Firm trade prevails in late afternoon session

Indian equity benchmarks continued their firm trade in the late afternoon session on account of buying in frontline blue chip counters amid positive manufacturing PMI despite its slowest pace. The sentiments were on optimistic note from the early trade after the country became the fastest growing nation in the world for the January-March quarter, as the nation’s gross domestic product (GDP) grew 7.9% in the fourth quarter, against a projected 7.7%. Some additional support came after reversing its two-day downward trend, the rupee recovered against the US dollar in early trade at the Interbank Foreign Exchange market on selling of the American currency by exporters and banks. Meanwhile, economic affairs secretary Shaktikanta Das stated that more economic reforms and policy initiatives are on the cards in the coming months. A good monsoon and a passage of Goods and Services Tax (GST) constitutional amendment will take the country to 8% growth in FY17. Traders were seen piling position in FMCG, TECK and IT stocks while selling was witnessed in Bankex, Auto and Capital Goods sector stocks. In scrip specific development, shares of Aviation Company were reeling under pressure after oil marketing companies have hiked Aviation Turbine Fuel (Domestic) by 9.2% to Rs 46,729.48 in Delhi effective from June 1 compared with Rs 42,784.01 last month.

On the global front, the Asian markets were trading mostly in red while the European markets traded on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 8,150 and 26,700 levels respectively. The market breadth on BSE was positive in the ratio of 1338:1148 while 155 scrips remained unchanged.

The BSE Sensex is currently trading at 26778.00, up by 110.04 points or 0.41% after trading in a range of 26671.86 and 26857.25. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green and red; the BSE Mid cap index was down by 0.03%, while Small cap index up by 0.42%.

The gaining sectoral indices on the BSE were FMCG up by 1.50%, TECK up by 1.12%, IT up by 0.96%, Oil & Gas up by 0.26% and PSU up by 0.10%, while, Bankex down by 0.77%, Auto down by 0.30%, Capital Goods down by 0.23% and Power down by 0.16% were the losing indices on BSE.

The top gainers on the Sensex were Adani Ports & Special Economic Zone up by 4.88%, Asian Paints up by 3.27%, TCS up by 2.39%, ITC up by 2.36% and Coal India up by 2.35%.

On the flip side, SBI down by 2.20%, Tata Motors down by 1.34%, BHEL down by 1.33%, ICICI Bank down by 1.10% and HDFC Bank down by 0.60% were the top losers.

Meanwhile, after an upbeat GDP and fiscal deficit data, there is another good macro data, with manufacturing sector output showing some improvement in the month of May, the seasonally adjusted Nikkei India Manufacturing Purchasing Managers Index edged higher, coming at 50.7 in May compared with 50.5 in April. Though, the manufacturing output in India grew at its slowest pace in five months in May, suggesting that the sector is still in the doldrums.

The reading highlighted an overall improvement in operating conditions, the fifth in as many months. Business conditions across India’s manufacturing industry improved for the fifth straight month in May. Whereas new orders expanded at a faster pace, the upturn in output softened.

In a positive development businesses took on additional workers and bought more inputs for use in the production process. The rate of job creation was, however, only marginal. Manufacturers purchased more inputs during May, taking the current sequence of expansion in buying levels to five months. Concurrently, pre-production inventories rose again, albeit marginally. Goods producers raised their output volumes for the fifth successive month in May, but to the least extent in this sequence.

Although new orders rose further, the rate of expansion was well below the long-run survey average. Data implied that growth was centred on the domestic market, as new business from abroad decreased for first time since September 2013. Sub-sector data highlighted intermediate goods as the best performing category in May, where growth rates for new orders and output were stronger than those seen among consumer goods producers. Investment goods firms, in contrast, saw further declines in new work and production.

Price indicators varied. While cost inflation climbed to the strongest since March 2015, charges were raised at a weaker pace. The rate of inflation was in fact the most pronounced since March 2015. Although firms passed on to their clients part of the additional increase in costs by way of raising selling prices, the rate of charge inflation eased to the weakest in the current three-month sequence of increases.

The CNX Nifty is currently trading at 8193.20, up by 33.10 points or 0.41% after trading in a range of 8173.75 and 8215.35. There were 29 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were Adani Ports & Special Economic Zone up by 5.18%, Asian Paints up by 3.57%, TCS up by 2.82%, Bharti Infratel up by 2.71% and ITC up by 2.54%.

On the flip side, SBI down by 2.49%, Hindalco down by 2.04%, Bank of Baroda down by 2.03%, Yes Bank down by 1.97% and Tata Motors down by 1.62% were the top losers.

The Asian market were trading mostly in red; Nikkei 225 decreased 279.25 points or 1.62% to 16,955.73, Hang Seng decreased 54.11 points or 0.26% to 20,760.98, Shanghai Composite decreased 3.11 points or 0.11% to 2,913.51 and KOSPI Index decreased 0.68 points or 0.03% to 1,982.72.

On the other hand, FTSE Bursa Malaysia KLCI increased 1.68 points or 0.1% to 1,627.68, Jakarta Composite increased 44.76 points or 0.93% to 4,841.63 and Taiwan Weighted increased 61.57 points or 0.72% to 8,597.16.

The European markets were trading in red; UK’s FTSE 100 decreased 24.66 points or 0.4% to 6,206.13, France’s CAC decreased 11.22 points or 0.25% to 4,494.40 and Germany’s DAX decreased 7.76 points or 0.08% to 10,254.98.