Bulls come back on Dalal Street; Nifty reconquers 10,700 mark

May F&O expiry session turned out to be a fabulous day of trade for Indian equity benchmarks with frontline gauges recapturing their crucial 10,700 (Nifty) and 35,300 (Sensex) levels, on the back of predictions of normal southwest monsoon rains and expectations of an improved gross domestic product data due later in the day. The markets’ mood remained up-beat throughout the day and benchmarks fervently gained from strength to strength, as investors continued hunt for fundamentally strong stocks. Key gauges made an optimistic start with traders taking some encouragement with report that India is likely to retain the position of world’s fastest growing major economy in the January-March quarter, surpassing China’s growth of 6.8%, driven by gains in manufacturing and consumer spending. The poll on the latest quarter’s annual growth was 7.3%, the best pace since July-September 2016, the quarter before the government unexpectedly scrapped high-value currency notes. Investors took note of a report that India will endeavour to have a ‘balanced’ Regional Comprehensive Economic Partnership (RECP) trade agreement as it would cover 40% of the global GDP and over 42% of the world’s population. Adding to the optimism, commerce and industry minister Suresh Prabhu said that India will pitch for continuing the eligibility of its 3,500-odd goods for low or zero duties in the US.

Markets extended gains in last leg of trade as traders covered-up of pending short positions on expiry of the May derivatives contracts. Sentiments also remained up-beat with SBI research report, where it expecting GDP growth for Q4FY18 to be around 7.6% and the FY18 growth to be at 6.7%. It also said that the GDP growth for Q4 and FY18 is likely to spring a positive surprise. Some support also came with report showing that the country’s special economic zones (SEZs) grew 5.44% in April to Rs 20,548 crore as against Rs 19,488 crore in the same month a year ago. According to Export Promotion Council for EOUs & SEZs (EPCES), highest growth in outward shipments was recorded from the Cochin SEZ which witnessed a 704% jump from Rs 461 crore in April last year to Rs 3,708 crore this year.

Positive opening in European markets too aided sentiments. Most of the European markets are trading in green in early deals, as Italian worries abated and the White House said that preparations for the highly anticipated June 12 summit in Singapore are going well. Asian equity markets ended mostly in green, as fears of turmoil in Italy were soothed by conciliatory noises from the country's two biggest populist parties.

Back home, some support also came with the Met department’s statement that the entire country is likely to get normal monsoon this year, except the east and northeast India, which is likely to witness below normal rainfall. Traders paid no heed towards report that credit rating agency Moody’s has cut its forecast for India’s GDP growth in 2018 to 7.3% from 7.5% earlier. Meanwhile, Electronics and IT secretary Ajay Prakash Sawhney has said that the government is likely to finalise new National Policy on Electronics in next couple of months, with an aim to boost design and innovation along with domestic production.

Finally, the BSE Sensex surged 416.27 points or 1.19% to 35,322.38, while the CNX Nifty was up by 121.80 points or 1.15% to 10,736.15.

The BSE Sensex touched a high and a low of 35,416.03 and 34,926.08, respectively and there were 20 stocks on gaining side as against 11 stocks on losing side on the index.

The broader indices ended in red; the BSE Mid cap index declined 0.24%, while Small cap index was down by 0.57%.

The top gaining sectoral indices on the BSE were Bankex up by 1.91%, Oil & Gas up by 1.17%, Energy up by 0.80%, IT up by 0.75% and PSU was up by 0.59%, while Consumer Durables down by 0.97%, Realty down by 0.85%, Healthcare down by 0.83%, Capital Goods down by 0.63% and Industrials was down by 0.58% were the top losing indices on BSE.

The top gainers on the Sensex were Adani Ports & SEZ up by 4.70%, HDFC Bank up by 4.36%, Indusind Bank up by 3.14%, Mahindra & Mahindra up by 3.12% and Hindustan Unilever up by 2.75%. On the flip side, Sun Pharma down by 2.95%, Tata Motors down by 2.09%, Hero MotoCorp down by 1.65%, Dr. Reddy’s Lab down by 1.14% and Maruti Suzuki down by 0.81% were the top losers.

Meanwhile, credit rating agency, ICRA in its latest report has said that cement production in India registered a growth of 6.3 percent at 298 million tonne (MT) in the financial year 2018, as compared to 280 MT in FY17, with the bulk of production growth was reported in the second half of FY18. It noted that the growth in output was mainly because of better demand in the key markets and the base effect of the demonetisation-driven low demand during the corresponding period of last year.

Rating agency has stated that going by the prevalent trend, the growth momentum is expected to continue in FY19 and the industry is likely to witness a growth of around 6 percent. It pointed out that this is primarily on the back of pick-up in the affordable and rural housing segments and infrastructure - primarily road and irrigation projects. Besides, it said that the FY19 budget also provides support in this direction with higher rural credit, increased allocation for rural, agricultural and allied sectors along with continued focus on the PMAY and infrastructure investments.

The report further indicated that the cement production increased by 10.6 percent and 18.2 percent respectively in the December and March quarters of 2017-18. It said that the trend was supported by demand in Andhra Pradesh and Telangana, driven by irrigation, low-cost housing and infrastructure projects.  Besides, it noted that in April 2018, rising demand resulted in an increase in cement prices in the Ahmedabad and Hyderabad markets respectively by Rs 20/a bag and Rs 10/a bag, respectively. However, it said that rising supplies resulted in prices remaining range-bound in the Kolkata market.

The CNX Nifty traded in a range of 10,763.80 and 10,620.40. There were 34 stocks in green as against 16 stocks in red on the index.

The top gainers on Nifty were Adani Ports & SEZ up by 5.10%, HDFC Bank up by 4.65%, Indusind Bank up by 4.02%, Tech Mahindra up by 3.16% and Mahindra & Mahindra up by 2.90%. On the flip side, Sun Pharma down by 2.47%, Tata Motors down by 1.99%, Dr. Reddy’s down by 1.73%, Hero MotoCorp down by 1.43% and Hindalco down by 1.32% were the top losers.

The European markets were trading mostly in green; UK’s FTSE 100 rose 5.32 points or 0.07% to 7,694.89 and France’s CAC was up by 5.93 points or 0.11% to 5,433.28, while Germany’s DAX was down by 63.94 points or 0.5% to 12,719.82.

Asian equity markets ended mostly higher on Thursday as oil prices rebounded, Italy's political turmoil eased and Chinese data topped forecasts. The Italian president, Sergio Mattarella, granted Italy's two populist leaders more time to form a government, helping ease worries that another election will essentially be a referendum on the country's membership of the European Union.  Chinese shares posted strong gains as investors cheered upbeat manufacturing and non-manufacturing data. The manufacturing sector in China continued to expand in May, and at a faster rate, the National Statistics Bureau said with a manufacturing PMI score of 51.9. That exceeded forecasts for 51.4, which would have been unchanged from the April reading. The bureau also said that its non-manufacturing PMI came in with a score of 54.9. That also beat expectations for 54.8, which also would have been unchanged. Further, Japanese shares closed higher on bargain hunting as concerns about Italy's political turmoil receded.