Benchmarks end higher on rate cut hopes; Sensex conquers 19,700 mark

Boisterous benchmarks witnessed an enthusiastic performance on Thursday by rallying over a percent and breaking a lot of psychological levels in their northbound journey. After a negative start, frontline gauges managed to fervently gain from strength to strength as investors continued hunt of fundamentally strong but oversold stocks. Local bourses finished the session at its highest level since February 4, 2013 on the back of hefty buying across the board ahead of Reserve Bank of India’s monetary policy amid expectations that the central bank may surprise by reducing both interest rates and cash reserve ratio by 25 basis points to boost growth.

Sentiments also remained upbeat after the Supreme Court upheld the constitutional validity of government’s decision of allowing 51% foreign direct investment in the multi-brand retail sector. Markets continued their northward journey in noon deals as market-men shrugged-off weak macroeconomic data. The seasonally adjusted HSBC Purchasing Managers’ Index, a composite indicator of operating conditions in the manufacturing economy slowed to 51 in April against its previous reading of 52 in March, registering its second monthly decline.

On the global front, European counters opened mostly in red as investors waited to see if the European Central Bank will cut rates and hint at more measures to boost struggling euro-zone economies. While, Asian markets too ended mostly in the red on the back of weaker than expected economic data from US and China, the two biggest economies of the world. The Chinese purchasing managers’ index fell to 50.6 in April from an 11-month high in March of 50.9.

Back home, sentiments remained jubilant after Planning Commission Deputy Chairman Montek Singh Ahluwalia said that the current account deficit (CAD) will come down to 2.5 percent of GDP in the next two to three years from around 5 percent currently. Investors’ confidence also got some boost after the International Monetary Fund (IMF) estimated that India will grow at about 5.8 percent in FY14 and said that acceleration in infrastructure investment will only help the economy to get back its growth rate at 8 percent per annum. Bucking the trend, fertilizer stocks like Chambal Fertilisers & Chemicals, Coromandel International and Gujarat State Fertilisers edged lower as the government in its bid to rein in fiscal deficit decided to cut the subsidies on phosphate and potash-based fertilisers in the fiscal year that began in April.

The NSE’s 50-share broadly followed index Nifty gained by about seventy points to end tad below its psychological 6,000 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex rose by over two hundred and thirty points to finish over its psychological 19,700 mark. The broader markets too traded with traction throughout the session and ended the session with a gain of over half a percent.

The overall volumes stood at over Rs 1.61 lakh crore, which remained on the higher side as compared to that on Tuesday. The market breadth remained in favour of advances as there were 1271 shares on the gaining side against 1117 shares on the losing side, while 123 shares remain unchanged.

Finally, the BSE Sensex gained 231.59 points or 1.19% to settle at 19,735.77, while the CNX Nifty rose by 69.15 points or 1.17% to end at 5,999.35.

The BSE Sensex touched a high and a low of 19,792.00 and 19,451.26, respectively. The BSE Mid cap index up by 0.77% and Small cap index was up by 0.57%.

The top gainers on the Sensex were, TCS up by 3.84%, Mahindra & Mahindra up by 3.48%, L&T up by 2.61%, Infosys up by 2.35% and HDFC up by 1.99%, while Hero MotoCorp down by 1.96%, Hindustan Unilever down 1.93%, Hindalco Industries down 1.44%, Gail India down 1.38% and Bajaj Auto down by 1.18% were the top losers on the index.

The top gainers on the BSE Sectoral space were IT up 2.55%, Teck up 2.07%, Capital Goods up 1.59%, Realty up 1.48% and Bankex up 1.17%, while ther were no losers on the sectoral space.

Meanwhile, expressing confidence that India’s current account deficit (CAD) will reach at comfortable level, Planning Commission Deputy Chairman Montek Singh Ahluwalia said, the CAD will come down to 2.5 percent of GDP in the next two to three years from around 5 percent currently. 

While, addressing a meeting of the Asia Pacific Regional Committee, Ahluwalia said that although the global economic slowdown was the primary reason for declining export, a lot of domestic problems and supply side constraints are other reasons affecting growth. These supply-side rigidities are the result of several years of rapid growth which puts a lot of pressure on the system, he added.   

By adding further he said, the government is focusing on the foreign investments, but it is also necessary to manage the high current account deficit. He emphasized the need for coordinated action among various ministries to spur the economy’s growth. Meanwhile, the current account deficit (CAD) reached an all-time high of 6.7 percent of GDP in the third quarter of FY13.

The CNX Nifty touched a high and a low of 6,019.45 and 5,910.95 respectively. 

The top gainers on the Nifty were Reliance Infrastructure up by 3.52%, HCL Tech up 3.41%, TCS up 3.38%, JP Associate up 3.06% and M&M up by 3.02%.

On the flip side, the top losers of the index were, Cairn down by 1.97%, HUL down by 1.95%, Hero MotoCorp down by 1.79%, Hindalco Industries down 1.49% and Tata Motors down by 1.17%.

The European markets were trading mixed, France’s CAC 40 down by 0.28%, the United Kingdom’s FTSE 100 down by 0.19% and Germany’s DAX up by 0.19%.

Most of the Asian Pacific markets ended the session in red terrain on Thursday as sentiments remained frail after weak set of economic data from US and China, the two biggest economies of the world. Data showed that US companies added fewer workers than forecast in April and the Institute for Supply Management’s factory index fell to 50.7 in April from 51.3 in March. Further, growth in China's manufacturing sector unexpectedly slowed in April, raising fresh doubts about the economy. The Chinese purchasing managers’ index fell to 50.6 in April from an 11-month high in March of 50.9.