Benchmarks extend northward journey for second straight day

Extending their previous session’s northward journey, key domestic benchmarks snapped the Monday’s trade near day’s high with both the frontline gauges re-capturing their crucial 5,850 (Nifty) and 19,300 (Sensex) bastions. Though, markets after a positive opening witnessed a sharp cut to touch their intraday lows in mid morning trade after Reserve Bank of India (RBI) in its June mid quarter monetary policy, as expected, left repo rate unchanged at 7.25% and kept the cash reserve ratio (CRR), or the share of deposits banks must keep with the central bank, steady at 4%. Consequently, the reverse repo rate under the LAF remains unchanged at 6.25% and the marginal standing facility (MSF) rate and the Bank Rate at 8.25%. Sentiments also got clobbered after India’s May trade deficit widened to $20.1 billion from $17.8 billion a month ago mainly on account of high imports of cheaper gold. Exports for the month fell 1.1% to $24.51 billion than the level of $24.77 billion recorded in the same month previous fiscal, while merchandise imports rose about 7% to $44.65 billion over the level of imports valued at $41.73 billion in May 2012.

However, investors shrugged-off both these somber macroeconomic data and started piling up positions in beaten down but fundamentally strong stocks. Buying in index heavyweight like Reliance Industries (RIL) and Bharti Airtel also supported markets up-move. Shares of RIL extended its previous session’s gains triggered by partner Niko Resources providing clarity on the companies’ recent gas and condensate discovery at key KG-D6 block in India, while Bharti Airtel edged higher by over two and a half percent after the company said that it has completed the allotment of 19.98 crore new shares, representing 5% equity stake in the company, to Qatar Foundation Endowment, in one of the largest private equity (PE) transactions in India.

Domestic benchmarks extended their rally in second half after European markets made a firm start on Monday, led higher by telecom shares after the sector was buoyed by fresh mergers and acquisition talk. Rally in Asian equities too underpinned the sentiments. Japanese Nikkei ended the session with a gain of over 2.70 per cent, re-capturing its psychological 13,000-mark on Monday, as recently battered stocks such as exporters bounced on bargain hunting.

Back home, some support also came in from buying in FMCG counter after reports that monsoon rains have covered the entire country a month ahead of schedule. Additionally, stocks of telecom sector like, Reliance Communication, Idea Cellular, MTNL and Tata Communications edged higher after the telecoms regulator allowed carriers to offer free nationwide mobile roaming to subscribers for a fixed fee from July 1, 2013. Meanwhile, the Commerce and Industry Minister Anand Sharma strongly favoured raising the FDI cap in telecom as well as defence sector and has said that he will meet global investors to address their concerns. Recovery in rate sensitive counters like, banking, auto and realty too aided the sentiments.

The NSE’s 50-share broadly followed index Nifty gained by over forty points to regain its psychological 5,850 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex rose by over one hundred and forty points to finish above its psychological 19,300 mark. The broader markets also traded with traction during the session and snapped the trade in green. 

The overall volumes stood at over Rs 1.84 lakh crore, which remained on the higher side as compared to that on Friday. The market breadth remained in favor of advances as there were 1,205 shares on the gaining side against 1,091 shares on the losing side while 136 shares remain unchanged.

Finally, the BSE Sensex gained 147.97 points or 0.77% to settle at 19,325.87, while the CNX Nifty rose by 41.65 points or 0.72% to end at 5,850.05.

The BSE Sensex touched a high and a low of 19,344.28 and 19,084.68, respectively. The BSE Mid cap index up by 0.33% and Small cap index was up by 0.39%.

The top gainers on the Sensex were, Mahindra & Mahindra up by 4.43%, BHEL up by 3.37%, Bharti Airtel up 2.53%, Bajaj Auto up 2.50% and Sun Pharma up by 2.20%, while Hindalco down by 1.64, Dr Reddys Lab down 1.38%, GAIL down 0.98%, Sterlite down 0.90% and NTPC down by 0.86% were the top losers on the index. 

The top gainers on the BSE Sectoral space were, Auto up 1.90%, Capital Goods up 1.15%, TECk up 1.09%, Consumer Durables up 1.02% and IT up 0.76%, while Metal down 0.13% was the only loser on the sectoral space.

Meanwhile, in a move to spur foreign investments, Commerce and Industry Minister Anand Sharma has strongly backed increasing the Foreign Direct Investment (FDI) cap in defence and telecom sectors. The proposal for hiking FDI cap in both sector has already been discussed with the telecom and defence minister and once we have the proposal, will move to the cabinet for raising the cap to 100 percent, he added. 

Referring to the defence sector, Sharma said that commerce ministry wants global majors in defence sector to partner both with the PSUs and the private sector to manufacture weapon systems in India as defence technologies have multiple applications including industrial applications. Further, it would also help to bring foreign inflow and to improve domestic manufacturing, which will also create jobs in the country.

Presently, FDI up to 26 per cent and 74 per cent is allowed in defence and telecom respectively. Ministry would move the Cabinet for further liberalization in other sectors as well which hold potential for FDI inflows, he added.

Moreover, to address concerns on multi-brand retail, commerce minister will meet global investors and will also convene a Round-Table with CEOs of Indian and foreign companies on June 27 after which the government could come up with some more clarification and simplification on FDI retail guidelines. 

The CNX Nifty touched a high and low of 5,854.90 and 5,770.25 respectively. 

The top gainers on the Nifty were BHEL up by 4.03%, M&M up 3.97%, Bharti Airtel up 2.26%, Bajaj Auto up 2.12% and Reliance Infra up by 1.75%.

On the flip side, the top losers of the index were, Ranbaxy down 3.57%, Hindalco down 1.50%, GAIL down 1.35%, NTPC down 1.32% and Sesa Goa down by 1.27%.

The European markets were trading in green, France’s CAC 40 up by 1.81%, Germany’s DAX up by 1.41% and the United Kingdom’s FTSE 100 up by 0.96%.

Asian markets ended mostly higher on Monday as investors indulged in buying ahead of the crucial US Federal Reserve meet. The Japanese market opened lower on Monday, with a stronger yen and Friday's weak close on Wall Street triggering some selling in early trades. However, following the dollar's rebound against the yen, the market bounced back smartly and ended in positive territory with strong gains. Shanghai Composite went home with marginal losses, after China's finance ministry was unsuccessful in selling all the debt offered at an auction for the first time in almost two years. Hong Kong closed higher, starting the new week on a positive note as buyers seeking short-term gains rolled into counters.