Boisterous benchmarks display spirited performance; Sensex rallies around 250 pts

Exuberant Indian markets finished the enthralling first day of a new week with a spirited performance, extending Friday’s rally on the back of broad-based buying amid firm global cues. Sentiments got a boost with the report that quick progress of monsoon in last one-two days has taken the crucial weather system to many new regions and is expected to intensify in the days ahead.  This is good news for farmers who have suffered two consecutive droughts and have so far planted crops in 11% less area than last year.  Some support also came with Economic Affairs Secretary Shaktikanta Das’ statement that the country’s GDP growth is likely to touch 8 per cent in the current fiscal 2016-17, on the back of above normal monsoon. Das expressed hope that the likely passage of Goods and Services Tax (GST) bill in Parliament would add to the business sentiment and will further help in country’s growth. Further, market participants digested Reserve Bank of India’s (RBI) Governor Raghuram Rajan’s decision of not going for a second term and bow out in September. The global rating agency Fitch stated that India’s sovereign ratings will not be affected solely by the unexpected departure of central bank governor Raghuram Rajan at the end of his term in September. Meanwhile, shares of companies engaged in defence and aviation sectors rallied after the government relaxed foreign direct investment (FDI) norms in civil aviation, airports, pharmaceuticals and defence sectors. Further, Real estate stocks surged for the second straight day after the Securities and Exchange Board of India (Sebi) proposed further relaxations to the real estate investment trusts (Reits) regulations, to attract real estate developers towards launching these instruments.

On the global front, Asian stock markets ended the first day of the week on optimistic note as worries eased about the coming referendum in the UK on European Union membership. Three British opinion polls ahead of the EU membership referendum on June 23 showed the ‘Remain’ camp recovering some momentum, although the overall picture remained one of an evenly split electorate. Further, Japanese market ended with gain of over two percent after the yen weakened against major currencies, while Chinese shares ended flat, as sentiment was subdued after the report that China's property sector continued to recover but at a slower pace in May, with gains spreading to smaller cities. Meanwhile, European counterparts too appeared to be in a sanguine mood, as they traded in the positive zone with over two and half percent gains.

Earlier on the Dalal Street, the benchmark got off to a negative opening as the indices drifted below the psychological 8,250 and 26,500 levels in the early moments of trade since investors largely remained influenced by Governor Raghuram Rajan’s decision to not renew his term after September 3, 2016. With Rajan’s departure, the continuation of the RBI’s policy, especially taming inflation and cleaning up massive bad debts held by state-run banks, remains the major concern. But the frontline indices slowly but steadily started gathering steam and surged by around half a percent by the noon session of trade. Second half of the session saw the key gauges capitalize on the momentum further and spurt to session’s highest levels in dying hour of the trade. However, a mild profit booking in dying moments of trade ensured that the key indices shut shops off the intraday highs. Finally the NSE’s 50-share broadly followed index Nifty, got buttressed by close to a percent to settle above the crucial 8,200 support level, while Bombay Stock Exchange’s Sensitive Index-Sensex accumulated around two hundred and fifty points and closed above the psychological 26,800 mark. The broader markets underperformed their larger peers by a big margin as the BSE’s midcap index went home with gains of 0.40%, while the smallcap index climbed 0.37% points. On the BSE sectoral space, buying was evident across the board and investors piled up hefty positions in the information technology (IT) counter which rocketed by around two percent on the back of a weakening rupee, while the Auto, Metal and Capital Goods pockets climbed by over a percent each. However, only chink in the armor was the defensive - FMCG index which closed on a flat note with a negative bias. The market breadth remained optimistic as there were 1385 shares on the gaining side against 1193 shares on the losing side, while 205 shares remained unchanged.

Finally, the BSE Sensex surged 241.01 points or 0.91% to 26866.92, while the CNX Nifty rose 68.30 points or 0.84% to 8,238.50.

The BSE Sensex touched a high and a low 26885.49 and 26447.88, respectively. The broader indices made a positive closing; the BSE Mid cap index ended up by 0.40%, while Small cap index was up by 0.37%.

