Benchmarks post smart recovery; Nifty ends above 7850 marks

Indian stock markets ended the first day of the week on an optimistic note as gains in a few blue chips such as Dr. Reddy's Laboratories and ITC offset a slump in state-run lenders such as Bank of Baroda. Sentiments got boost after data showed India’s wholesale prices unexpectedly rose for the first time in 18 months in April, ending a period of deflation. India's annual wholesale price inflation (WPI) moved up into the positive zone at 0.34% for April, from (-) 0.85% in March and (-) 2.43% during the corresponding month of the previous year. Some support also came with the report from Economic think-tank NCAER projecting India's economic growth rate to improve marginally to 7.7 percent in 2016-17 against the backdrop of IMD's forecast of better monsoon rains this year. However, investors remained cautious with industry body FICCI’s survey that growth of India's manufacturing sector may decelerate during June quarter due to factors like bleak export outlook, poor demand and high cost of borrowing. Furthermore, the report that onset of the southwest monsoon over Kerala is likely to be delayed from the normal date of June 1, the first negative signal since it forecast above-normal rainfall this season after two years of drought, also weighed on the sentiment.

On the global front, most of Asian markets ended the day on a firm note as gains in oil prices and hopes for economic stimulus in Japan helped investors shrug off weak cues from Wall Street and disappointing Chinese data. China's investment, factory output and retail sales all grew more slowly than expected in April, adding to doubts about whether the world's second-largest economy is stabilizing. Back home, the benchmark got off to a soft start as the indices showed signs of consolidation in early trade, lacking any significant upside cues. The indices moved only sideways thereafter but touched intraday lows in the noon session as fresh bouts of selling pressure was witnessed after weak European opening. However, the frontline gauges managed to pare the losses and rise above the neutral line in the afternoon trades, as investor turned optimistic. The bourses further capitalized on the momentum and spurted in final hour of trades on the back of broad based bottom fishing in undervalued stocks. Finally, the NSE’s 50-share broadly followed index - Nifty garnered over half a percentage points to settle above the crucial 7,850 level, while Bombay Stock Exchange’s Sensitive Index-Sensex accumulated over one hundred sixty points and closed above the psychological 25,650 mark.

On the BSE sectoral space, the FMCG counter remained the top gainer in the space with over one and half percent gains followed by the beaten down Realty pocket which surged over a percent. On the flipside, PSU counter languished at the bottom of the table with cut of over a percent, while the Oil & Gas, Capital Goods and Power sectors settled with moderate cuts.  The market breadth remained in favor of advances as there were 1309 shares on the gaining side against 1258 shares on the losing side while 172 shares remain unchanged.

Finally, the BSE Sensex surged 163.66 points or 0.64% to 25653.23, while the CNX Nifty rose 45.85 points or 0.59% to 7,860.75.

The BSE Sensex touched a high and a low 25688.46 and 25351.62, respectively. The broader indices made a positive closing; the BSE Mid cap index ended up by 0.30%, while Small cap index gained 0.09%.

The top gaining sectoral indices on the BSE were FMCG up by 1.58%, Realty up by 1.47%, Metal up by 0.77%, IT up by 0.62% and Auto up by 0.56%, while PSU down by 1.10%, Oil & Gas down by 0.41%, Capital Goods down by 0.32%, Power down by 0.22% and Consumer Durables down by 0.12% were the top losing indices on BSE.

The top gainers on the Sensex were Dr. Reddys Lab up by 3.16%, ITC up by 3.13%, HDFC Bank up by 2.01%, Hindustan Unilever up by 1.85% and HDFC up by 1.82%. On the flip side, SBI down by 4.22%, Cipla down by 1.47%, Adani Ports &Special down by 1.38%, ICICI Bank down by 1.13% and BHEL down by 0.94% were the top losers.

Meanwhile, posting  seventeenth consecutive month of fall, Indian merchandise exports fell by 6.74 percent in the month of April to $ 20568.85 million. The significant fall in exports was due to sharp fall in shipments of petroleum and engineering products amid tepid global demand. However, the imports too fell by 23 per cent, narrowing the trade deficit by 20 per cent, a five year low to $ 4844.87 million in April from $ 10992.30 million reported during the corresponding month of 2015, led by a sharp fall in gold imports due to a nationwide strike by jewellers protesting against the proposed 1 percent excise duty and a decrease in inbound oil shipments.

According to the data released by the Commerce Ministry, Indian exports in dollar terms during April 2016 stood at $20568.85 million, which was 6.74 per cent lower than the level of $22054.72 million during April, 2015. In Rupee terms the exports was valued at Rs 136720.11 crore, which was 1.21 per cent lower than the level of Rs. 138400.44 crore in the same period last year. The growth in exports has fallen for the US, the EU, China and Japan by 3.87 per cent, 0.04 per cent, 25.34 per cent and 1.10 per cent, respectively for February 2016. In April, exports declined in most major categories including petroleum products, ready-made garments, engineering goods, cotton yarn, carpet, leather, rice and cashew. However, items such as gems & jewellery, tobacco, electronic products, chemicals and pharmaceuticals posted an increase.

Meanwhile, Imports during April, 2016 were valued at $25413.72 million in dollar terms, 23.10 per cent lower over the level of imports valued at $33047.02 million in same period last year. In rupee terms imports were valued at Rs 168923.71 crore, which was 18.54 per cent lower than Rs 207380.63 crore during April 2015. The massive fall in the crude oil prices over the past year has brought down the import bill.

Oil imports which accounts for 31 percent of the total imports dropped by 24.01 per cent to $ 5655.92 million as against oil imports valued at $7442.92 million in the corresponding period last year. Non-oil imports during April, 2016 were estimated at $19757.80 million which was 22.83 per cent lower than non-oil imports of $25604.10 million in April, 2015.

The commerce ministry said that the trend of falling exports is in tandem with other major world economies. Federation of Indian Export Organisations has expressed its hope that the exports will enter the positive zone in June-July as the fall had been arrested to some extent in March and April and expect double-digit growth from October onwards.  The CNX Nifty touched a high and low 7,873.90 and 7,873.90 respectively. 

The top gainers on Nifty were Yes Bank up by 3.85%, Bharti Infratel up by 3.44%, ITC up by 3.26%, BOSCH up by 3.26% and Dr. Reddys Lab up by 2.53%. On the flip side, Bank of Baroda down by 8.41%, SBI down by 4.17%, Cipla down by 1.84%, Adani Ports &Special down by 1.59% and Idea Cellular down by 1.28% were the top losers.

The European markets were showing mixed trend, Germany’s DAX was up by 90.78 points or 0.92% to 9,952.90, France’s CAC was down by 35.43 points or 0.82% to 4,284.56 and UK’s FTSE 100 declined by 17.44 points or 0.28% to 6,121.06.

Asian equity markets ended mostly higher on Monday as gains in oil prices and hopes for economic stimulus in Japan helped investors shrug off weak cues from Wall Street and disappointing Chinese data. Japanese shares rallied earlier in the day after reports suggested that Prime Minister Shinzo Abe will postpone a planned sales tax increase scheduled for next year. The early rally faded soon after a top government spokesman denied the report. Chinese shares closed notably higher despite a raft of disappointing data pointing to continued weakness in the world's second largest economy. China's investment, factory output and retail sales all grew more slowly than expected in April, raising fears that a bounce seen in March is fizzling. Sentiment was bolstered somewhat after the China Securities Regulatory Commission denied the media reports about an adjustment to the policies on refinancing and mergers and acquisitions by listed companies.