Post session - Quick review

Unwinding days’ good work, benchmark equity indices pared significant portion of gains, to negotiate just a petite positive close. Questions over the likelihood of expected stimulus action from global policymakers coupled with slowing Spanish service sector growth sapped the demand for the emerging markets’ risky asset class such as equities. Conversely, positive domestic developments scored the equity markets a second positive close.

30 scrip sensitive index, Sensex, concluded above the crucial 16,000 psychological level, with gains close to 50 points. The index, despite sailing through the crucial 16k mark, faced stiff resistance near the 16100 level. Meanwhile, the widely followed index, Nifty, also sailed past the 4850, to end with slender gains of over 15 points. Broader indices, however, managed to gain additional traction in comparison to the frontline indices.

Hopes of rate cut in RBI’s next annual monetary policy review, strong showings of India’s service sector, helped the markets from falling in today’s trading session. Moreover, South-west monsoon, the key to the agriculture driven trillion-dollar Indian economy, on Tuesday brought showers to Kerala bringing much-needed respite to the market. According to the data compiled by Markit, the HSBC Business Activity Index, which measures the service sector activity, bounced from 52.8 in April to a three-month high of 54.7 in May. A figure above 50 signals increase in production while, a number below 50 indicates decrease in production.

Furthermore, Asian counterparts too supported Indian equity markets, as the regional counterparts negotiated fairly decent close, upbeat on speculation of more central banks joining the Reserve Bank of Australia’s move of cutting rates, in the wake of weakening global environment. The gains came ahead of G-7 finance ministers and central bankers teleconference on Tuesday on the euro zone, with a particular emphasis on Spain.

Back home, shares of aviation companies flew high for second consecutive session on reports that the aviation ministry has called for abolition of service tax on air tickets and reduction in sales tax on aviation fuel from an average 25% to a uniform 4%. Additionally, shares of fertiliser manufacturers gained on arrival of the monsoon season in Kerala, as this would boost demand for fertilizers. Sentiments were further fortified after the India Meteorological Department, said it was optimistic on monsoon hitting Konkan, Goa and Mumbai in next 5 days. The market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 1401:1290 while 137 scrips remained unchanged. (Provisional)

The BSE Sensex gained 29.21 points or 0.18% and settled at 16,017.61. The index touched a high and a low of 16,138.29 and 15,979.77 respectively. 19 stocks advanced against 11 declining ones on the index (Provisional)

The BSE Mid-cap index gained 0.31% while Small-cap index was up by 0.21%. (Provisional)

On the BSE Sectoral front, Capital Goods up 1.91%, Power up 0.88%, Bankex up 0.75%, Oil & Gas up 0.58% and IT up 0.45% were the top gainers while Realty was down 1.52%, FMCG down 1.30%, Consumer Durables down 0.70%, Metal down 0.35% and Auto down 0.27% were the only losers.

There top gainers on the Sensex were L&T up 3.20%, NTPC up 1.94%, BHEL up 1.67%, Hindalco Industries up 1.60% and HDFC Bank up 1.45% while, Tata Motors down 3.19%, Bharti Airtel down 2.39%, ITC down 2.19%, Sun Pharma down 1.62% and DLF down 1.61% were the top losers in the index. (Provisional)

Meanwhile, service sector activity in India showed strong performance in the month of May as it expanded at the fastest clip in last three months largely because of significant increase in new work orders. According to the data compiled by Markit, the HSBC Business Activity Index, which measures the service sector activity in the nation, bounced from 52.8 in April to a three-month high of 54.7 in May. A figure above 50 signals increase in production while, a number below 50 indicates decrease in production.

The resilient performance in the country’s service sector was due to continued rise in new business growth and a strong expansion of new orders. The data also highlighted that though the rate of jobs growth remained marginal, employment in service sector continued to increase. Service providers were more sanguine about one-year outlook, which is evident since the index measuring business expectations zoomed to a 15-month high of 76.7 in May from 73.8 in April, more than 14 points above its March level.

However, inflation remained a cause of concern as input price inflation in the sector climbed to a strong rate while the rise in output prices too was sharp, the highest in four months, and higher than the long-run trend. Nevertheless, the data spurred some respite as it was quite opposite to the government’s recently released fourth quarter gross domestic product (GDP) growth numbers which underscored that Asia's third largest economy expanded at its slowest annual pace in almost nine years.

Moreover, the HSBC Composite Output Index, which encompasses both manufacturing and service sectors’ activity, ascended to 55.3 in May, from 53.8 in the previous month largely because of sharp rise in services PMI and steady manufacturing PMI. Amid increasing speculations that the Reserve Bank of India in its mid-quarter policy review on June 18 would take some policy action to bring India’s deteriorating economy out of doldrums, these PMI numbers emphasize on the fact that there is little room for aggressive monetary policy easing over the near term.India VIX, a gauge for market’s short term expectation of volatility gain 2.57% at 26.26 from its previous close of 25.60 on Monday. (Provisional)

The S&P CNX Nifty gained 11.45 points or 0.24% to settle at 4,859.60. The index touched high and low of 4,898.95 and 4,847.70 respectively. 30 stocks advanced against 20 declining ones on the index. (Provisional)

The top gainers on the Nifty were Cairn India up 3.06%, L&T up 3.02%, Grasim up 2.68%, Reliance Infrastructure up 2.52% and IDFC up 2.40%.On the other hand, Ambuja Cement down 3.39%, Tata Motors down 3.30%, Siemens down 2.71%, Bharti Airtel down 2.31% and BPCL down 2.14% were the top losers. (Provisional)

The European markets were trading on a mix note, with France's CAC 40 up 0.44% and Germany's DAX down 0.82%. Stock markets in the United Kingdom remained closed on Monday for a national holiday.

Snapping their four day’s losing streak, all the Asian equity indices ended the trade in the positive terrain on Tuesday as investors turned optimistic ahead of the meetings of Euro-zone policymakers and the wider group of seven (G7) industrialized nations. A group of G-7 finance ministers and central bankers will hold a teleconference later on Tuesday to talk about strains in the 17-nation euro-zone, with Spain expected to be a focus of discussion. Moreover, investors are also hoping for 25 basis points rate cut by European Central Bank at its rate-setting meeting later in the week.

Meanwhile, Hang Seng and Nikkei ended the trade with a gain of 0.40% and 1.04% respectively, partly on short-covering ahead of emergency G7 talks on the euro zone debt crisis. Moreover, Chinese Shanghai ended marginal higher on Tuesday, as investors remained cautious after the index posted its biggest percentage fall in six months on Monday due to worries over a slowdown in the domestic economy.