The top gaining sectoral indices on the BSE were IT up by 2.00%, TECK up by 1.97%, Auto up by 1.49%, Metal up by 1.40% and Capital Goods up by 1.23%, while FMCG down by 0.06% were the only losing index on BSE.

The top gainers on the Sensex were Tata Motors up by 3.98%, Tata Steel up by 3.27%, Bharti Airtel up by 2.60%, Infosys up by 2.57% and TCS up by 2.00%. On the flip side, Asian Paints down by 0.60%, Coal India down by 0.46%, Axis Bank down by 0.39%, Sun Pharma Inds. down by 0.37% and GAIL India down by 0.35% were the top losers.

Meanwhile, expressing optimism for the strong growth rate of the country, Economic Affairs Secretary Shaktikanta Das has said that the country's GDP growth is likely to touch 8 per cent in the current fiscal 2016-17, on the back of above normal monsoon. Das expressed hope that the likely passage of Goods and Services Tax (GST) bill in Parliament would add to the business sentiment and will further help in country’s growth. The Economic Affairs Secretary said “we will certainly exceed 7.6 per cent growth. If the monsoon is good which we expect it will be because of the forecast and once the GST is passed, we can expect our GDP to touch 8 per cent in the current fiscal'.

The government is hoping to get the Constitution Amendment Bill passed by Parliament in the upcoming Monsoon Session and plans to roll-out GST from April 1, 2017. Stating the importance of the GST bill, Das said that the passage of the bill would significantly help in boosting sentiment and generating economic activity. Once GST is passed in the parliament, the business environment will show improvement and will boost business sentiment and economy. Once the sentiment turns positive, the business will also start the process of re- orienting their business for GST purpose and hence there will be lot of spurt in activity.

India Meteorological Department (IMD) had earlier forecasted this year 96 per cent chances that the rainfall would be “normal to excess”. However, the slow progress of the south-west monsoon has led to overall deficiency of rains by 22 per cent from June 1-15. Economic Survey in February had projected a growth rate of 7-7.75 per cent for the current fiscal while RBI had forecast 7.6 per cent for the current fiscal.

The CNX Nifty traded in a range of 8,244.15 and 8,107.35. There were 36 stocks advancing against 25 decliners on the index.

The top gainers on Nifty were Tata Motors up by 3.92%, Tata Steel up by 3.47%, Ambuja Cement up by 2.88%, Tata Motors - DVR up by 2.74% and Infosys up by 2.33%. On the flip side, Axis Bank down by 0.88%, Asian Paints down by 0.66%, Sun Pharma down by 0.65%, Eicher Motors down by 0.61% and ITC down by 0.60% were the top losers. European markets were trading in green; France’s CAC surged 121.55 points or 2.9% to 4,315.38, UK’s FTSE 100 soared 156.26 points or 2.6% to 6,177.35 and Germany’s DAX was up by 296.69 points or 3.08% to 9,928.05.

Asian equity markets ended higher on Monday, as worries over a potential British exit from the European Union receded and a weaker dollar supported commodity prices. Safe-haven assets and currencies like gold, government bonds and the yen retreated after three opinion polls on the EU referendum suggested the 'Remain' campaign is pulling back into the lead following the murder of pro-EU MP Jo Cox. A UK exit from the European Union could seriously hurt the British economy and possibly lead to a recession next year, the International Monetary Fund has warned. Separately, Prime Minister David Cameron warned Sunday of a painful hit to Britain's economy if it quits the EU on Thursday's Brexit vote. The dollar weakened broadly against its rivals after St. Louis Fed President James Bullard issued a position paper on Friday saying he thinks there will be just one interest rate hike through 2018 and the Federal Reserve is eroding its credibility by indicating otherwise. Japanese shares rose sharply to hit a one-week high, aided by a weaker yen. Investors shrugged off sluggish trade data showing a fall in Japanese exports for an eighth consecutive month in May. Chinese shares ended flat, bucking the upward trend in Asian markets, as sentiment was subdued amid concerns of yuan depreciation and a fresh regulatory crackdown on shell companies raising funds from external sources in backdoor listings, offset positive home price data. China's property sector continued to recover but at a slower pace in May, with gains spreading to smaller cities, an official survey released over the weekend showed.