Resilient Indian benchmarks stage relief rally; halt five sessions southward journey

Relief rally finally came on Wednesday as market-men enthusiastically resorted to hunt for undervalued fundamentally strong bargains amid firm global cues. The bounce back came after five successive sessions of downtrend in which the BSE’s Sensex suffered a massive loss of close to six hundred and fifty points while the NSE’s Nifty suffered staggering losses of around one hundred and ninety points as continuous political uncertainty over early elections kept the investors mood jittery, while the foreign funds kept on selling, adding further pressure on the markets.

The sentiments remained positive since the start of trade with the Planning Commission Deputy Chairman Montek Singh Ahluwalia reiterating that India can get back to 8 percent GDP growth with improved infrastructure. However, markets soon, after a gap up opening, pared most of their initial gains and traded cautiously tad above their neutral lines for most part of the session as investors remained on the sidelines focusing on Infosys results later this week. Though, it was the last hour of trade where market picked up pace and garnered gain of around a percent, recapturing their crucial 5,550 (Nifty) and 18,400 (Sensex) bastions.

Broad-based buying came in after European counters opened firmly following unexpectedly good French production data that helped the euro to a fresh one-month high against the dollar, while an upbeat close to trading the US too aided sentiments. Asian equity indices too shut shop in the green as Chinese trade data signaled a recovery in the world’s second largest economy. China recorded a mild trade deficit of $884 million in March as imports surged way ahead of market expectations, growing 14.1% year-on-year, while annual export growth of 10.0% were largely in line with forecasts.

Back home, over two percent rally in software and technology counters helped market to end near intraday high. Stocks like Infosys, Wipro, HCL Technologies and TCS edged higher after Gartner survey stated that a majority of large Indian enterprises are planning to increase their IT spending this year. Auto sector too witnessed buying despite report that car sales in India fell an annual 6.7% in the financial year that ended in March, their first fall in a decade. Domestic passenger car sales declined by 22.51% to 180,675 units in March this year compared to 233,151 units in the same month of 2012.

The NSE’s 50-share broadly followed index Nifty rose by about 65 points to end above the psychological 5,550 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged by about two hundred and ninety points to end above its crucial 18,400 mark. Moreover, broader markets too traded with traction during the session and ended the trade in green.

The market breadth remained in favor of advances as there were 858 shares on the gaining side against 828 shares on the losing side while 795 shares remain unchanged.

Finally, the BSE Sensex surged 187.97 points or 1.03% to settle at 18,414.45, while the CNX Nifty climbed by 63.60 points or 1.16% to end at 5,558.70.

The BSE Sensex touched a high and a low of 18,461.44 and 18,173.31, respectively. The BSE Mid cap index up by 0.53% and Small cap index was up by 0.01%.

The top gainers on the Sensex were, HDFC up by 3.64%, L&T up by 2.25%, TCS up by 2.19%, Wipro up by 2.17% and Tata Motors up by 1.86%, while Sun Pharma down by 1.24%, Jindal Steel down by 1.01%, ITC down by 0.91%, Hindustan Unilever down 0.82% and Dr Reddys Lab down by 0.55% were the top losers on the index.

The top gainers on the BSE Sectoral space were TECk up 2.10%, IT up 2.05%, Bankex up 1.73%, Capital Goods up 1.40% and Realty up 1.30%, while FMCG down 0.40% was the only loser on the sectoral space.

Meanwhile, India’s steel consumption registered a modest growth of 3.3 percent to 73.3 million tonnes in FY13 lowest in the last three years on the back of subdued demand because of the prevailing economic slowdown and high interest rates. The consumption of steel, used mainly in construction and consumer durables, grew by 5.5 percent in FY12 and 9.9 percent in FY11.

While, total steel production expanded by just 2.5 percent during FY13 to 75.5 million tonne. Decline in consumption forced almost all steel companies to resort to curtailing capacity utilization. A stubbornly-high inflation and a tight monetary policy forced consumers to postpone buying decisions leading to subdued demand for steel.

Steel industry is highly correlated to the growth of the economy as its demand depends upon the manufacturing activities around the country. A sound economy ensures higher consumption.

The CNX Nifty touched a high and a low of 5,569.25 and 5,477.20 respectively. 

The top gainers on the Nifty were Reliance Infra up by 4.62%, HCL Tech up 3.73%, JP Associates up 3.67%, Axis Bank up 3.06% and Kotak Bank up by 2.95%.

On the flip side, the top losers of the index were, Sun Pharma down by 1.45%, Jindal Steel down by 1.37%, ITC down by 1.20%, HUL down by 1.16% and Dr Reddy down by 0.86%.

Most of the European markets were trading in green, France’s CAC 40 up by 1.25%, the United Kingdom’s FTSE 100 up by 0.77% and Germany’s DAX up by 1.13%.

Asian markets ended mostly higher on Wednesday, with increase in commodity prices and a surge in Chinese imports boosting resource stocks. Japan’s Nikkei closed with strong gains supported by the weak yen. Shanghai went home with marginal gains following a rare trade deficit for China in March. Meanwhile, investors were worried about the Korean peninsula, where the North continues its stand-off with the South and the United States.