Boisterous benchmarks stage a remarkable rally; Nifty ends above 8700 mark

Indian equity indices witnessed a blockbuster performance on the first day of the week by vehemently rallying over a percentage points and re-conquering their psychological levels. Except for some mild profit taking in early afternoon trades, Monday’s session remained a day of recovery as key equity indices enthusiastically rallied through the day. Investors continued to build hefty positions across the board as sentiments got a boost with India’s core sector output rising to 3.2% in August on the back of sharp rise in steel production and a pickup in cement, suggesting a lift in infrastructure and construction activity. Steel production rose 17% to a 37-month high, aided by the low base of last year. Adding the optimism among the market participants, credit rating agency Crisil expects India's gross domestic product (GDP) to grow at 7.9 per cent and agriculture to grow above trend at 4 per cent. The country’s GDP will be supported by a boost from consumption especially in the hinterland after a well distributed monsoon this year. Some support also came with the report that foreign investors pumped in more than Rs 20,000 crore into the capital market in September, making it the highest net inflow in 11 months.

Investors didn’t give any heed to geo-political tension arising between India and Pakistan Pakistani troops opened fire on forward areas along the LoC in Poonch district of Jammu and Kashmir.  Meanwhile, Auto stocks gained traction after many automakers posted a solid show in September ahead of the crucial festival season.  Certain power, fertilizer and CNG suppliers were also under the spotlight as price of natural gas for all these sectors were cut by 18 percent to $2.5 per million British thermal unit, it’s the fourth reduction in 18 months. In scrip specific development, Jubilant Life Sciences surged after the company received United State Food and Drug Administration (USFDA) approval for Ruby-Fill- Rubidium 82 generator and elution system. Moreover, Multi Commodity Exchange of India (MCX) has rallied after the Reserve Bank of India (RBI) announced that Foreign Institutional Investors (FIIs) can now invest up to 34% in the company. Indian Oil Corporation (IOC) surged after the company said it will invest over Rs 9,800 crore in expanding its Barauni refinery in Bihar and setting up a petrochemical unit at Panipat refinery in Haryana.

On the global front, Asian markets ended mostly higher on Monday as investors weighed the prospects of a further US interest rate hike and a report on business sentiment out of Japan. The mood was supported by a survey showing activity in China's manufacturing sector expanded again in September, which may indicate that recent positive momentum can be sustained. Sentiment also got a boost after oil prices stabilised on hopes the OPEC cut on output would help re-balance markets. Meanwhile, European markets started the week little changed as investors focused on Britain’s plans to leave the European Union. British Prime Minister Theresa May said she will formally begin the process of the UK's exit from the European Union (EU) by the end of March 2017, ending the speculation surrounding the timing of the move.

Back home, the local indices got off to a positive start as investors were largely influenced by the supportive leads from Asian markets. The frontline indices soon gathered momentum and traded with over a percent gains through the morning 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. 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, convalesced by close to one and half percent to settle above the crucial 8,700 support level while Bombay Stock Exchange’s Sensitive Index, Sensex accumulated over three hundred and fifty points and closed above the psychological 28,200 mark. Moreover, the broader markets too participated in the rally and closed with gains of over a percent. On the BSE sectoral space, hefty buying was evident across the board as not even a single sectoral index went home in the negative territory. Investors piled up hefty positions in Realty counters which rocketed by over three percent while the Consumer Durables index too showed smart gains and jumped by over two and half percent. While high beta sectors like - Metal, Auto and Capital Goods too soared in the session. The market breadth remained optimistic as there were 2228 shares on the gaining side against 660 shares on the losing side, while 117 shares remained unchanged.

Finally, the BSE Sensex surged by 377.33 points or 1.35% to 28243.29, while the CNX Nifty ended up by 126.95 points or 1.47% to 8,738.10. 

The BSE Sensex touched a high and a low 28273.02 and 27919.89, respectively. There were 28 stocks advancing against 2 stocks declining on the index. The broader indices ended in green; the BSE Mid cap index rose 2.40%, while Small cap index was up by 2.67%.

