Benchmarks end a volatile session with modest gains; Sensex ends above 26600

A session after displaying a distressing performance, Indian benchmark indices managed a modestly positive close on Friday, as investors accumulated quality stocks at attractive levels. Sentiments got a boost after India's current account deficit (CAD) declined sharply to $0.3 billion (0.1% of Gross Domestic Product) in the fourth quarter of ended March 2016 (FY16) from $ 7.1 billion (1.3%), in third quarter ended December 2015, on account of lower trade gap.  Besides, firm global cues coupled with the appreciation in rupee value against the dollar added to the optimistic sentiments. Indian rupee strengthened by 4 paise against the US dollar at the time of equity markets closing at 67.17 from its previous close of 67.20. Some support also came with Economic Affairs Secretary Shaktikanta Das’ statement that FDI inflows in the current fiscal will top 15.3 per cent rise in 2015-16 on the back of reforms and liberalisation of FDI norms. However, investors remained concern with the report that India's monsoon deficit has widened to 25% since the beginning of this month as rainfall in the past day was less than half of the normal level increasing the anxiety of farmers, although forecasters say that heavy showers are just a few days away. Meanwhile, sugar stocks declined after the government imposed 20% customs duty on sugar exports to boost domestic supply and ensure that traders don’t ship out sugar to take advantage of favourable international markets. On the other hand, Real estate stocks surged ahead of the Securities and Exchange Board of India (Sebi) board meeting on Friday to make further relaxations to rules governing real estate investment trusts (Reits).

On the global front, Asian markets bounced back on Friday, as US consumer price data helped calm investor sentiment, one day after Bank of Japan's decision not to add stimulus measures sparked heavy losses. The consumer-price index, which measures what Americans pay for everything from car repairs to potatoes, increased a seasonally adjusted 0.2% in May from the prior month. It was the third straight monthly rise in overall prices as the damping effects of low oil prices and a strong dollar faded. Further, Japan's Nikkei share average rebounded and recovered from four-month lows after the yen took a breather from its recent strong gains, lifting all sectors into positive territory. However, European markets, after getting positive start, slipped below neutral line amid concerns over key central bank decisions and the UK’s upcoming June 23 referendum vote on its future within the European Union.

Back home, after gap up start, the local benchmark indices showed some strength in morning trades, but the sentiments turned pessimistic in afternoon session and indices start drifting lower, however the markets regained its momentum in the final hour of trade and finished the day gaining over quarter a percent. Finally the NSE’s 50-share broadly followed index Nifty, shut shop after surging over quarter a percent and regained the crucial 8,150 support level, while Bombay Stock Exchange’s sensitive Index or Sensex, accumulated hundred points to close a tad above the psychological 26,600 mark. On the BSE sectoral space, Realty counter remained the top gainer in the space with over three percent gains, followed by the FMCG, Consumer Durables and Auto indices which ended with moderate gains of over half a percent. On the flipside, the Capital Goods and Oil & Gas sectors languished at the bottom of the table with losses of 0.44% and 0.10% respectively. The market breadth remained pessimistic as there were 1260 shares on the gaining side against 1317 shares on the losing side, while 191 shares remained unchanged.

Finally, the BSE Sensex surged 100.45 points or 0.38% to 26625.91, while the CNX Nifty rose 29.45 points or 0.36% to 8,170.20.

The BSE Sensex touched a high and a low 26730.55 and 26538.51, respectively. The broader indices made a mixed closing; the BSE Mid cap index ended down by 0.05%, while Small cap index was up by 0.29%.

The top gaining sectoral indices on the BSE were Realty up by 3.51%, FMCG up by 0.73%, Consumer Durables up by 0.59%, Auto up by 0.56% and PSU up by 0.40%, while Capital Goods down by 0.44% and Oil & Gas down by 0.10% were the only losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 2.73%, HDFC up by 2.21%, Tata Motors up by 2.03%, Coal India up by 2.00% and TCS up by 1.81%. On the flip side, Sun Pharma Inds. down by 1.45%, Tata Steel down by 1.38%, Dr. Reddys Lab down by 1.36%, SBI down by 1.07% and Larsen & Toubro down by 0.91% were the top losers.

