Benchmarks snap five days losing streak; make gap up opening

Indian equity benchmarks have made a gap-up opening on Monday with Sensex and Nifty recapturing their crucial 31,400 and 9,750 levels respectively, as traders went for bargain hunting after five days of continuous drubbing. Sentiments remained up-beat with outgoing Niti Aayog Vice Chairman Arvind Panagariya’s statement that resolution of bad loans in the banking system is on 'right track' and will 'open the door' to rapid credit expansion and growth. Traders also took some encouragement with a private report that the Indian economy is at the cusp of entering its strongest growth phase and a full blown bull market is yet to play out with the wide-based Nifty expected to touch 11,500 in 2018.

Firm trend in global markets too provided much needed strength to domestic markets with most of the Asian equity markets trading in green at this point of time with tensions between the US and North Korea showing signs of easing, though the Japanese market was lower as the yen strengthened against the dollar. The US markets made a minor bounce back in the last session and all the major averages managed a positive close.

Back home, traders totally shrugged off India's industrial production data, which fell to four-year low of 0.1 per cent in June as manufacturers reduced inventories ahead of the GST rollout. Meanwhile, the market breadth indicating the overall health of the market was strong, with 1,577 shares gaining and 375 shares declining, while a total of 51 shares were unchanged.

The BSE Sensex is currently trading at 31446.76, up by 233.17 points or 0.75% after trading in a range of 31298.90 and 31464.58. There were 24 stocks advancing against 7 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index surged 1.60%, while Small cap index was up by 1.93%.

The top gaining sectoral indices on the BSE were Realty up by 2.99%, Metal up by 2.28%, Basic Materials up by 1.90%, Power up by 1.67% and Utilities up by 1.59%, while Telecom down by 0.39%, TECK down by 0.14% and IT was down by 0.05% were the few losing indices on BSE.

The top gainers on the Sensex were Adani Ports up by 3.82%, Cipla up by 3.74%, Tata Steel up by 2.85%, HDFC up by 1.88% and Maruti Suzuki up by 1.68%. On the flip side, Bharti Airtel down by 1.72%, SBI down by 0.68%, Infosys down by 0.48%, Larsen & Toubro down by 0.43% and Wipro down by 0.28% were the top losers.

Meanwhile, with the sharp fall in capital goods production and decline in manufacturing sector, India’s industrial output contracted by 0.1% in the month of June 2017, as compared to an expansion of 8% in the previous year-ago period, also lower than 2.8% growth in May. This reading was a four-year low since June 2013.Segments like mining, power generation, infrastructure/construction goods and consumer durables recorded poor performance. Besides, data for growth in the Index of Industrial Production (IIP) for May was revised to 2.8%.

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 June 2017, stood at 119.6, which is 0.1% lower as compared to the level in the month of June 2016. However, the cumulative growth for the period April-June 2017 over the corresponding period of the previous year stood at 2.0%. The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of June 2017 stand at 98.8, 120.6 and 147.4 respectively, with the corresponding growth rates of 0.4%, (-) 0.4% and 2.1% as compared to June 2016. The cumulative growth in these three sectors during April-June 2017 over the corresponding period of 2016 has been 1.2%, 1.8% and 5.3% respectively.

The fall in capital goods output, which is the barometer of investment, was lowest since September 2016, as it shrank 6.8% in June, compared to a 3.9% contraction in the previous month and a growth of 14.8% a year ago. Among the other use-based categories, Primary goods were (-) 0.2%, Intermediate goods were (-) 0.6% and Infrastructure/ Construction Goods were 0.6%. The Consumer durables and Consumer non-durables have recorded growth of (-) 2.1% and 4.9% respectively.

In terms of industries, fifteen out of the twenty three industry groups in the manufacturing sector have shown negative growth during the month of June 2017 as compared to the corresponding month of the previous year. The industry group ‘Manufacture of electrical equipment’ has shown the highest negative growth of (-) 20.1% followed by (-) 11.1% in ‘Manufacture of fabricated metal products, except machinery and equipment’ and (-) 10.5% in ‘Printing and reproduction of recorded media’. On the other hand, the industry group ‘Other manufacturing’ has shown the highest positive growth of 28.1% followed by 19.2% in ‘Manufacture of pharmaceuticals, medicinal chemical and botanical products’ and 11.7% in ‘Manufacture of furniture’.

The CNX Nifty is currently trading at 9784.80, up by 74.00 points or 0.76% after trading in a range of 9752.10 and 9793.55. There were 42 stocks advancing against 9 stocks declining on the index.

The top gainers on Nifty were Adani Ports up by 4.11%, Cipla up by 3.93%, Tata Steel up by 2.80%, Hindalco up by 2.65% and Vedanta up by 2.44%. On the flip side, BPCL down by 2.12%, Bharti Airtel down by 1.34%, Larsen & Toubro down by 0.71%, Infosys down by 0.58% and SBI down by 0.55% were the top losers.

Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI rose 3.43 points or 0.19% to 1,770.39, Shanghai Composite gained 13.94 points or 0.43% to 3,222.48, KOSPI Index increased 15.61 points or 0.67% to 2,335.32, Jakarta Composite added 24.64 points or 0.43% to 5,790.77 and Hang Seng was up by 314.25 points or 1.17% to 27,197.76.

On the flip side, Nikkei 225 decreased 157.87 points or 0.8% to 19,571.87 and Taiwan Weighted was down by 36.39 points or 0.35% to 10,293.18.