Sensex soars by 506 pts as fund inflows resume

Logging its biggest rise in over a month, the benchmark BSE Sensex today surged by 506 points to 27,105.39 points on government’s move to mollify overseas investors’ taxation worries and rupee’s recovery.

Firm global stocks tracking UK election result, fall in Brent oil prices, value-buying in domestic beaten-down stocks helped Sensex recover from 6-1/2 months low, traders said.

On weekly basis, the 30-share Sensex recovered by 94.08 points or 0.35 per cent, to snap three weeks of losses.

Market Outlook by Vinod Nair, Head-Fundamental Research, Geojit BNP Paribas Financial Services
Government’s move to set up a high level committee to decide MAT issue has helped market today. This could reduce FII’s concerns over the medium term. But the risks prevailing with Q4 and outcome of key bills still remains, which will decide the market momentum going forward.

“Sentiments got some support with Finance Minister Arun Jaitley announcing a high level committee, which will give its recommendations on the issue of imposition of MAT on foreign investors,” Jayant Manglik, President of retail distribution at Religare Securities said.

Snapping three days of losses, the BSE Sensex resumed on a strong footing and quickly recaptured the crucial 27,000-mark to touch the day’s high of 27,196.28.

It finally closed at 27,105.39, a jump of 506.28 points or 1.90 per cent. Previously, it had soared by 517.22 points on March 30.

Market Wrap Up by Alex Mathews, Head Research, Geojit BNP Paribas Financial Services
Markets opened with a positive bias in this morning and gained momentum on comment of global rating agencies that India’s rating is unlikely to affect on the back of the sales of shares and bonds by the foreign investors, and the European cues were also positive after a report showed that the David Cameron’s Conservatives were set to govern for another five year term. Sustained buying was seen in the front line Banking, FMCG, IT and Pharma stocks, but market mood is still cautious. Nifty closed at 8191 up around 134 points. The market breadth turned to positive as there were seen 1861 stocks advancing against 836 stocks declining. The Nifty volatility index, India VIX stood at 19.1100 down around 2.74%. The mid-cap and small – cap sectors indices closed up around 1.69% and 1.68% respectively. Barring the Consumer Durable sector which ended down around 1.83%, all other sectors ended in green. The major gainers for the day were Realty and Auto which closed up around 3.93% and 2.65% respectively.
In the stocks’ front, the major gainers were Tata Motors and Cipla which closed up around 5.10% and 4.72% respectively whereas the selling was seen in PNB and Bank of Baroda closed up around 6% and 5.25% respectively.
The FIIs were sellers in the cash market segment on 07 May 2015, Thursday, sold shares worth Rs 1360.69 crore. The DIIs on the other hand they were buyers on 07 May, bought shares worth Rs 1158.02 crore in the capital markets segment. On Monday, DEN, Bank of Baroda, Havells, Eveready, OCL, Orient Paper, SRF and Usha Martin may announce their earnings.

The gauge had lost 891.48 points in the previous three days to hit 6-1/2 months low on persistent worries over MAT and delay in passage of key reforms bills in Parliament.

The 50-share NSE Nifty after crossing the 8,200-mark, touched a high of 8,224.95 before closing 134.20 points or 1.67 per cent higher at 8,191.50.

Government’s move over MAT issue could reduce FII’s concerns over the medium term, traders added.

Market View by Anand James, Co Head Technical Research Desk, Geojit BNP Paribas
Sentiments & Technicals: Consumer cyclicals and non cyclicals were the top gainers in Nifty today followed by banking stocks, suggesting that today’s recovery was more broad based, after persistent selling in the last couple of weeks. It also helped that Hindustan Unilever posted quarterly profit which were up by almost 17 percent. IT stocks were largely flat, as rupee strengthened nearly 0.5% from the 64.5 levels seen yesterday. Technical Analysis of Nifty’s indicates that the ongoing relief rally may have some more steam, given the condition of the oscillators. However the 8000-7780 view could dominate again, if the present short covering rally finds the 8300-8360 too stiff to overcome.

