Benchmarks extend gains despite a choppy trade; Sensex ends above 25,700 level

Indian benchmark indices though managed to extend the uptrend for the second consecutive session but consolidated their position after showcasing the outstanding feat of registering biggest intra-day gains in nearly four weeks on Monday. It turned out to be a rather volatile day of trade as the indices rebounded after drifting to lower levels in the morning session, sustained position build up was witnessed in select index heavyweights and capital goods shares. Sentiments got some support with the report that the Centre's indirect tax mop-up rose 41 per cent in April led by high excise collections, signaling a pick-up in economic activity. Furthermore, India's foodgrain production too increased marginally to 252.23 million tonnes in the 2015-16 crop year, despite setback due to deficient rainfall and shortage of water in reservoirs. If the estimates hold up, it would imply that the damage to the agrarian economy is less than what had been initially feared; reflecting a degree of resilience of Indian agriculture to a deficit monsoon. However, investors remained cautious with report that higher food and fuel prices probably nudged India's annual inflation up to 5.0 percent in April from 4.83 percent in March, making it harder for the central bank to follow up last month's interest rate cut too swiftly.

On the global front, stock markets across the world rose on Tuesday helped by some solid corporate earnings in Europe and a new pledge by Japan that it was prepared to step in to weaken its currency. Steady inflation numbers out of China for the second straight month also offered some support. China's consumer price inflation rose an annual 2.3 percent in April, unchanged from the previous month and in line with economists' expectations.

Back home, the benchmark got off to a flat opening with a negative bias despite mostly positive leads from Asian markets, were sentiments remained optimistic in thin trades triggered by a fresh promise of stimulus from Beijing, which helped to counter pessimism over weak trade data from China for April. However, the key gauges drifted into the negative zone in early trades and slipped to intraday lows in early noon session on sharp across the board sell-off.  But, the indices managed to pare most of the losses and entered into positive terrain in early afternoon trades on getting encouraging leads from European counterparts. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 224.40 crore on May 09, 2016. Thereafter, the indices kept oscillating in a narrow range through the day’s trade as investors remained cautious and refrained from any buying activity ahead of the key macroeconomic data and quarterly earnings by some more companies, to be released this week.  Finally the NSE’s 50-share broadly followed index Nifty, got buttressed by over quarter percent to settle above the crucial 7,850 support level, while Bombay Stock Exchange’s Sensitive Index-Sensex accumulated over eighty points and closed above the psychological 25,700 mark.

On the BSE sectoral space, the Capital Goods counter remained the top gainer with around one and half percent of gains, followed by the Consumer Durables pocket which gained over half percent. Further, shares of sugar companies extended gains and rallied on expectation of strong earnings for quarter ended March 31, 2016 (Q4FY16). On the flipside, the Metal, Auto and Oil & Gas sectors languished at the bottom of the table with losses of 1.16%, 0.87% and 0.74% respectively. Metal stocks including NMDC, Vedanta and JSW Steel came under pressure after the report that Iron ore traffic, including pellets, at major ports saw a sharp fall of 28 per cent in financial year 2015-16 as imports declined because of weak demand.

The market breadth remained in favor of declines as there were 1277 shares on the gaining side against 1334 shares on the losing side while 153 shares remain unchanged.

Finally, the BSE Sensex surged 83.67 points or 0.33% to 25772.53, while the CNX Nifty rose 21.75 points or 0.28% to 7,887.80.

The BSE Sensex touched a high and a low 25809.93 and 25614.24, respectively. The broader indices made a positive closing; the BSE Mid cap index ended up by 0.20%, while Small cap index gained 0.11%.

The top gaining sectoral indices on the BSE were Capital Goods up by 1.48%, Consumer Durables up by 0.68%, Bankex up by 0.62%, IT up by 0.52% and TECK up by 0.47%, while Metal down by 1.16%, Auto down by 0.87%, Oil & Gas down by 0.74%, PSU down by 0.55% and Power down by 0.50% were the top losing indices on BSE.

The top gainers on the Sensex were Dr. Reddys Lab up by 3.04%, Axis Bank up by 2.22%, Hindustan Unilever up by 1.93%, Larsen & Toubro up by 1.87% and GAIL India up by 1.26%. On the flip side, Tata Motors down by 3.58%, NTPC down by 1.75%, ONGC down by 1.65%, Adani Ports &Special down by 0.99% and Asian Paints down by 0.83% were the top losers.

Meanwhile, inviting applications from merchant bankers to manage the offer for sale (OFS), the department of investment and public asset management (DIPAM) has said the government is planning to sell 15% stake in State Trading Corporation (STC).  The STC OFS could fetch about Rs 85 crore at current market prices.

The STC stake sale is in addition to over a dozen companies DIPAM has lined up for disinvestment in the current fiscal to raise 36,000 crore from minority stake sales in PSUs. It will raise another 20,500 crore from strategic stake sales. Other PSUs lined up for disinvestment include Oil India, NMDC, Coal India, Oil and Natural Gas Corporation, Hindustan Aeronautics and Power Finance Corporation. Besides, DIPAM is in the process of appointing merchant bankers for stake sales in National Fertilisers (15%) and Rashtriya Chemicals and Fertilisers (5%), Oil India (10%) and NMDC (10%).

In April, the government kick-started its disinvestment process for the current fiscal with 11.36 percent stake sale in state-controlled hydropower producer NHPC at Rs 21.75 per share through an offer for sale which was likely to fetch the exchequer over Rs 2,700 crore.The CNX Nifty touched a high and low 7,896.90 and 7,837.70 respectively. 

The top gainers on Nifty were Grasim Industries up by 3.41%, Dr. Reddys Lab up by 3.03%, Axis Bank up by 2.10%, Hindustan Unilever up by 2.04% and Larsen & Toubro up by 2.04%. On the flip side, Tata Motors down by 3.26%, Tata Motors - DVR down by 2.63%, Hindalco down by 1.91%, ONGC down by 1.70% and NTPC down by 1.54% were the top losers.

European markets were trading in green; France’s CAC surged 48.9 points or 1.13% to 4,371.71, UK’s FTSE 100 increased 57.31 points or 0.94% to 6,172.12 and Germany’s DAX was up by 108.12 points or 1.08% to 10,088.61.

The Asian markets closed mostly in green on Tuesday as the dollar-yen pair rose towards the 109 handle and oil prices steadied after steep losses overnight on expectations of an inventory build and easing concerns over Canadian oil supply disruptions. Steady inflation numbers out of China for the second straight month also offered some support. China's consumer price inflation rose an annual 2.3 percent in April, unchanged from the previous month and in line with economists' expectations. Japanese shares rose for a second day to hit a 1-1/2-week high after Finance Minister Taro Aso reiterated that authorities will intervene in the currency market to prevent ‘one-sided’ moves of the yen. Chinese stocks closed up marginally after a two-day slump on concerns over economic recovery and regulatory crackdown on speculation in the country's commodity markets.