The top gaining sectoral indices on the BSE were Realty up by 3.01%, Consumer Durables up by 2.65%, Metal up by 2.45%, Auto up by 2.44% and Capital Goods up by 2.43%, while there were no losers on BSE sectoral space.

The top gainers on the Sensex were Maruti Suzuki up by 3.70%, Hero MotoCorp up by 3.18%, Adani Ports &Special up by 3.00%, Power Grid Corpn. up by 2.72% and Larsen & Toubro up by 2.67%. On the flip side, TCS down by 0.63% and Infosys down by 0.02% were the top losers.

Meanwhile, Growth in eight core sectors - coal, crude oil, natural gas, refinery products, fertilizer, steel, cement and electricity, which comprise nearly 38% of the weight of items included in the Index of Industrial Production (IIP), rose to 3.2% in August compared with 2.6% in the corresponding month last year, on back of rise in steel production and growth in fertilizer sector. Core sectors cumulative growth during April to August, 2016-17 was 4.5 %.

As per the data of Ministry of Commerce & Industry, the combined Index of Eight Core Industries stood at 176.0 in August, 2016, 3.2% higher compared to the index of August, 2015. Among the eight sectors that make up the core sector. Steel production having weight of 6.68% surged by 17.0% to 37 month high in August, 2016 over August, 2015, aided by the low base of last year. Its cumulative index during April to August, 2016-17 increased by 4.4% over the corresponding period of previous year. Fertilizer production having weight of 1.25% jumped by 5.7% in August, 2016 over August, 2015. Its cumulative index during April to August, 2016-17 increased by 6.4% over corresponding period of previous year.

Petroleum Refinery production having weight of 5.94%, rose by 3.5% in August, 2016 over August, 2015. Its cumulative index during April to August, 2016-17 increased by 7.6% over the corresponding period of previous year. Cement production having weight of 2.41% increased by 3.1% in August, 2016 over August, 2015. Its cumulative index during April to August, 2016-17 increased by 4.4% over the corresponding period of previous year. Electricity generation having weight of 10.32% increased by 0.1% in August, 2016 over August, 2015. Its cumulative index during April to August, 2016-17 increased by 5.7% over the corresponding period of previous year.

On other hand, the Natural Gas production having weight of 1.71% dropped by 5.7% in August, 2016 over August, 2015. Its cumulative index during April to August, 2016-17 declined by 4.2% over the corresponding period of previous year. Crude Oil production having weight of 5.22% decreased by 3.9% in August, 2016 over August, 2015. Its cumulative index during April to July, 2016-17 declined by 3.1% over the corresponding period of previous year. Coal production having weight of 4.38% decreased by 9.2% in August, 2016 over August, 2015, while its cumulative index during April to August, 2016-17 increased by 2.6% over the corresponding period of previous year.

The CNX Nifty traded in a range of 8,745.20 and 8,635.00. There were 48 stocks advancing against 3 decliners on the index.

The top gainers on Nifty were Zee Entertainment up by 5.83%, Eicher Motors up by 4.32%, Maruti Suzuki up by 3.70%, Hero MotoCorp up by 3.52% and Adani Ports & Special Economic Zoneup by 3.17%. On the flip side, TCS down by 0.96%, Bharti Infratel down by 0.49% and Bosch down by 0.21% were the top losers.

The European markets were trading in green; UK’s FTSE 100 increased 78.16 points or 1.13% to 6,977.49 and France’s CAC increased 13.15 points or 0.3% to 4,461.41. Germany stock exchange was closed on account of ‘Unification Day’ holiday.

The Asian markets ended in green on Monday, as European bank worries receded and an official survey showed activity in China's manufacturing sector expanded slightly in September. Though, a raft of factory activity data from across the region proved a mixed bag. China's official manufacturing PMI stood unchanged in September from the previous month, while data over the weekend showed activity in the services sector picked up somewhat. Japanese shares ended higher as easing fears over Deutsche Bank's health helped to improve investors' risk appetite. Investors shrugged off the Bank of Japan's (BOJ) closely-watched business sentiment survey, which showed that confidence among big Japanese manufacturers remained unchanged in September, compared to the previous three months. Markets in China, South Korea and Malaysia were closed for public holidays.