Dalal Street cheers exit poll results

Rising for the third session in a row, Indian equity benchmarks settled at record closing highs on Monday, after exit polls predicted win for Bharatiya Janata Party-led National Democratic Alliance (NDA) in the recently concluded general elections. After a fabulous start, key indices remained in the grip of bulls throughout the session, aided by the Reserve Bank of India’s (RBI) data report that the country's foreign exchange reserves rose by $1.368 billion to reach $420.055 billion in the week to May 10 on account of a rise in foreign currency assets. In the previous week, the reserves had increased by $171.9 million to $418.687 billion. Traders remained optimistic amid reports that the government is considering various options to adequately empower the Reserve Bank of India (RBI) to deal with banks' stressed assets under the Insolvency and Bankruptcy Code following the Supreme Court order, quashing February 12 circular of the central bank.

Markets maintained gaining momentum in the second half of the trading session, despite weak cues from European markets. Market participants got comfort with a private report stating that Indian retail real estate sector attracted private equity investment worth $1.2 billion during 2017-18 calendar years, double from the previous two years. The report attributed the sharp rise in private equity (PE) inflow to further liberalisation in FDI policies such as 51 per cent FDI in multi-brand retail and 100 per cent FDI in single-brand retail under the automatic route. The street paid no heed towards India Meteorological Department’s (IMD) latest report indicating that pre-monsoon rainfall in the country from March to May recorded a deficiency. The IMD recorded 75.9 millimetres of rainfall from March 1 to May 15 as against the normal rainfall of 96.8 millimetres, which comes to around minus 22%.

On the global front, European markets were trading in red, as Germany's producer price inflation rose marginally in April. The figures from Destatis showed that producer prices climbed 2.5 percent year-on-year in April, faster than the 2.4 percent increase in March. The annual rate was expected to remain at 2.4 percent. Energy prices had the biggest impact on overall producer prices. Electricity prices had advanced 10.8 percent. Excluding energy, producer prices rose only 1.3 percent. Asian markets ended mixed, as Japan's industrial production declined in March. The final data from the Ministry of Economy, Trade and Industry showed that industrial production fell a seasonally adjusted 0.6 percent month-on-month in March, smaller than the 0.9 percent decrease initially estimated.

Back home, metal industry stocks ended higher, as Industry body FICCI suggested to the railways ministry various measures like inclusion of coal and coke in long-term tariff contract (LTTC) policy, to promote growth of steel industry. Further, shipping sector remained in limelight, after the Indian Ports Association (IPA) data showed that the 12 major ports in India recorded a growth of 5.65 percent and together handled 60.07 million tonnes (MT) of cargo during the period April 2019 as against 56.86 MT handled during the corresponding period of previous year. The growth in the cargo traffic was mainly attributed to increase in demand from various sectors, including coal, containers and petroleum, oil and lubricants (POL).

Finally, the BSE Sensex gained 1421.90 points or 3.75% to 39,352.67, while the CNX Nifty was up by 421.10 points or 3.69% to 11,828.25.

The BSE Sensex touched a high and a low of 39,412.56 and 38,570.04, respectively and there were 29 stocks advancing against 02 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 3.57%, while Small cap index was up by 3.55%.

The top gaining sectoral indices on the BSE were Capital Goods up by 5.62%, Industrials up by 5.57%, Realty up by 5.47%, PSU up by 5.37% and Bankex up by 4.68%, while there were no losing sectoral indices on the BSE.

The top gainers on the Sensex were Indusind Bank up by 8.64%, SBI up by 8.04%, Tata Motors up by 7.53%, Tata Motors - DVR up by 6.86% and Yes Bank up by 6.73%. On the flip side, Bajaj Auto down by 1.18% and Infosys down by 0.19% were the only losers.

Meanwhile, Economic Advisory Council to the Prime Minister's (EAC-PM) member Shamika Ravi has said that India needs to make all efforts to reach double-digit Gross Domestic Product (GDP) growth and should not treat 7 percent increase as the 'new normal'. She explained “the new normal of 7 percent or perhaps weakening further because of the global trends cannot be the new normal for a country with per capita income that we do have.”

Ravi also asserted that there needs to be reinforcement of mechanisms through which India can continue to aspire for double digit growth. She maintained that India is unlikely to fall into the middle income trap. She also said 'I don't think India can afford that (middle income trap). I don't think India is going to fall into the middle income trap like Brazil or South Africa.”

The EAC-PM member further said that India should not lose fiscal discipline which it maintained during the last five years of the Narendra Modi government. She pointed out that states which are ranked high in ease of doing business have low unemployment rate compared to the all-India average. She stated that it is important to realise that the recipe for job creation will also eventually come through entrepreneurship and noted that the government cannot be final provider of jobs.” She also stressed on the need to improve fundamental quality of India's data systems.

The CNX Nifty traded in a range of 11,845.20 and 11,591.70. There were 45 stocks advancing against 05 stocks declining on the index.

The top gainers on Nifty were Adani Ports & SEZ up by 10.99%, Indiabulls Housing Finance up by 10.62%, Indusind Bank up by 8.77%, SBI up by 8.32% and Tata Motors up by 7.15%. On the flip side, Dr. Reddy’s Lab down by 5.50%, Zee Entertainment down by 3.00%, Bajaj Auto down by 0.82%, Tech Mahindra down by 0.76% and Infosys down by 0.36% were the top losers.

European markets were trading in red; UK’s FTSE 100 lost 24.55 points or 0.33% to 7,324.07, France’s CAC fell 39.14 points or 0.72% to 5,399.09 and Germany’s DAX was down by 68.95 points or 0.56% to 12,169.99.

Asian markets ended mixed on Monday as trade worries persisted, offsetting a surprise election victory for Australia's pro-coal ruling Coalition and upbeat Japanese GDP data. Markets remained fragile after Chinese foreign minister Wang Yi told US Secretary of State Mike Pompeo in a call that negotiating on an equal footing is the only way to solve pressing trade issues. Chinese shares closed lower as trade war fears simmered. China's offshore yuan strengthened after the country's central bank said that it would maintain the stability of its yuan within a reasonable and balanced range. Further, Japanese shares ended higher as Q1 GDP data topped forecasts. Growth in the nation's economy unexpectedly accelerated at an annualized 2.1 percent in the first quarter, defying expectations for a 0.2 percent contraction. However, the surprise expansion was mostly caused by imports declining faster than exports. Meanwhile, the markets in Malaysia and Singapore were closed in observance of Vesak Day.