Benchmarks start FY’14 on positive note; Nifty reclaims 5,700 mark

Indian equity benchmarks started the new financial year slightly on the positive side with frontline indices ending the session re-conquering 5,700 (Nifty) and 18,650 (Sensex) levels as investors opted to invest in beaten down fundamentally strong stocks. Earlier, markets started trading in fine fettle on optimism over Planning Commission Deputy Chairman Montek Singh Ahluwalia’s statement that the Cabinet Committee on Investments (CCI) is expected to give its nod for a number of projects within the next three weeks. Besides, the Environment and Forests Ministry had also informed CCI that it had initiated steps for speedy approval to infrastructure projects, stuck for want of green nod. But, the bourses started relinquishing their gains on account of accentuated selling pressure following the release of 16 months low factory output figures. The seasonally adjusted HSBC Purchasing Managers’ Index, a composite indicator of operating conditions in the manufacturing economy slowed to 52 in March against its previous reading of 54.2 in February, thereby underscoring shrinking domestic and foreign demand. Deceleration in new orders and power outages mainly slowed the growth momentum in the manufacturing sector.

Some selling also emerged after eight core sectors output fell 2.5% in February, against a growth of 3.1% in the previous month and a whopping 7.7% expansion in February, 2012, dashing the hope of policy makers that the industry will revive in the third quarter of the current financial year. The eight core sectors, which have a weight of 38% in the Index of Industrial Production, saw five of them registering a contraction in February year-on-year.

Global cues too remained sluggish as most of the Asian markets ended the trade in red terrain as sentiments in the region got dampened after Chinese factory data missed market expectations. The country’s factory production ran at its fastest in 11 months in March, though the rise to 50.9 missed market expectations of a bigger headline jump while, European counters remain closed for Easter holidays.

Back home, buying in pharmaceutical stocks provided some strength to the bourses. Shares of stocks like Natco Pharma, Cipla and Ranbaxy surged 2-5% after the Supreme Court dismissed Novartis Glivec Patent Petition. In a landmark judgment that has the potential to change the direction of India's pharmaceutical business, the Supreme Court said that the drug failed to qualify for a patent according to Indian law. Additionally, buying in Aviation space too supported the sentiments after some media reports suggested Oil PSUs slashing Aviation Turbine Fuel or ATF prices by a steep 5.5%. However, gains remain capped as selling witnessed in Auto pack after some companies reported lower than expected March sales numbers.

The NSE’s 50-share broadly followed index Nifty rose by over twenty points to end above the psychological 5,700 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged by about thirty points to finish above the psychological 18,850 mark. Moreover, broader markets outperformed benchmarks during the trade and ended the session with a gain of over 1-2 percent.

The market breadth remained in favor of advances as there were 1,874 shares on the gaining side against 869 shares on the losing side while 92 shares remain unchanged.

Finally, the BSE Sensex gained 28.98 points or 0.15% to settle at 18,864.75, while the CNX Nifty rose by 21.85 points or 0.38% to end at 5,704.40.

The BSE Sensex touched a high and a low of 18,959.48 and 18,796.60, respectively. The BSE Mid cap index was up by 1.28%, while the Small cap index up by 2.30%.

The top gainers on the Sensex were, Dr Reddys Lab up by 3.34%, BHEL up 2.83%, L&T up 2.18%, Infosys up 1.85% and Cipla up 1.20%, while Sterlite Industries down by 4.37%, Jindal Steel down by 1.51%, Tata Motors down by 1.41%, Coal India down 1.33% and Wipro down by 1.22% were the top losers on the index.

The top gainers on the BSE sectoral front were, Realty up 5.37%, Capital Goods up 1.68%, Power up 1.09%, Health Care down 0.97% and Bankex up 0.63%, while Metal down 1.22%, Auto down 0.75% and FMCG down 0.04% were top losers on the BSE sectoral space.

Meanwhile, as per the Planning Commission Deputy Chairman Montek Singh Ahluwalia, the Cabinet Committee on Investments (CCI), which was set up in January for clearing major infrastructure projects, is expected to give its nod for a number of projects within the next 3 weeks.  

Last month, the CCI had cleared the development of five oil and gas blocks where the defence ministry had either barred oil & gas activity or put stringent conditions on it. These include Reliance Industries' KG-D6 and Mahanadi blocks and one block of Cairn India in the KG Basin. Besides, the Environment and Forests Ministry had also informed CCI that it had initiated steps for speedy approval to infrastructure projects, stuck for want of green nod. Further, CCI is also likely to consider proposals to ease norms for highway projects.

Regarding the energy prices and power sector, Ahluwalia said, ‘domestic energy prices have to be more closely aligned to global prices and most of all, solving the fuel supply problems for the power sector and all this put together will enable the Indian economy to see increase in investments.’ By adding further he said, India should have more projects on power generation and emphasis would be to simply make sure that (India's) infrastructure story, looks very good.

We have been very successful in expanding the space in power sector. In 10th plan, we added 21,000 MW. In 11th plan which ended in 2011-12, we added 54,000 MW. In the last year of the plan, we added 22,000 MW which is a little more than the whole of what was done in the 10th Plan, he added.

The CNX Nifty touched a high and a low of 5,720.95 and 5,675.90 respectively. 

The top gainers on the Nifty were, DLF up by 7.80%, Cairn up 5.08%, Reliance Infra up 4.22%, Dr Reddy’s up 3.42% and JP Associates up by 3.36%.

On the flip side, the top losers of the index were, Sesa Goa down by 2.77%, Tata Motors down by 1.69%, Jindal Steel down by 1.60%, Bajaj Auto down by 1.50% and TCS down by 1.50%.

The European markets were trading in green, France’s CAC 40 up by 0.53%, Germany’s DAX up by 0.08% and the United Kingdom’s FTSE 100 up by 0.38%.

Asian markets slipped in a holiday-hit trade and ended lower on Monday, as investors sentiments were dampened by a slight improvement in economic reports from China and Japan. Japan’s Nikkei went home with red mark as the yen climbed against the dollar ahead of a Bank of Japan (BoJ) policy meeting this week. Meanwhile, South Korean market closed lower despite its exports last month barely grew from a year earlier while inflation unexpectedly eased to a 7-month low on weak domestic demand, reinforcing expectations for a central bank rate cut as early as next week.

Asian markets were relatively quiet some markets including Hong Kong, South Korea and Taiwan remained closed for the Easter holiday.