Rally in technology counters help Sensex gain for third day in a row

Indian stock markets managed to close in the positive territory on last trading day of the month and extended the gaining streak for the third straight session. The benchmark equity indices, which were gradually gaining momentum since the start and touched the day’s highs in late morning trades, witnessed some profit booking in early noon trades and found support around the important psychological 17,300 (Sensex) and 5,200 (Nifty) levels.

The climb of over three fourth of a percentage point for the frontline gauges appeared even more prominent given the fact that the gains came on a day when most Asian equity indices closed with moderate gains of less than half a percent. Subdued European markets too pressured domestic sentiments and limited the upside chances after reports showed Spain’s economic growth declined 0.3% in the first quarter however, the number was better than expectations of 0.4% decline.

On the domestic front, sentiments were supported by CII survey showing business confidence in India improved from the previous quarter but concerns over stagnancy in reforms and rising cost of finance and raw materials remain. Market’s mood was also undermined to some extent after reports showed global rating agency Moody's will be reviewing ICICI Bank, Axis Bank and HDFC Bank for a potential downgrade.

Meanwhile, the quarterly earnings announcement from the banking counter remained mixed as on one hand, investors commended Bank of India’s performance which was better than the street’s expectations, while on the other, they punished the Oriental Bank of Commerce for reporting weaker than forecasted numbers.

Besides, investors were seen covering hefty short positions in the beaten down IT and TECk counters which rallied around two percent each and supported the frontline gauges. The software services exporting majors like Infosys and TCS spurted to higher levels amid increasing speculations of the US Federal Reserve would employ quantitative easing measures after data showed cooling of US GDP growth, making valuations in the sector more attractive after recent falls.

Also, shares of textile companies including Arvind and Alok Industries jumped as reports showed that Indian government lifted a ban on cotton exports and decided to allow further cotton exports in 2011-12 marketing year, ending September.

On the global front, cues from Asian region remained largely positive on a day when major markets like the ones in China and Japan were closed for a public holiday. Investors added positions, overlooking the S&P’s downgrade of Spanish sovereign debt rating, after the weaker than expected US economic growth numbers triggered speculations that the US Fed would now have to employ third round of quantitative easing measures in order to stimulate the world’s largest economy.

The European markets on the other hand, traded on a mixed note as the reports of disappointing Spanish GDP numbers was countered by German retail sales data which rose 0.8 percent in March from February.

The NSE’s 50-share broadly followed index Nifty, gained by three fourth of a percent to settle just below the psychological 5,250 support level while Bombay Stock Exchange’s Sensitive Index - Sensex amassed one hundred and thirty points to finish below the crucial 17,300 mark. Moreover, the broader markets too gained traction but failed to outperform their larger peers as they settled with over half a percent gains.

The markets rose on weak volumes of over Rs 0.99 lakh crore while the turnover for NSE F&O segment remained on the higher side as compared to that on Saturday, at over Rs 0.66 lakh crore. The market breadth remained optimistic as there were 1173 shares on the gaining side against 1091 shares on the losing side while 593 shares remained unchanged.

Finally, the BSE Sensex gained 131.47 points or 0.76% to settle at 17,318.81, while the S&P CNX Nifty rose by 39.15 points or 0.75% to close at 5,248.15.

The BSE Sensex touched a high and a low of 17,359.18 and 17,195.51 respectively. The BSE Mid cap and Small cap index were up by 0.69% and 0.57% respectively.

The major gainers on the Sensex were TCS up by 3.49%, Jindal Steel up by 3.41%, Infosys up by 2.75%, DLF up by 2.61%, and Hero MotoCorp up by 2.35% while Maruti Suzuki down by 1.95%, BHEL down by 1.94%, Mahindra & Mahindra down by 0.64%, ITC down by 0.61% and HDFC down by 0.50% were the major losers on the index.

The major gainers on the BSE sectoral space were IT up by 2.37%, TECk up by 1.93%, Oil & Gas up by 1.05%, Realty up by 1.04% and Metal up by 0.89%, while Consumer Durables (CD) down by 0.66% and FMCG down by 0.27% were major losers on the BSE sectoral space.

Meanwhile, the government has reversed the ban on cotton and has allowed its exports. Fresh registrations are expected to start in the next 1-2 days. After a meeting between the GoM and the Prime Minister Commerce Minister Anand Sharma informed about the decision. The GoM is expected to review the situation based on revised estimates and figures of crop size.

The exports of cotton has become a political issue after the government banned its exports on March 5 citing shortages in the domestic markets and a tendency of cotton mills to hoard the fibre abroad.  The decision drew flak from the United Progressive Alliance, as well as Gujarat chief minister Narendra Modi. The international community also did not view it favourable.

Consequently the government then allowed exports of those quantities which had already been registered with the Directorate General of Foreign Trade, subject to revalidation by authorities. However no new registrations were allowed. Now with today’s decision the ban stays reversed and fresh registrations are expected to start in the near future. 

The S&P CNX Nifty touched a high and low of 5,262.15 and 5,201.45 respectively.

The top gainers on the Nifty were TCS up by 3.81%, Jindal Steel up by 3.73%, Powergrid up by 3.08%, Hero MotoCorp up by 2.91% and Infosys up by 2.84%.

On the flip side, BHEL down by 2.27%, Maruti Suzuki down by 1.75%, Axis Bank down by 1.38%, Dr Reddy down by 1.09%, and SAIL down by 0.68% were the top losers on the index.

The European markets were trading mixed, as France's CAC 40 down 0.67%, Britain’s FTSE 100 up 0.14%, while Germany's DAX was up by 0.14%.

Sentiments in the Asian region remained bullish and most of the Asian counters snapped the day’s trade in the positive terrain on Monday in holiday-thinned trade after sluggish US growth figures boosted hopes for more measures from the Federal Reserve to help the world’s No. 1 economy. The Fed has already carried out two rounds of bond-buying known as quantitative easing to stimulate spending and drive down long-term interest rates. Low bond yields generally encourage investors to shift money to buying stocks. Meanwhile, Seoul shares edged up to a one-week closing peak on Monday, lifted by a rally in auto shares and a recovery in recently underperforming shipyards. Moreover, Hong Kong shares rose over one and a half percent, led by gains in Chinese banks after posting growth in quarterly profits, with the Hang Seng Index poised to end April in the black after a 5.2 percent slide in March.

Stock markets in Japan remained closed on Monday on account of Bridge Public Holiday while the Chinese bourses too were shut owing to May Day holidays and will re-open directly on Wednesday.