Benchmarks extend winning streak for fourth straight session

Indian equity Benchmarks showcased yet another courageous performance and went on to outclass indices around the world, by vivaciously rallying around a percent in the session and settling above the psychological 7,900 (Nifty) and 25,800 (Sensex) levels. Investors continued building hefty across the board positions as sentiments got a boost after India's wholesale prices Index (WPI) fell for the 17th straight month in March, with the WPI-based inflation declining 0.85% from a year ago on the back of falling prices of manufactured products. In February, the index was down 0.91%, while in March 2015 it had fallen 2.33%.  Investors’ morale was also boosted with Infosys, India’s second-largest information technology (IT) services firm forecasting strong revenue growth of 11.5%-13.5% in constant currency in the current fiscal (FY17). In dollar terms, the company expects revenue to grow between 11.8% and 13.8% for the fiscal year ending March 31, 2017. Besides, good gain in ITC stocks post the company’s decision to resume manufacturing of cigarettes at its factories soon following a favourable high court order too aided the sentiment. Meanwhile, shares of aviation and state-owned oil marketing companies surged after global crude oil prices eased after talks between the OPEC and non-OPEC producers to freeze oil output remained inconclusive. On the flip sides, PSU Banks came under pressure after ratings agency Moody's said asset quality of the 11 rated PSU banks may face further stress as restructured loans may eventually turn into NPAs.

On the global front, tumbling crude oil prices dragged down most of the Asian markets on Monday after producers' weekend talks failed to agree a plan to curb the global supply glut, and Tokyo shares dropped as investors assessed the impact of a devastating earthquake in southwestern Japan. Furthermore, Europe’s stock markets too sank at the start of trade, with sentiment hit hard by failed Doha talks and the subsequent slump in oil prices. Brent crude tumbled about 4.6 percent to $41.10, while US crude slid about 5.2 percent to $38.26.

Back home, after getting gap up start, Indian benchmark indices slipped into negative territory in early trade, tracking weakness in the other regional markets amid sharp decline in the oil prices. But the frontline indices slowly but steadily continued gathering steam and surged by around half a percent by late morning trades. The bourses further capitalized on the momentum and spurted in afternoon trades on the back of broad based bottom fishing in undervalued stocks. However, a mild profit booking in dying hour of trade ensured that the key indices shut shops off the intraday highs. Finally the NSE’s 50-share broadly followed index Nifty, got buttressed by close to a percent to settle above the crucial 7,900 support level, while Bombay Stock Exchange’s Sensitive Index-Sensex accumulated over one hundred and eighty points and closed above the psychological 25,800 mark.  The broader markets succeed to outperform their larger peers as the BSE’s midcap gained 1.2% and smallcap index jumped 1.1%. On the BSE sectoral space, the Realty counter remained the top gainer with over four percent gains, followed by the IT pocket which gained by over three percent. On the flipside, the Banking, Auto and PSU sectors languished at the bottom of the table with losses of 0.52%, 0.27% and 0.13% respectively.  The market breadth remained optimistic as there were 1440 shares on the gaining side against 1177 shares on the losing side while 149 shares remained unchanged.

Finally, the BSE Sensex surged 189.61 points or 0.74% to 25816.36, while the CNX Nifty rose 64.25 points or 0.82% to 7,914.70.

The BSE Sensex touched a high and a low 25870.03 and 25634.12, respectively. The broader indices made a positive closing; the BSE Mid cap index ended up by 1.26%, while Small cap index gained 1.11%

The top gaining sectoral indices on the BSE were Realty up by 4.40%, IT up by 3.09%, TECK up by 2.92%, Consumer Durables up by 1.73% and FMCG up by 1.07%, while Bankex down by 0.52%, Auto down by 0.27%, PSU down by 0.13% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 5.70%, Cipla up by 2.42%, Bharti Airtel up by 1.92%, Lupin up by 1.77% and NTPC up by 1.68%. On the flip side, Hero MotoCorp down by 2.74%, SBI down by 2.56%, GAIL India down by 2.47%, ONGC down by 2.46% and ICICI Bank down by 1.76% were the top losers.

Meanwhile, the International Monetary Fund (IMF) in its latest World Economic Outlook (WEO) report has said that the Indian government must stick to its fiscal consolidation path and focus on the reforms especially in the labour and infrastructure sectors.  It said that fiscal consolidation should continue, underpinned by revenue reforms and further reductions in subsidies and added that sustaining strong growth over the medium term will require labour market reforms and taking apart of infrastructure bottlenecks, especially in the power sector.

The report further stated that lower commodity prices, supply side measures, and a relatively tight monetary stance have resulted in a faster-than-expected fall in inflation, making room for nominal interest rate cuts, but upside risks to inflation could necessitate a tightening of monetary policy. The report predicted that India would achieve its inflation target of 5 per cent in the first half of 2017, but has warned that an unfavourable monsoon and the effect of public sector wage increases due to the adoption of the Seventh Pay Commission’s recommendations could pose risks. The retail inflation or the Consumer Price Index (CPI) for the month March 2016 eased to a six- month low at 4.83 percent as compared to 5.18 percent in February.

The WEO report has projected that India’s current account deficit would widen sharply to $94.7 billion by 2021. The WEO data show India’s CAD, which was at $26.2 billion or 1.3 per cent of GDP in 2015, will widen to $51.8 billion (2.1 per cent of GDP) by 2017. Furthermore, IMF has retained its GDP growth forecast for India, adding that the main driver of this growth will be private consumption and investment. The report said that “In India, growth is projected to notch up to 7.5 per cent in 2016-17, as forecast in October”.

The CNX Nifty touched a high and low 7,920.60 and 7,842.75 respectively. 

The top gainers on Nifty were Infosys up by 5.50%, Idea Cellular up by 5.10%, BPCL up by 5.02%, Ultratech Cement up by 4.04% and Bharti Infratel up by 2.61%. On the flip side, Bank of Baroda down by 3.18%, Gail down by 3.13%, ONGC India down by 2.91%, SBI down by 2.79% and Hero MotoCorp down by 2.79% were the top losers.

European markets were trading lower; Germany’s DAX decreased 28.71 points or 0.29% to 10,022.86, France’s CAC shed 22.38 points or 0.5% to 4,472.79 and UK’s FTSE 100 was down by 15.66 points or 0.25% to 6,328.09.

Asian equity markets ended mostly lower on Monday, as oil prices tumbled after a summit of major oil producing nations in Doha failed to reach an agreement to freeze oil production. Some 18 oil-exporting nations, including OPEC members, had gathered in Doha, the capital of Qatar, over the weekend in an attempt to agree to stabilize output at January levels until October 2016. The pact fell apart after Saudi Arabia demanded that Iran join in. Japanese shares led regional losses due to a renewed surge of its currency and after two powerful earthquakes hit the country last week, killing at least 41 people and forcing major companies to curtail production.