Meanwhile, giving a big relief to the government, India’s current account deficit (CAD), difference between the value of all imports and the value of all exports, narrowed to its lowest level in seven years in the quarter ended March 2015-16. India’s current account deficit had narrowed to $0.3 billion or 0.1 per cent of GDP in Q4 of 2015-16, significantly lower than $7.1 billion or 1.3 per cent of GDP in third quarter of 2015-16 and marginally lower than $0.7 billion 0.1 per cent of GDP in the same period last fiscal. The contraction in CAD was primarily on account of a lower trade deficit $24.8 billion than in Q4 of last year $31.6 billion and $34.0 billion in the preceding quarter.

As per the data released by Reserve Bank of India (RBI), for the entire 2015-16 fiscal, CAD stood at 22.1 billion or 1.1 per cent of the GDP as against 26.8 billion or 1.8 per cent for 2014-15, on the back of contraction in the trade deficit. India’s trade deficit narrowed to $130.1 billion in 2015-16 from $144.9 billion in 2014-15.

Meanwhile, the Balance of Payments (BoP) stayed in positive territory with accretion of $3.3 billion to India's Foreign exchange reserves in Q4 2015-16. The overall BoP during the fiscal FY16 moderated to $17.9 billion from $ 61.06 billion in 2014-15. During the fiscal, there was decline in net invisible receipts, reflecting moderation in both net services earnings and private transfer receipts.

In the year 2015-16, Net invisible receipts declined, primarily reflecting moderation in both net services earnings and private transfer receipts. Net FDI inflows during 2015-16 $36.0 billion rose sharply by 15.3 per cent over the level in 2014-15. Portfolio investment, however, recorded a net outflow $4.5 billion in 2015-16 as against a net inflow of $40.9 billion last year. In 2015-16, there was an accretion of $17.9 billion to foreign exchange reserves as compared with $61.4 billion in 2014-15.

Economic affairs secretary Shaktikanta Das has said that a CAD at 1.1% of GDP is yet another robust macroeconomic indicator and hoped that FDI inflows in the current fiscal will top 15.3 per cent rise in 2015-16 on the back of reforms and liberalisation of FDI norms announced in November 2015.

The CNX Nifty traded in a range of 8,195.25 and 8,135.80. There were 28 stocks advancing against 23 decliners on the index.

The top gainers on Nifty were Bharti Airtel up by 3.26%, Tata Motors up by 2.05%, Tata Motors - DVR up by 1.85%, HDFC up by 1.84% and Power Grid up by 1.65%. On the flip side, Tata Power down by 3.54%, Bharti Infratel down by 3.02%, Sun Pharma down by 1.81%, Tata Steel down by 1.60% and Dr. Reddys Lab down by 1.58% were the top losers.

European markets were trading in green; France’s CAC increased 57.92 points or 1.39% to 4,210.93, UK’s FTSE 100 surged 88.37 points or 1.49% to 6,038.85 and Germany’s DAX was up by 125.77 points or 1.32% to 9,676.24.

Asian equity markets ended higher on Friday, taking their cues from overnight gains on Wall Street, higher oil prices and a weaker yen, after both official groups in the EU referendum campaign suspended campaigning activities until further notice out of respect for Labor MP Jo Cox, who was shot dead in the street in northern England. Japanese shares recovered some of the hefty losses recorded in the previous session, as the yen steadied against the dollar after surging to a 22-month high on Thursday in the wake of the Bank of Japan's decision to leave its asset-buying plan unchanged. Chinese shares eked out modest gains even as concerns lingered about slowing growth and the weak yuan, which hit a five-year low earlier this week on concerns that capital outflows may accelerate.