Benchmarks extend winning streak for the fifth straight session

Monday’s trading session was clearly of consolidation and the Indian benchmark indices appeared a bit fatigued and remained in directionless trajectory throughout the day. Nevertheless, the benchmarks managed to extend the winning momentum for the fifth consecutive day of trade. Investors got some confidence with the report that India is one of the best-placed among emerging market economies as domestic factors have started to turn ‘incrementally positive’ indicating a nascent recovery.  According to the report, several economic data such as electricity generation, cement production, diesel consumption and tractor growth are showing a sharp improvement over 2015.  Besides, the expectation that the Reserve Bank is likely to keep key rates unchanged in the next policy meeting on June 7, but might lower rates by another 50 bps during the current financial year, added to the optimistic sentiments. Some support also came with the report that a normal monsoon this year is expected to provide 20% boost to the income of farmers, whose debt leverage has touched 22% following two years of droughts. On an average, farmers' income has come down by 3 per cent in 2014-15 and by 4 per cent in 2015-16. However, some traders remained cautious as India Ratings and Research stated that the economic growth of the country is expected to be 7.5% in 2015-16, lower than advance estimate of 7.6% by the Central Statistics Office.

On the global front, buoyed by a weaker yen, Japanese stocks were leading Asia higher, as the US dollar climbed in the wake of firming expectations that the Federal Reserve will lift benchmark interest rates in coming months. Further Chinese stocks rose modestly with many investors keeping to the sidelines pondering the monetary policy outlook, as the economy fails to show signs of a sustained recovery. Investors were looking ahead to China's May manufacturing index due out Wednesday and first-quarter gross domestic product for India on Tuesday, Australia on Wednesday and South Korea on Thursday. Meanwhile, European stocks opened mostly higher, as investors shrugged off comments by Federal Reserve Chair Janet Yellen pointing to the possibility for a rate hike this summer.

Back home, the benchmark got off to a positive opening, in tandem with the cautiously optimistic sentiments prevailing in Asian markets. The key indices soon capitalized on the momentum and touched intraday highs but the indices failed to hold onto the highs and receded to lower levels in late morning session as investors opted to book some of their profits at higher levels. Thereafter, the indices kept oscillating in a narrow range through the day’s trade. Finally, the NSE’s 50-share broadly followed index - Nifty garnered around two tens of a percent point to settle above the crucial 8,100 level, while Bombay Stock Exchange’s sensitive index-Sensex accumulated seventy two points and closed above the psychological 26,700 mark. On the BSE sectoral space, the Metal counter remained the top gainer in the space with over two percent gains followed by the IT and Auto pockets, which surged over a percent point each. On the flipside Realty counter languished at the bottom of the table with a cut of over a percent, while the Oil & Gas and FMCG sectors settled with moderate cuts.

The market breadth remained in favour of declines as there were 1238 shares on the gaining side against 1372 shares on the losing side, while 191 shares remained unchanged.

Finally, the BSE Sensex gained 72 points or 0.27% to 26725.60, while the CNX Nifty rose 21.85 points or 0.27% to 8,178.50.

The BSE Sensex touched a high and a low 26794.96 and 26623.33, respectively. The broader indices made a positive closing; the BSE Mid cap index ended up by 0.35%, while Small cap index gained 0.42%

The top gaining sectoral indices on the BSE were Metal up by 2.28%, IT up by 1.33%, TECK up by 1.17%, Auto up by 1.11% and PSU up by 0.55%, while Realty down by 1.02%, Oil & Gas down by 0.40% and FMCG down by 0.05% were the losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 4.23%, Coal India up by 3.80%, Hero MotoCorp up by 3.02%, TCS up by 2.46% and NTPC up by 2.29%. On the flip side, BHEL down by 5.81%, HDFC down by 2.16%, Tata Steel down by 1.79%, Maruti Suzuki down by 1.65% and Sun Pharma Inds. down by 1.57% were the top losers.

Meanwhile, Global industry body World Steel Association (WSA), in its latest report has revealed that India, the world's third largest steel producer, was among the top 10 importers of the alloy last year. India imported 13.3 million tonnes (MT) of the metal in 2015, slightly higher from 13.2 MT of steel imported by China during the same period. WSA data also showed that India exported 7.6 MT of steel in 2015, which was just a fraction of what its neighbour China exported during the same period at 111.6 MT.

As per the data of WSA, European Union as a bloc imported 37.7 MT of steel last year, which was followed by the US with 36.5 MT, Germany 24.8 MT, South Korea 21.7 MT, Italy 19.9 MT, Turkey 18.6 MT, Vietnam 16.3 MT, Thailand 14.6 MT and France 13.7 MT.

WSA forecasted that India's steel demand is expected to grow by 5.4 per cent to 83.8 MT in 2016 on the back of low oil prices and reform momentum. Regarding outlook it said that economic environment facing steel industry continues to be challenging with China's slowdown impacting globally across a range of indicators contributing to volatility in financial markets, sluggish growth in global trade and low oil and other commodity prices.

Recently the industry body had said that India's prospects are brightening due to low oil prices, the reform momentum and policies to increase infrastructure and manufacturing output. India’s steel demand will increase by 5.4 per cent in both 2016 and 2017 reaching 88.3 MT in 2017.

The CNX Nifty touched a high and low 8,200.00 and 8,150.80 respectively. 

The top gainers on Nifty were Hindalco up by 11.86%, Tata Motors up by 4.73%, Tata Power up by 3.93%, Coal India up by 3.91% and Tata Motors - DVR up by 3.64%. On the flip side, BHEL down by 5.89%, Tata Steel down by 2.34%, Zee Entertainment down by 2.23%, Maruti Suzuki down by 1.87% and HDFC down by 1.64% were the top losers.

European markets were trading in green; France’s CAC rose 0.37 points or 0.01% to 4,515.11, UK’s FTSE 100 increased 5.14 points or 0.08% to 6,270.79 and Germany’s DAX was up by 25.31 points or 0.25% to 10,311.62.

Asian equity markets ended mostly higher on Monday as a weaker yen and steadier oil prices added to optimism about the health of the US economy. Investors shrugged off comments by Federal Reserve Chair Janet Yellen suggesting than an interest rate hike could be around the corner. Chinese shares closed marginally higher ahead of manufacturing data due on Wednesday, though it is expected to show that growth in China's manufacturing sector likely stalled in May after slight expansions in the previous two months, throwing more cold water on hopes that the world's second-largest economy is reviving. Further, Japanese shares hit a one month high as US rate hike bets and media reports that the government would delay a sales tax hike scheduled for next April helped the dollar/yen pair to break above 111 levels for the first time since late April.