Benchmarks trim gains; trade continues in green

After getting a positive start, Indian equities trimmed gains but continued to trade in green in the late morning session as investors remained cautious after US Federal Reserve Chair Janet Yellen suggested that an interest rate hike may occur if economic growth picks up and there is an improvement in the labour market. However, on domestic front, sentiment got some support 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. Investors also 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. 

On the global front, most Asian stock markets rose in early trade, led by Japan, as the dollar rose against the yen after US Federal Reserve Chair Janet Yellen hinted a near-term interest rate hike, while news that Japan's government is delaying a sales tax hike also supported sentiment. Chinese stocks rose modestly with many investors keeping to the sidelines as they ponder 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, Major US stock indexes rose on Friday, notching their biggest weekly gains in months as riskier corners of the markets picked up. The advance came as markets quieted down ahead of a holiday weekend and as investors scooped up shares that were hit hard earlier this year amid worries about the possibility of an economic slowdown.

Back home, stocks from Metal, information technology (IT) and Auto were supporting the markets’ uptrend, while those from Power, Oil & Gas and Consumer Durables counters were adding to the underlying cautious undertone. In scrip specific development, shares of Hindalco Industries have surged after the company reported standalone net profit of Rs 356 crore for the quarter ended March 2016 (Q4FY16) due to lower input costs. Moreover, Coal India gained after the company raised prices by 6.29% across all its subsidiaries for both regulated and non-regulated sectors.

The market breadth on BSE was positive, out of 2225 stocks traded, 1076 stocks advanced, while 1011 stocks declined on the BSE. 

The BSE Sensex is currently trading at 26666.79, up by 13.19 points or 0.05% after trading in a range of 26623.33 and 26794.96. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.06%, while Small cap index up by 0.20%.

The gaining sectoral indices on the BSE were Metal up by 1.99%, IT up by 1.33%, TECK up by 1.09%, Auto up by 0.21%, PSU up by 0.11% while, Power down by 0.57%, Oil & Gas down by 0.49%, Consumer Durables down by 0.25%, Realty down by 0.08%, FMCG down by 0.03% were the losing indices on BSE.

The top gainers on the Sensex were Coal India up by 3.64%, Infosys up by 1.46%, Dr. Reddys Lab up by 1.40%, TCS up by 1.26% and Mahindra & Mahindra up by 0.81%. On the flip side, BHEL down by 3.35%, HDFC down by 2.25%, Adani Ports &Special down by 1.33%, NTPC down by 1.07% and Lupin down by 1.06% were the top losers.

Meanwhile, Finance Minister Arun Jaitley, kick starting his 6-day visit to Japan aimed at attracting investments from Asia's second biggest economy, has said that Japanese investors are keen to invest in India’s infra sector. Jaitley said that Japanese conglomerate SoftBank and a number of other investors have shown keen interest in investing in India’s infrastructure growth story.

Jaitley after a meeting with SoftBank Group CEO Masayoshi Son stated that “There are people who want to participate in infrastructure growth story. For example, at the SoftBank meeting we just had, they are looking at one of the biggest investments in solar power already.” In June last year, Soft-Bank announced that the group was forming a joint venture with Bharti Enterprises and Taiwan's Foxconn Technology Group to invest about $20 billion in renewable energy in India. Son on his part said that “India has a great future... We are interested in investing for Internet companies, also for solar energy. We would make a strong commitment.”

During the visit, Jaitley will also call on Japanese Prime Minister Shinzo and will attend the 22nd International Conference on 'The Future of Asia' organised by Nikkei Inc. Jaitley will also meet Osamu Suzuki, Chairman of Suzuki Motor, the biggest Japanese investor in automobile sector in India and will participate in 'The Future of Asia' conference and will deliver keynote address at the roundtable on National Investment & Infrastructure Fund (NIIF).

The government is looking at attracting investors to the Rs 40,000-crore NIIF, which is an investment vehicle for funding commercially viable greenfield, brown-field and stalled projects. Its creation was announced in the Union Budget 2015-16, the objective of NIIF is to maximize economic impact mainly through infrastructure development in commercially viable projects, both greenfield and brownfield, including stalled projects. It could also consider other nationally important projects, for example, in manufacturing, if commercially viable.

The CNX Nifty is currently trading at 8167.70, up by 11.05 points or 0.14% after trading in a range of 8150.80 and 8200.00. There were 29 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 9.85%, Tech Mahindra up by 4.06%, Coal India up by 3.86%, Idea Cellular up by 2.39% and Dr. Reddys Lab up by 1.41%. On the flip side, BHEL down by 3.59%, Zee Entertainment down by 2.37%, HDFC down by 1.86%, NTPC down by 1.28% and BPCL down by 1.22% were the top losers.

Asian markets were trading mostly in green, Shanghai Composite was up by 0.18%, Jakarta Composite up by 0.42%, Taiwan Weighted up by 0.72%, Hang Seng up by 0.34% and Nikkei 225 up by 1.06%. On the flip side, FTSE Bursa Malaysia KLCI was down by 0.6% and KOSPI Index was down by 0.06%.