Positive global set-up, over three-year low WPI fortify benchmarks

Snapping their three days downfall, boisterous benchmarks showcased an enthusiastic performance on last trading day of the week by rallying close to two percentage points and breaking a lot of psychological levels in their northbound journey. There appeared not even an iota of profit booking in the session as the benchmarks managed to fervently gain from strength to strength as investors continued hunt of fundamentally strong but oversold stocks. Frontline indices managed to finish the session around their intraday high and settled above 5,800 (Nifty) and 19,150 (Sensex) levels as investors took to hefty across the board buying. Sentiments got bolstered after India’s main inflation gauge, declining for fourth straight month, surprisingly slowed down further to 4.7% for the month of May, as compared to 4.89% (Provisional) for the previous month of April, which was its lowest level since 2009. However, in a big surprise, March inflation figures too were revised downwards to 5.65% from 5.96%.

Some support also came in with Finance Minister P Chidambaram’s statement that the government will unveil more reforms in the next few days and weeks, to revive investment and growth and there is no need for panic over the rupee’s weakness. Chidambaram has further said that the economy was stronger than what it was this time last year and inflation too was low. Chief Economic Advisor Raghuram Rajan too allaying concern about the country’s Current Account Deficit (CAD) said that for the fourth quarter of financial year 2012-13, it is likely to be around 4 percent of the gross domestic product.

Firm global cues too supported the sentiments with European markets opening in green, snapping a four-day losing streak, as robust US economic data outweighed persistent uncertainty over the durability of stimulus measures from the US Federal Reserve. Asian markets too shut shop mostly in positive terrain with Japanese Nikkei surging by about two percent, rebounding from their biggest drop in three weeks as the yen fell overnight.

Back home, sentiments remained jubilant after shares of rate sensitive sectors such as realty, infrastructure, banking and automobiles edged higher ahead of the Reserve Bank of India’s (RBI) mid-quarter policy review on June 17 on rate cut hopes. The street is expecting 0.25% cut in cash reserve ratio (CRR) instead of interest rate next week as this move is likely to balance growth and rupee concerns. Sentiments also remained up-beat after Indian rupee gained strength during the trade after headline inflation eased further, holding out some hopes for a rate cut. The rupee was at 57.54 per dollar, appreciating by 0.43 paise per dollar at the time of equity market closing.

Buying in FMCG counter also aided sentiments on reports that monsoon rains have covered half of India two days ahead of the usual date and more hefty downpours are expected next week, weather experts said on June 13, easing concern over southwestern regions parched by drought. Additionally, oil marketing companies like BPCL, HPCL and IOC edged higher on the buzz of increase in petrol prices by Rs 1.5-2/litre with effect from Friday midnight.

The NSE’s 50-share broadly followed index Nifty gained by about one hundred and ten points to end above its psychological 5,800 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex surged by three hundred and fifty points to finish over its psychological 19,150 mark. Moreover, the broader markets too traded jubilantly and garnered massive gains of over a percent.

The overall volumes stood at over Rs 1.50 lakh crore, which remained on the lower side as compared to that on Thursday. The market breadth remained in favor of advances as there were 1,420 shares on the gaining side against 887 shares on the losing side while 143 shares remain unchanged.

Finally, the BSE Sensex surged 350.77 points or 1.86% to settle at 19,177.93, while the CNX Nifty climbed by 109.30 points or 1.92% to end at 5,808.40.

The BSE Sensex touched a high and a low of 19,213.10 and 18,952.09, respectively. The BSE Mid cap index up by 1.19% and Small cap index was up by 1.03%.

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

The top gainers on the BSE sectoral space were, Consumer Durables up 3.52%, Auto up 3.01%, Realty up 2.86%, Metal up 2.50% and Capital Goods up 2.37%, while there was no loser on the sectoral space.

Meanwhile, as per the Reserve Bank of India (RBI) report, foreign direct investment by Indian companies declined by 76 percent in May to $1.82 billion from the previous month. The investments include the equity, debt as well as guarantees issued for overseas ventures. Overall Indian companies issued guarantees worth $1.21 billion, extended loans worth $291 million and invested in foreign equities worth $319 million. Meanwhile, in April, overseas direct investment by Indian companies stood at $7.63 billion.    

Among the companies, who emerged as major players in investing overseas include, Piramal Enterprises and Cox & Kings India among others. Piramal Enterprises issued a guarantee worth $258 million to its joint venture in USA, while Cox & Kings India also issued a guarantee worth $246 million to wholly owned subsidiary in UK. Other companies were Mahindra & Mahindra, Ushdev International, and JSW Steels.

The CNX Nifty touched a high and low of 5,819.40 and 5,739.40 respectively. 

The top gainers on the Nifty were Hindalco up by 8.47%, Tata Motors up 4.79%, Maruti up 4.08%, JP Associates up 4.03% and Tata Power up by 3.71%.

On the flip side, the top losers of the index were, Indusind Bank down 1.47%, Hero MotoCorp down 0.86%, HUL down 0.18%, Bharti Airtel down 0.07% and Cipla down by 0.05%.

The European markets were trading in green, France’s CAC 40 up by 0.03%, Germany’s DAX up by 0.42% and the United Kingdom’s FTSE 100 up by 0.10%.

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.