Indian equity indices climb ahead of RBI policy review

Hopes of a rate cut in the monetary policy review, coupled with positive macro-economic data and value buying in frontline blue-chip stocks, helped Indian benchmark indices to end the session with the gain of over half a percent on Monday. Sentiments got a boost after a business survey showed India's manufacturing activity expanded to an eight-month high in March driven by strong rise in business orders. The Nikkei-Markit purchasing managers’ index rose to 52.4 in March, up 1.3 percentage points after two months at 51.1 this year. This is a third consecutive monthly improvement in business conditions across the sector. Some support also came with the report that the government achieved the fiscal deficit target for the year, putting an end to speculation after February numbers came in on the high side and reinforcing the commitment to fiscal discipline ahead of the Reserve Bank of India monetary policy review scheduled for April 5. Further, market participants also got some encouragement with India's latest monsoon forecasting model predicting good rainfall this year, which will end severe water shortage that is threatening power supply and could cheer farmers who have been devastated by two consecutive droughts.

On the global front, Asian marked ended the session on positive note on Monday, as investors maintained bets the Federal Reserve will proceed cautiously on raising interest rates, even as data showed the world’s biggest economy is strengthening.  Manufacturing data from the US and China also eased concerns about slump in the global manufacturing activity. However, European shares declined to near a one-month low in early trade, with telecom shares slumping after talks between Orange and Bouygues on a deal to create a dominant French telecoms operator collapsed.

Back home, after starting the trade on firm note, Indian benchmark indices showed some strength in early trade, but the sentiments turned pessimistic in late morning trades and indices started drifting lower, however the market regained its momentum in the final hour of trade and finished the day gaining around half a percent.  The NSE’s 50-share broadly followed index Nifty, shut shop after surging over half a percent and regained the crucial 7,750 support level, while Bombay Stock Exchange’s sensitive Index, or Sensex accumulated over hundred points to close a tad below the psychological 25,400 mark. Moreover, the broader markets too showed some resilience and settled on a positive note. On the BSE sectoral space, Teck counter remained the top gainer in the space with over two percent gains, followed by the IT, Auto and Power indices which ended with moderate gains of around a percent. On the flipside, the Realty and FMCG sectors languished at the bottom of the table with losses of 0.61% and 0.38% respectively.

The market breadth remained positive as there were 1650 shares on the gaining side against 963 shares on the losing side while 133 shares remained unchanged.

Finally, the BSE Sensex gained 130.01 points or 0.51% to 25399.65, while the CNX Nifty rose 45.75 points or 0.59% to 7,758.80.

The BSE Sensex touched a high and a low 25424.15 and 25223.49, respectively. The broader indices too made a positive closing; the BSE Mid cap index ended up by 0.24%, while Small cap index gained by 0.52%

The top gaining sectoral indices on the BSE were TECK up by 2.06%, IT up by 1.95%, Auto up by 1.16%, Power up by 0.81% and Consumer Durables up by 0.56%, while Realty down by 0.61% and FMCG down by 0.38% were the top losing indices on BSE.

The top gainers on the Sensex were Mahindra & Mahindra up by 4.29%, Bharti Airtel up by 3.76%, Infosys up by 3.12%, Tata Motors up by 2.24% and Asian Paints up by 1.80%. On the flip side, ITC down by 1.50%, Maruti Suzuki down by 1.13%, Axis Bank down by 0.99%, Coal India down by 0.83% and HDFC down by 0.67% were the top losers.

Meanwhile, registering above the crucial 50.0 threshold for the third consecutive month, India’s manufacturing growth rose to an eight-month high in March driven by a strong rise in business orders, leading firms to scale up output. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers’ Index (PMI)-composite single-figure indicator of manufacturing performance was up from 51.1 in February to 52.4 in March. A figure above 50 represents expansion while a reading below this level means contraction.

According to the survey, India’s manufacturing upturn gathered momentum in March, with stronger inflows of new work which lead firms to scale up output. Further, with the improved domestic demand, producers also recorded an increase in new export business. These positive developments encouraged companies to buy more inputs.  On the price front, cost inflation accelerated and output charge inflation touched a 16-month high.

The latest expansion was widespread across the three monitored sub-sectors, with consumer goods posting the quickest rate of increase. March data highlighted a third successive monthly rise in order books. New business inflows increased at a solid pace. Growth of new export orders was sustained, but the rate of expansion remained slight. Buying levels increased further in March, which survey participants linked to stock-building initiatives. Although quicker than in February, the rate of growth was slight overall.

Furthermore, the survey highlighted that the backlogs of work decreased in March. These prevented manufacturers from taking on additional workers and employment levels were broadly unchanged again. Meanwhile, input costs rose amid reports of the weaker rupee resulting in higher prices paid for imported raw materials. Tariffs were subsequently raised.

The CNX Nifty touched a high and low 7,764.45 and 7,704.40 respectively. 

The top gainers on Nifty were Idea Cellular up by 6.21%, Tata Power up by 4.60%, Bharti Airtel up by 4.02%, Mahindra & Mahindra up by 3.96% and Aurobindo Pharma up by 3.44%. On the flip side, Ambuja Cement down by 1.64%, ITC down by 1.50%, UltraTech Cement down by 1.50%, HDFC down by 1.25% and Maruti Suzuki India down by 1.19% were the top losers.

European markets were trading in green; UK’s FTSE 100 increased 38.67 points or 0.63% to 6,184.72, France’s CAC surged 48.02 points or 1.11% to 4,370.26 and Germany’s DAX was up by 96.62 points or 0.99% to 9,891.26.

Asian equity markets ended mostly higher on Monday as better-than-expected U.S. jobs and factory data underscored the resilience of the world's largest economy and movements in the dollar failed to change investor views on the outlook for U.S. interest rates. Data showed that US employers added 215,000 jobs in March, which was largely in line with expectations, with growth in nearly every domestically-oriented sector. The unemployment rate edged up to 5%, though that was largely due to more people joining the labor force. However, Japanese shares hit a fresh one-month low as the yen strengthened and March sales proved a mixed bag for the country's three big automakers. Markets in China, Hong Kong and Taiwan were closed for public holidays.