Sensex stages a splendid comeback; outclasses regional peers

On a day when most stock markets across the Asian region went home with nasty lacerations of over two percentage points, the only major equity indices which weathered the storm resiliently were India’s Sensex and Nifty, which settled with marginal gains on Monday.

The benchmark equity indices were brutally pounded in the start of trade when they got a gap down opening and drifted to the lowest point of the day in no time as sentiments were spooked by terrifying over the weekend cues from US, the exacerbating financial crisis in Euro-zone and sharp slowdown in China and prompted investors to flee from riskier asset classes like equities.

The market participants witnessed a trend reversal in early noon trades when the frontline gauges found support around the psychological 4,800 (Nifty) and 15,800 (Sensex) levels and started their skyward journey thereon.

Investors drew solace from comments of Reserve Bank of India’s deputy governor Subir Gokarn who indicated that the Reserve Bank in its mid-quarter policy review on June 18 has some room to reduce policy rates to bring Asia’s largest economy out of the doldrums following moderate core inflation and soft global oil prices. Meanwhile, the rupee, Asia’s worst performing currency, reversed its early losses and traded on a flat note in line with Friday's close against the US dollar due to selling of dollars by banks and eased some concerns.

Stocks like Spice Jet and Jet Airways from the Aviation basket skyrocketed amid reports that the aviation ministry is mulling over abolishing service tax on air tickets and reducing sales tax on aviation fuel from an average 25% to a uniform 4%, proposals that may not only nurse bleeding carriers back to profits, but also rein in soaring fares. Fertilizer manufacturers’ shares too gained traction in the session ahead of arrival of the monsoon season, which will boost demand for fertilizers.

On the BSE sectoral front, investors were seen covering hefty short positions in the Capital Goods counter, which jumped over two percent and remained the top gainer in the space while the rate sensitive and Oil & Gas pockets too went home with notable gains. On the flipside, the Consumer Durables sector along with defensive FMCG pocket got battered in the session.

Cues from the global front too remained subdued as the Asian markets were rattled by global economic growth concerns. The equity index in China got pounded by close to three percent as the nation’s non-manufacturing sector grew at the slowest pace in more than a year and the purchasing managers' index fell to 55.2 in May from 56.1 in April.

On the other hand, the European markets traded on a mixed note amid growing worries over global economy in light of the European financial turmoil, deteriorating US economy and a slowdown in China. However, sentiments got support from reports that Portugal has passed a fourth review of its continuing spending cuts and economic reforms as it fulfilled all the bailout criteria set by inspectors from the EU, European Central Bank and International Monetary Fund (IMF)

Back home, the NSE’s 50-share broadly followed index Nifty, garnered single digit gain to settle just below the psychological 4,850 support level while Bombay Stock Exchange’s Sensitive Index - Sensex added twenty three points to finish just below the crucial 16,000 mark. Moreover, the broader markets too recovered most part of their losses in tandem with their larger peers and closed with slight losses of less than a quarter percent.

The markets rose stronger volumes of over Rs 1.2 lakh crore on the second day of a new F&O series while the turnover for NSE F&O segment also remained on the higher side as compared to that on Friday. The market breadth remained pessimistic as there were 1,204 shares on the gaining side against 1,449 shares on the losing side while 121 shares remained unchanged.

Finally, the BSE Sensex rose 23.24 points or 0.15% to settle at 15,988.40, while the S&P CNX Nifty gained 6.55 points or 0.14% to close at 4,848.15.

The BSE Sensex touched a high and a low of 16,012.84 and 15,748.98 respectively. The BSE Mid cap and Small cap indices eased 0.21% and 0.23% respectively.

L&T up 3.43%, ONGC up 3.19%, DLF up 1.97%, Tata Motors up 1.89% and RIL up 1.31% were the major gainers on the Sensex, while Gail India down 3.47%, Jindal Steel down 2.72%, Tata Power down 2.49%, Bharti Airtel down 2.31% and Sterlite down 2.30% were the major losers on the index.

On the BSE sectoral space, Capital Goods up 2.08%, Realty up 1.35%, Oil & Gas up 1.17%, Bankex up 1.10% and Auto up 0.78%, while Consumer Durables (CD) down 2.92%, FMCG down 1.53%, Metal down 0.60%, Healthcare down 0.54% and TECk down 0.51% were top losers on the BSE sectoral space.

Meanwhile, the government of India has set up Manufacturing Industry Promotion Board (MIPB) to oversee the implementation of the National Manufacturing Policy (NMP), in the backdrop of economic growth sliding to a 9-year low of 6.5% in 2011-12. Anand Sharma, Commerce and Industry Minister will chair MIPB and it will have three panels - Board of Approval, Green Manufacturing Committee and High Level Committee for the proper implementation of the NMP.

The 13-member MIPB will periodically review the overall situation of the manufacturing sector, which contracted to 0.3% during Q4 2011-12 compared to Q4 2010-11. The NMP aims to increase the manufacturing sector's share in GDP to 25% from the present 16% over the next decade, creating 100 million jobs.

The policy also intends to create world class industrial infrastructure, a favorable business environment, an ecosystem for technological innovation - particularly in the domain of green manufacturing, institutions for industry relevant skill up gradation, and mechanisms for easy access to finance for entrepreneurs.

The S&P CNX Nifty touched a high and low 4,858.30 and 4,770.35 respectively.

The top gainers on the Nifty were JP Associates up 5.59%, Siemens up 4.60%, Bank of Baroda up 3.77%, L&T up 3.51% and BPCL up 3.41%.

On the flipside, GAIL down by 3.07%, Jindal Steel down 2.92%, Tata Power down 2.85%, Sesa Goa down 2.45% and Asian Paints down 2.38% were the top losers on the index.

The European markets were trading on a mixed note, as France's CAC 40 climbed 0.56% while Germany's DAX plunged 1.08%.

Stock markets in the United Kingdom remained closed on Monday for a national holiday.

Sentiments remained subdued in the Asian region for fourth consecutive day of trade and all the Asian counters snapped the day’s trade in the negative terrain on Monday on concern of slowing global economic growth, triggered by poor US employment data. On Friday that the US economy added a meager 69,000 jobs in May, the slowest rise for 12 months while, the unemployment rate rose for the first time in almost a year to 8.2 percent. The Labour Department also slashed its estimate of April job gains by 33 percent to 77,000. Moreover, deepening debt woes for the euro zone and slowing Chinese growth too weighed on the sentiments in the region.

Meanwhile, Chinese market tumbled over two and half a percent, as country’s non-manufacturing industries expanded at the slowest pace in more than a year and the purchasing managers’ index fell to 55.2 in May from 56.1 in April. In addition, Hang Seng and Nikkei crumbled 2.01 percent and 1.71 percent respectively as weak US data added to worries about Europe’s deepening debt crisis, driving investors out of riskier assets. Moreover, Taiwan Weighted crashed about three percent hit by a regional sell-off on fears of a global economic downturn, and by concerns about a planned capital gains tax plan.