Markets make a positive start reacting to good IIP data

Markets extending their gaining streak made a positive start on Wednesday morning, though there was some sense of consolidation too, but the positive sentiments emanating from the other global peers restricted any fall. The early gains were getting support from the upbeat industrial output data announced after the market hours last day. India's industrial production grew by 1.2 percent in May compared to (-) 0.8 percent in April. The cumulative growth for the period April-May 2016 over the corresponding period of the previous year stood at (-) 0.1 percent. However, there was some concern too with the retail inflation based on Consumer Price Index (CPI) rising to 5.77 percent in June as against 5.76 percent in May. Food inflation was 7.79 percent last month, higher than a revised 7.47 percent in May. Also, there was some cautiousness with the Sebi chairman suggesting that a false sense of relief is prevailing in the market post Brexit. Meanwhile, Arvind Subramanian, the chief economic adviser to the PM, suggested that India's focus needs to move away from simply promoting manufacturing and export growth to enabling both manufacturing and services growth. He said that India would have to pursue an outward orientation strategy if it were to achieve 8-10 per cent GDP growth levels. Subramanian also said India and other developing countries have strong incentives to keep global markets open.

Back on street, the bullrun of the mid cap is continuing unabated and it is at the fresh highs with over a quarter percent of gains, small caps too were trading higher, while on sectoral front most of the indices are trading in green led by metal, oil & gas and energy, while some weakness was being seen in telecom and consumer durables. The PSU oil marketing companies were moving higher after the government paved the way to prune fuel subsidy. Oil companies have received the green signal to increase kerosene price by 25 paise every month till April 2017, a move that has not been publicly announced.

The BSE Sensex is currently trading at 27887.33, up by 79.19 points or 0.28% after trading in a range of 27829.51 and 27928.76. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.35%, while Small cap index gained 0.28%.

The top gaining sectoral indices on the BSE were Metal up by 2.20%, Oil & Gas up by 1.80%, PSU up by 1.41%, Power up by 0.53%, IT up by 0.50%, while Auto down by 0.06%, FMCG down by 0.03%, were the losing indices on BSE.

The top gainers on the Sensex were ONGC up by 5.29%, Tata Steel up by 2.31%, Adani Ports & SEZ up by 1.38%, GAIL India up by 1.32% and Sun Pharma Inds. up by 1.05%. On the flip side, Power Grid Corpn. down by 0.69%, Maruti Suzuki down by 0.68%, HDFC down by 0.33%, Axis Bank down by 0.32% and Bajaj Auto down by 0.31% were the top losers.

Meanwhile, the Finance Ministry may finalise this week the proposal for the first round of capital infusion in select public sector banks (PSBs) and the approval for the same is expected from the Finance Minister. The government has made Budget provision of Rs 25,000 crore capital infusion in PSBs for the current fiscal. Besides, Rs 10,000 crore each would be infused in 2017-18 and 2018-19, while the Finance Minister Arun Jaitley has assured that the government will provide more funds if needed.

The Department of Financial Services has finalised the first tranche of fund infusion, as after the fourth quarter results, each bank made a detailed request taking into account issues pertaining to non- performing assets (NPAs) or bad loans and growth projections.

Last year, the government announced a revamp plan ‘Indradhanush’ to infuse Rs 70,000 crore in state-owned banks over four years, while they will have to raise a further Rs 1.1 lakh crore from the markets to meet their capital requirements in line with global risk norms Basel-III. Further, during the last fiscal, 21 PSBs got fund support of Rs 25,000 crore. Of this, SBI got the highest amount of Rs 5,393 crore followed by Bank of India at Rs 2,455 crore, IDBI Bank Rs 2,229 crore, Indian Overseas Bank Rs 2,009 crore and Punjab National Bank Rs 1,732 crore.

The CNX Nifty is currently trading at 8534.80, up by 13.75 points or 0.16% after trading in a range of 8514.95 and 8550.25. There were 28 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were ONGC up by 5.20%, BHEL up by 5.10%, Hindalco up by 2.40%, Tata Steel up by 2.40% and GAIL India up by 1.43%. On the flip side, Indusind Bank down by 1.24%, Bharti Infratel down by 1.07%, Power Grid Corpn. down by 0.75%, Maruti Suzuki down by 0.74% and Ultratech Cement down by 0.72% were the top losers.

The Asian markets were mostly in green, KOSPI Index was up by 5.97 points or 0.3% to 1,997.20, Shanghai Composite gained 11.07 points or 0.36% to 3,060.45, Jakarta Composite was higher by 15.1 points or 0.3% to 5,114.63, Hang Seng added 110.79 points or 0.52% to 21,335.53 and Nikkei 225 surged by 207.3 points or 1.29% to 16,302.95

On the other hand, Taiwan Weighted declined by 3.56 points or 0.04% to 8,837.90 and FTSE Bursa Malaysia KLCI was marginally down by 1.02 points or 0.06% to 1,652.95.