buttressed by close to quarter percent to settle above the crucial 7,500 support level, while Bombay Stock Exchange’s Sensitive Index-Sensex accumulated sixty nine points and closed above the psychological 24,750 mark.

On the BSE sectoral space, Banking counter remained the top gainer in the space with over half percent gains followed by the defensive - FMCG up index which ended with similar gains. On the flipside, the Metal, PSU and Realty sectors languished at the bottom of the table with losses of 2.04%, 0.49% and 0.32% respectively. 

The market breadth remained pessimistic as there were 1321 shares on the gaining side against 1331 shares on the losing side, while 174 shares remained unchanged.

Finally, the BSE Sensex gained 86.29 points or 0.35% to 24804.28, while the CNX Nifty rose 28.55 points or 0.38% to 7,538.75.

The BSE Sensex touched a high and a low 24960.51 and 24734.04, respectively. The broader indices made a positive closing; the BSE Mid cap index ended up by 0.31%, while Small cap index gained 0.41%

The top gaining sectoral indices on the BSE were Bankex up by 0.81%, FMCG up by 0.69%, Auto up by 0.60%, Oil & Gas up by 0.47% and Power up by 0.29%, while Metal down by 2.04%, PSU down by 0.49%, Realty down by 0.32% and Consumer Durables down by 0.23% were the top losing indices on BSE.

The top gainers on the Sensex were ICICI Bank up by 3.70%, Tata Motors up by 3.36%, BHEL up by 1.88%, ONGC up by 1.51% and GAIL India up by 0.94%. On the flip side, Coal India down by 6.96%, TCS down by 0.88%, Mahindra & Mahindra down by 0.73%, Sun Pharma down by 0.43% and Bajaj Auto down by 0.42% were the top losers.

Meanwhile, contracting for the third month in a row, India’s annual industrial output growth, measured by index of industrial production (IIP), stood at (-)1.5 percent in the month of January 2016 against a revised (-)1.2 percent the previous month, driven by a sharp decline in capital goods production and consumables, signaling that growth momentum in the economy remains vulnerable.

As per the data released by the Central Statistics Office of the Ministry of Statistics and Programme Implementation, IIP with base 2004-05 for the month of January 2016 stood at 186.3, which is 1.5 percent lower as compared to the level in the month of January 2015. The cumulative growth for the period April-January 2015-16 over the corresponding period of the previous year stands at 2.7 percent.

On the sectoral basis, the growth of manufacturing index which occupies 75.52% weightage in the overall index slipped to -2.8 percent in the month of January as against -2.4 percent in December 2015. Growth in mining slowed down to 1.3 per cent in January from 2.9 per cent in December. However, electricity sector output was the only savior, coming in at 6.6 percent in January versus 3.2 percent in December 2015.

The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of January 2016 stood at 138.4, 195.0 and 188.3 respectively, with the corresponding growth rates of 1.2 percent, (-) 2.8 percent and 6.6 percent as compared to January 2015. The cumulative growth in three sectors during April-January 2015-16 over the corresponding period of 2014-15 has been 2.1 percent, 2.5 percent and 4.7 percent respectively. In terms of industries, ten out of the twenty two industry groups in the manufacturing sector have shown negative growth during the month of January 2016 as compared to the corresponding month of the previous year.

As per Use-based classification, the growth rates in January 2016 over January 2015 are 1.8 percent in Basic goods, (-) 20.4 percent in Capital goods and 2.7 percent in Intermediate goods.  The Consumer durables and Consumer non-durables have recorded growth of 5.8 percent and (-) 3.1 percent respectively, with the overall growth in Consumer goods being 0.0 percent.

Commenting on the numbers, Reserve Bank of India (RBI) Governor Raghuram Rajan has said the latest industrial growth numbers were disappointing and, though the economy was recovering, the process is volatile, raising hopes that the central bank may cut rates in its review early next month.

The CNX Nifty touched a high and low 7,583.70 and 7,515.05 respectively. 

The top gainers on Nifty were ICICI Bank up by 3.65%, Tata Motors up by 3.44%, Cairn India up by 3.27%, Tech Mahindra up by 2.65% and BHEL up by 2.17%. On the flip side, Coal India down by 6.96%, Kotak Mahindra Bank down by 0.91%, Idea Cellular down by 0.88%, Mahindra & Mahindra down by 0.69% and Sun Pharma down by 0.69% were the top losers.

European markets were trading in green; France’s CAC increased 27.63 points or 0.61% to 4,520.42, UK’s FTSE 100 gained 34.09 points or 0.56% to 6,173.88 and Germany’s DAX was up by 171.04 points or 1.74% to 10,002.17.

The Asian markets rallied on Monday, with major averages extending a global rally posting good gains, ahead of central banks in two of the world’s three biggest economies reviewing policy this week. The Bank of Japan, which adopted a negative interest rate in January, will conclude a policy review on Tuesday and a Federal Reserve meeting will be ending on Wednesday. Meanwhile, the Chinese market surged over two percent, posting their biggest gain in more than a week after chairman of the China Securities Regulatory Commission, said it was too early to think about the state rescue fund leaving the market and vowed to step in “decisively” if needed to curb panic. Other markets in the region too ended higher, with Japanese Nikkei and Hang Seng posting gains in excess of a percent.