Markets recover previous session losses with a gap-up opening

With a gap-up opening Indian equity markets have recovered all their previous session losses and are now trading up by around a percent, on the back of fresh buying by funds and retail investors in early deals. The sentiment got a boost with India's infrastructure sectors clocking their highest growth in 16 months in March 2016 led by solid growth in electricity, fertilizer, refinery and cement sectors, with the index for core industries climbing 6.4 per cent, against 5.7 per cent in February. The sentiments were further supported by Indian rupee appreciating 9 paise at 66.35 per dollar, helped by a decline in the dollar index after a report showed US manufacturing activity remained lackluster in April.  Meanwhile, foreign institutional investors were net buyers to the tune of Rs 435 crore on Monday, as per provisional stock exchange data. Besides, Buying in Auto stock too supported sentiments after the country's top auto firms reported a strong start to the new financial year with good sales numbers.

In the scrip specific development, BGR Energy Systems rallied 17 per cent on the BSE trade after the company executed agreement with Hitachi, Japan and Hitachi Power Europe GmbH (HPE), Germany to settle their disputes.

On the global front, US markets ended higher on Monday, helped by a decline in the dollar index. The US dollar index lost half a percent for a sixth-straight day of declines, its first since the one ended in early April. Asian markets were trading mixed amid dip in oil prices and weakening of the US dollar. Disappointing manufacturing sector data from China was weighing on investor sentiment. The Japanese market is closed today for the Constitution Day holiday.

Back home, all the sectoral indices on the BSE were trading in fine fettle led by Capital Goods, Auto, Power, Realty and Bankex. The market breadth on BSE was positive in the ratio of 1176: 376, while 77scrips remained unchanged.

The BSE Sensex is currently trading at 25699.65, up by 262.68 points or 1.03% after trading in a range of 25477.84 and 25702.55. There were 25 stocks advancing against 5 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.74%, while Small cap index gained 0.87%.

The top gaining sectoral indices on the BSE were Capital Goods up by 1.69%, Auto up by 1.56%, Power up by 1.39%, Realty up by 1.08% and Bankex up by 0.85%, while there were no losses. 

The top gainers on the Sensex were Adani Ports &Special up by 3.36%, Tata Motors up by 2.66%, Larsen & Toubro up by 2.00%, HDFC up by 1.87% and NTPC up by 1.59%. On the flip side, Sun Pharma Inds. down by 0.88%, Coal India down by 0.42%, GAIL India down by 0.23%, Wipro down by 0.17% and TCS down by 0.13% were the top losers.

Meanwhile, the Rajya Sabha has approved an amendment to the mining law to enable mergers and acquisitions (M&A) of steel and cement companies, reeling in the aftermath of the collapse in global commodity prices. Lots of public sector banks (PSBs) including State Bank of India (SBI), were trying to forge tie-ups between distressed cement, steel and power companies with those that are in better shape, but were unable to do so, it was SBI who lobbied hard to get the amendments in the bill, which will enable banks to sell assets to relieve stress.

The changes are mainly aimed at helping companies sell limestone mining licences along with their cement plants. The government expects the transfer of non-auctioned mines to happen smoothly. Mines minister Narendra Singh Tomar said that the amendment was in the larger interest of workers and the provision was not intended to benefit any industrial house.

In 2015, the government brought the Mines and Minerals (Development and Regulation) Amendment Bill, replacing a 1957 legislation which stipulated that mining licences could only be auctioned. This amended law allowed transfer of mines allotted through auctions but was silent on captive mining licences handed out in the past on the basis of recommendations of a screening committee. That discouraged deals among companies and Major deals among cement companies like UltraTech, Reliance Cements and Lafarge were stuck because the Mines and Minerals (Development and Regulation) Amendment Act, 2015 permitted transfer of mining leases only for auctioned mines

So in January this year, the government proposed the amendment to spur merger and acquisitions in the mining sector and help in checking the stressed and non-performing assets of banks by allowing them to liquidate assets where a firm or its captive mining lease is mortgaged. Since Lok Sabha has already approved the proposed law, The Mines and Minerals (Development and Regulation) (Amendment) Bill, 2016, is just one step away from becoming a law- it now?only requires the President’s signature. Once the Bill is signed into law, there will be no bar on the transfer of mining leases.

The CNX Nifty is currently trading at 7871.95, up by 66.05 points or 0.85% after trading in a range of 7820.95 and 7874.65. There were 46 stocks advancing against 5 stocks declining on the index.

The top gainers on Nifty were Tata Motors - DVR up by 5.03%, Adani Ports &Special up by 3.50%, Bharti Infratel up by 3.09%, Aurobindo Pharma up by 2.96% and Tata Motors up by 2.58%. On the flip side, Sun Pharma Inds. down by 0.93%, GAIL India down by 0.44%, Coal India down by 0.40%, TCS down by 0.34% and Wipro down by 0.23% were the top losers.

Asian markets were trading mixed, KOSPI Index increased 7.38 points or 0.37% to 1,985.53, Jakarta Composite increased 16.99 points or 0.35% to 4,825.31, Shanghai Composite increased 47.09 points or 1.6% to 2,985.41. On the flip side, Hang Seng decreased 243.59 points or 1.16% to 20,823.46, Taiwan Weighted decreased 75.47 points or 0.9% to 8,302.43 and FTSE Bursa Malaysia KLCI decreased 19.57 points or 1.17% to 1,653.15.