Post Session: Quick Review

Snapping three days losing streak, Indian equity markets witnessed awe-inspiring session of trade, largely comforted by lower than expected Wholesale Price Index (WPI) data, which bolstered rate cut hopes at RBI’s monetary policy meeting next week. On the macro-front, slowing for the fourth straight month, headline inflation dropped to 4.7% from a year earlier, well within the RBI’s comfort zone of 4-5%. Besides, appreciation of Rupee also calmed the frayed nerves. Indian rupee appreciated against greenback to trade sub 58/$ level on the back of banks and exporters selling the US currency amid strong local equities. Dollar’s weakness against some Asian currencies also supported the local unit. Further, even positive global set-up added to the glory of equity markets, which saw benchmark 30 share and 50 share index, Sensex and Nifty, rallying over a percent and half to end past the crucial 19100 and 5800 levels respectively.

However, the massive gains of last trading session failed to overcome the losses incurred in the previous three trading session, which led to Sensex and Nifty ending the week with a cut of over a percent. Week turned out to be far more damaging for broader indices which went home with loss of over 3%.Nevertheless, today’s trading session was a spectacular one as there did not emerge a single iota of profit-booking, which led to benchmarks halt near day’s highest points.

Positive global cues mainly encouraged investors to go long on risky equity right from the start of the trade. Both Asian pacific shares and European markets rebounded as robust US economic data outweighed persistent uncertainty over the durability of stimulus measures from the US Federal Reserve. The solid data helped to assuage concerns over whether the world's biggest economy could withstand a scaling back of the Fed's stimulus, which have contributed to a drop of some 6 percent from five-year highs hit towards the end of May.

Closer home, amid across the board buying, stocks from Consumer Durable, Auto and Realty counters outperformed, while no sector pivotal ended lower.  While banking shares managed to eke out gains on rate cut hopes, stocks of Oil Marketing Companies (OMCs) gained on expectation of petrol price hike by Rs 1.5-2/ litre by this weekend. According to reports, a hike in petrol prices is along the expected lines as OMCs are hit by Rs 20,000 crore of under-recoveries due to rupee depreciation in last four weeks. Additionally, sentiment at D-street was also propped up from reports suggesting Fitch revision on outlook of 10 India-based financial institutions' to stable from negative, while affirming their respective ratings, including their 'BBB-' Long-Term (Issuer Default Ratings (IDRs). The market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 1418: 890, while 142 scrips remained unchanged. (Provisional)

The BSE Sensex gained 350.77 points or 1.86% to settle at 19177.93.The index touched a high and a low of 19213.10 and 18952.09 respectively. Among the 30-share Sensex pack, 26 stocks gained, while rest of 4 declined. (Provisional) The BSE Mid cap and Small cap indices ended higher by 1.17% and 1.02% respectively. (Provisional)

On the BSE Sectoral front, Consumer Durables up by 3.54%, Auto up by 3.01%, Realty up by 2.87%, Metal up by 2.69% and Capital Goods up by 2.35% were the top gainers, while there were the no losers in the space. (Provisional)

The top gainers on the Sensex were Hindalco Industries up by 7.07%, Tata Motors up by 4.91%,  Maruti Suzuki up by 4.09%, Tata Power up by 3.72% and L&T up by 3.41%, while, Wipro down by 0.71%, Hero MotoCorp down by 0.41%, Cipla down by 0.24% and Hindustan Unilever down by 0.24% were the top losers in the index. (Provisional)

Meanwhile, in a big surprise, the annual rate of inflation, based on monthly WPI, slowed down further to 4.70% (Provisional) for the month of May, 2013 (over May, 2012) as compared to 4.89% (Provisional) for the previous month and 7.55% during the corresponding month of the previous year. Build up inflation in the financial year so far, was 0.88% compared to a build-up of 1.80% in the corresponding period of the previous year. However in a pleasant surprise, March inflation figures were revised downward to 5.65% from 5.96%.

Manufactured products, which carry weight of 64.97% in the index, rose by 0.3% to 149.1 (Provisional) from 148.7 (Provisional) for the previous month. The index for 'Food Products' group rose by 0.8% to 167.1 (Provisional) from 165.8 (Provisional) for the previous month. The index of Fuel & Power, which has weight of 14.91%, declined by 1.3% to 192.0 (Provisional) from 194.6 (Provisional) for the previous month due to higher price of electricity (13%) as price of other items such as LPG (12%), coal (10%), aviation turbine fuel (6%) and petrol (5%) declined.

The index of Primary Articles, having weight of 20.12% too rose by 0.6% to 229.3 (Provisional) from 228.0 (Provisional) for the previous month. The index for 'Non-Food Articles' group declined by 0.6% to 208.5 (Provisional) from 209.7 (Provisional) for the previous month, while the index for 'Minerals' group declined by 2.4% to 346.5 (Provisional) from 355.0 (Provisional) for the previous month.

However, it remains to be noted the widening divergence between WPI and CPI remains the matter of concern. Annual rate of inflation, based on the consumer prices index (CPI), declining for third straight month grew above the expectation of sub 9% figure at 9.31% in May, as against 9.39% in April.

Meanwhile, the sharp downtick in March inflation figures, core wholesale price index, or inflation that excludes volatile food and fuel prices, which is estimated to have risen by 2.4% from a year earlier, easing from an annual 2.77% rise in April, also provides the central bank with some room to cut policy rates by 25 basis points in its Policy review on June 17. The Reserve Bank of India (RBI), so far, has obliged the street with rate cuts for three times, with the latest being the one on May 3. Drawing comfort from 3-year low inflation, RBI, in its ‘Monetary Policy Statement 2013-14’, reduced repo rate by 25 basis points from 7.5% to 7.25% with immediate effect, its lowest since May 2011.

India VIX, a gauge for markets short term expectation of volatility lost 5.60% at 18.35 from its previous close of 19.44 on Thursday. (Provisional)

The CNX Nifty gained 106.20 points or 1.86% to settle at 5,805.30. The index touched high and low of 5,819.40 and 5,739.40 respectively. 45 stocks advanced against 5 declining and one stock remains unchanged on the index. (Provisional)

The top gainers on the Nifty were Hindalco Industries up by 8.47%, Tata Motors up by 4.79%, Maruti Suzuki up by 4.08%, JP Associate up by 4.03% and Tata Power was up by 3.71%. On the other hand, IndusInd Bank down by 1.47%, Hero MotoCorp down by 0.86%, Hindustan Unilever down by 0.18%, Bharti Airtel down by 0.07% and Cipla down by 0.05% were the top losers. (Provisional)

Most of the European markets were trading in green with, France’s CAC 40 up by 0.21%, Germany’s DAX up by 0.29% and the United Kingdom’s FTSE 100 up by 0.09%.

Asian markets rebounded from earlier sessions’ of losses and ended mostly higher as eased worries about the Federal Reserve’s monetary policy and an improvement in US economic data sparked relief buying across the region. Japan’s Nikkei shut the shop with strong gains as Japan's cabinet rubber-stamped a set of measures to boost economic growth that so far have failed to impress markets. Chinese market went home with green mark, after falling nearly three per cent on Thursday as dealers returned from a three-day holiday to another batch of weak domestic economic data. However, shares in Taiwan closed lower as investors pocketed gains posted earlier in the session on continued worries over the future of the United States' quantitative easing program.