Benchmarks continue to show fervor; Nifty trades shy off 6,000 mark

Investors continue to ramp up their bullish bets on local equities on expectations of monetary easing and a dovish stance by the Reserve Bank of India (RBI) at its May 3 meeting, which have fired up all the rate sensitive’s, namely, banking, Auto and Realty since early deals. Benchmark 30-share index, Sensex, is comfortably cruising past its psychological 19,700 level and Nifty is trading just shy of the crucial 6,000 mark, with gains of close to a percent amidst negative global set-up. Nevertheless, the barometer 50-share index, Nifty, went over the psychologically important 6,000 level on Thursday, the first time since February 4. Meanwhile, broader indices too enticing traction were up with gains of over 0.50%. However, the sentiment to some extent were soured after India’s manufacturing PMI expanded the least since Nov 2011 in April; with factory output rising at weakest pace in current 49-month period of expansion. 

On the global front, European stocks declined in the opening minutes of trade on global growth concerns as investors await the outcome of the European Central Bank policy meeting. Meanwhile, weak Chinese manufacturing data, which reinforced doubts over the health of global economies, pushed Asian shares lower on Thursday.

The BSE Sensex is currently trading at 19,722.17, up by 217.99 points or 1.12% after trading in a range of 19,756.90 and 19,451.26. There were 20 stocks advancing against 10 declines on the index.

The overall market breadth on BSE is in favour of advances which are outnumbering declines in the ratio of 1161:883; while 113 shares remain unchanged. The broader indices were trading in green; the BSE Mid cap index and Small cap index were trading up by 0.69% and 0.84% respectively.

The top gaining sectoral indices on the BSE were IT up by 4.40%, Capital Goods up by 3.66%, Teck up by 1.74%, Bankex up by 1.45% and Auto up by 1.05% while there were no losers on the sectoral space.

The top gainers on the Sensex were Mahindra & Mahindra up by 3.35%, TCS up by 3.08%, L&T up by 2.72%, SBI up by 2.24% and Infosys up by 2.17%.

On the flip side, Hindustan Unilever down by 1.41%, Gail India down by 1.27%, BHEL down by 0.78%, Hindalco Industries down by 0.62% and Bharti Airtel down by 0.60% were the top losers on the Sensex.

Meanwhile, expanding at its slowest pace since November 2011, 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. Production at Indian factories increased at the slowest pace in forty-nine months in April, mainly on account of deceleration in domestic orders and persistent power shortages. Nevertheless, the PMI index, which gauges business activity in Indian factories but not its utilities, has held above the watershed 50 level that divides growth from contraction for over four years.

Further, although April data signaled rise in order book volumes for the forty-ninth month, amid evidence of firm demand and new product launches, the overall rate of expansion was modest and the slowest since September 2011. The new business index, which rose an 18-month high in January, also fell for its second straight month to its lowest since November 2011.

Encouragingly, input and output price inflation eased. Although average prices paid for inputs rose solidly, but at the slowest rate since June 2010. Input prices in the Indian manufacturing sector rose for the forty-ninth consecutive month. Manufacturers increased their workforces further during the month, extending the current period of job creation to 14 months. Further even a pick up in the export orders index suggested factories could step up production in coming months. The latest PMI also pointed out ebbing inflation pressures last month with both costs of raw material and prices charged rising at a slower pace than March.

Thus, the survey suggests with the growth momentum slowing and inflation receding, the RBI is likely to cut the policy rate this week, to arrest the worst economic slowdown in a decade. The Reserve Bank of India, has slashed its key lending rate twice so far this year by 25 basis points each time, lowering the rate to 7.5% after leaving it on hold for nine months.

The CNX Nifty is currently trading at 5,997.70, up by 67.50 points or 1.14% after trading in a range of 6,007.25 and 5,910.95. There were 40 stocks advancing against 10 declines on the index.

The top gainers of the Nifty were Reliance Infra up by 4.15%, JP Associates up by 3.65%, M&M up by 3.23%, TCS up by 3.09% and L&T up by 2.88%.

On the flip side, Hindustan Unilever down by 1.44%, GAIL down by 1.18%, BHEL down by 1.12% Cairn down by 0.99% and Hindalco Industries down by 0.77% and were the major losers on the index.

Most of the Asian equity indices were trading in red; Shanghai Composite 0.26%, Hang Seng slipped 0.19%, Jakarta Composite dropped 0.53%, KLSE Composite decreased 0.23%, Nikkei 225 contracted 0.76% and KOSPI Composite was down by 0.34%. On the flip side, Straits Times added 0.89% and Taiwan Weighted was up by 0.43%. 

European shares got off to a mostly negative start; with CAC 40 declining by 0.31%, FTSE100 shedding 0.34% and DAX rising by 0.14%.