Benchmarks trade in high spirit; Sensex surpasses 32,000 mark

Extending their record hitting streak, Indian equity benchmarks have made a gap-up opening and are trading with a gain of over half a percent, surpassing their crucial 32,000 (Sensex) and 9,850 (Nifty) levels. Traders remained optimistic for a rate cut by Reserve Bank of India (RBI) after the industrial output growth dropped to 1.7 percent in May from 8 percent in the same month last year. On the other hand, retail inflation hit new low of 1.54 percent in June, down from 2.18 per cent in May. Tepid data of industrial output coupled with record low inflation figures have rekindled hopes of a rate cut when the RBI reviews its monetary policy on August 2. Some support to the markets also came with rating agency Fitch’s report that the global sovereign credit cycle is likely to turn less negative in 2017 as the global GDP growth forecast for 2017 and 2018 had improved.

Global cues too remained supportive with Asian markets trading mostly in green at this point of time after Janet Yellen signaled the Federal Reserve won’t rush to tighten monetary policy. The US markets bounced back and posted good gains in the last session with Dow reaching a record closing high in reaction to Federal Reserve Chair Janet Yellen's remarks before the House Financial Services Committee.

Back home, stocks related to software space remained on buyers’ radar with TCS, the largest domestic IT firm by sales slated to announce its first quarter numbers. In scrip specific developments, Magma Fincorp surged around three percent on planning to disburse Rs 6,000 crore in FY18 in the asset finance business category. Mangalore Refinery and Petrochemicals (MRPL) edged higher by around half a percent on securing the green signal from the Union Ministry of Environment, Forest and Climate Change (MoEFCC) for the Bharat Stage (BS) VI auto fuel quality compliance project and associated project facilities.

The BSE Sensex is currently trading at 32033.11, up by 228.29 points or 0.72% after trading in a range of 31892.63 and 32042.58. There were 29 stocks advancing against 2 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.78%, while Small cap index was up by 0.67%.

The top gaining sectoral indices on the BSE were FMCG up by 1.11%, Capital Goods up by 1.05%, Bankex up by 0.92%, Power up by 0.91% and Basic Materials up by 0.81%, while there were no losers on the BSE sectoral front.

The top gainers on the Sensex were ICICI Bank up by 1.79%, ITC up by 1.58%, Axis Bank up by 1.47%, Bharti Airtel up by 1.33% and Larsen & Toubro was up by 1.25%. On the flip side, ONGC down by 0.89% and Mahindra & Mahindra down by 0.13% were the only losers.

Meanwhile, industrial output growth of India slowed down to 1.7% in the month of May 2017, as compared to 8% in the same month last year and 3.1% in April 2017, mainly due to poor performance of mining and manufacturing. Besides, capital goods and consumer durable goods too continued to drag IIP growth. The Index of Industrial Production (IIP) for the month of May 2017 stood at 124.3. The cumulative growth for the period April-May 2017 over the corresponding period of the previous year stood at 2.3%.

As per the data released by the Central Statistics Office of the Ministry of Statistics and Programme Implementation, IIP with base 2011-12 for the month of May 2017, the indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of May 2017 stood at 100.5, 125.1 and 158.7 respectively, with the corresponding growth rates of (-) 0.9%, 1.2% and 8.7% as compared to May 2016. The cumulative growth in these three sectors during April-May 2017 over the corresponding period of 2016 has been 1.1%, 1.8% and 7.1% respectively.

The output of the capital goods segment, considered as key indicator of investment, shrunk by 3.9% compared to a high growth of 13.9% recorded in May 2016. The consumer durables segment too witnessed a decline of 4.5% as against a growth of 14.7% in the month of May last year. As per Use-based classification, the growth rates in May 2017 over May 2016 are 3.4 percent in Primary goods, 0.7% in Intermediate goods and 0.1% in Infrastructure/ Construction Goods.  The Consumer non-durables have recorded growth of 7.9%.

In terms of industries, 12 out of the 23 industry groups in the manufacturing sector showed positive growth during the month of May 2017 as compared to the corresponding month of the previous year. The industry group ‘Manufacture of pharmaceuticals, medicinal chemical and botanical products’ has shown the highest positive growth of 24.5% followed by 24.4% in ‘Other manufacturing’ and 11.8% in ‘Manufacture of other transport equipment’. On the other hand, the industry group ‘Manufacture of beverages’ has shown the highest negative growth of (-) 16.5% followed by (-) 15.1% in ‘Manufacture of motor vehicles, trailers and semi-trailers’ and (-) 15.0% in ‘Manufacture of electrical equipment’.

The CNX Nifty is currently trading at 9882.60, up by 66.50 points or 0.68% after trading in a range of 9853.45 and 9884.65. There were 45 stocks advancing against 6 stocks declining on the index.

The top gainers on Nifty were Indiabulls Housing up by 2.35%, ICICI Bank up by 1.92%, ITC up by 1.55%, Axis Bank up by 1.46% and Yes Bank up by 1.43%. On the flip side, Bharti Infratel down by 2.00%, Indian Oil Corporation down by 1.22%, ONGC down by 0.86%, Mahindra & Mahindra down by 0.16% and Indusind Bank down by 0.13% were the top losers.

Asian markets were trading mostly in green; Shanghai Composite increased 13.97 points or 0.44% to 3,211.51, KOSPI Index surged 30.1 points or 1.26% to 2,421.87, Taiwan Weighted added 53.44 points or 0.51% to 10,474.12 and Hang Seng was up by 279.69 points or 1.07% to 26,323.33.

On the flip side, Nikkei 225 decreased 12.29 points or 0.06% to 20,086.09, Jakarta Composite slipped 1.27 points or 0.02% to 5,817.86 and FTSE Bursa Malaysia KLCI was down by 0.09 points or 0.01% to 1,757.15.