Tata Motors, topped the gainer list from the Sensex pack with a rise of 5.18 per cent after the company raised Rs 9,040.56 crore from its right issue.

The automaker was followed by Cipla, ICICI Bank, Hindalco, Bajaj Auto, HDFC Bank, HDFC, Axis Bank, RIL, Tata Power, L&T and ITC.

Share of FMCG major Hindustan Unilever rose 3.34 per cent after it reported a 16.73 per cent increase in its standalone net profit at Rs 1,018.08 crore for the March quarter.

Bucking the trend, Hero MotoCorp was down 2.23 per cent after it reported a 14.05 per cent decline in its net profit.

Market Trend by – Vivek Gupta, CMT – Director Research, CapitalVia Global Research
Nifty Future opened gap up this week but could not cross the resistance level of 8400, it extended the losses on concern of continuous outflow of funds by FIIs ,due to uncertainty created by the Minimum Alternate Tax (MAT) and rupee hitting lowest level in last 20 months. It managed to hold the crucial support level of 8000 in futures. The Nifty future has formed a doji candlestick pattern on the daily charts on Thursday which is reversal in nature , it bounced from the major support on the last day of weekly trading session to shut shop at 8208.05 with the weekly marginal gain of 30.70 points. In upcoming sessions , market movement will depend on macro-economic numbers (CPI, WPI , IIP) which are scheduled to be announced next week.
Technically Nifty Future is in short term correction phase and is forming a spinning top pattern in weekly charts which indicates that bearish sentiments may end if nifty manages to cross and hold the level of 8400 decisively. In forthcoming sessions we may see recovery in Index and it can test the level of 8400 if it manages to hold the level of 7990, while with the breach of this support level it may again continue to show correction.

Yesterday’s battered banking stocks were in the limelight with ICICI Bank, HDFC Bank, Axis Bank and SBI adding about 180 points in total to the Sensex kitty.

Meanwhile, Foreign portfolio investors sold shares worth Rs 1,360.69 crore yesterday, as per provisional data.

“Surprise victory of David Cameron’s Conservative Party in the UK elections has further lifted sentiments,” said Jignesh Chaudhary, Head of Research at Veracity Broking Services.

Overseas, Asian stocks closed mixed on signs of global bond markets stabilising after a big sell-off in the past few days.

Key indices in China, Hong Kong, Japan and Singpaore ended up by 0.45 to 2.28 per cent while indices in South Korea and Taiwan moved down between 0.12 and 0.26 per cent.

European markets were trading higher as key indices in France, Germany and the UK firmed up by 0.70 per cent to 0.82 per cent.

Turning to the domestic market, other gainers on the Sensex were ICICI Bank with a rise of 4.09 per cent, Cipla 4.03 per cent, Hindalco 3.50 per cent, HUL 3.34 per cent, HDFC Bank 3.26 per cent, Bajaj Auto 3.02 per cent, Axis Bank 2.80 per cent, HDFC 2.66 per cent and RIL 2.36 per cent.

Among the BSE sectoral indices, realty rose by 4.06 per cent, auto 2.67 per cent, bankex 2.23 per cent, healthcare 1.76 per cent, consumer goods 1.76 per cent, FMCG 1.59 per cent and refinery 1.16 per cent, while consumer durables dropped by 1.60 per cent.

The market breadth turned positive as 1,871 stocks ended with gains, 823 stocks finished in the red, while 124 ruled steady.

The total turnover moved down to Rs 2,960.28 crore from Rs 3,182.30 crore yesterday

Bonds and stocks rebound, sterling soars after UK election

Reuters – World bond and stock markets rose on Friday after a bruising week and sterling jumped to a two-month high after the business-friendly Conservative party won Britain’s national elections.

Sterling was up 1.4 percent against the dollar and London’s FTSE led equity markets with a 1.5 percent surge to help European shares rebound from two-month lows and wipe out what had looked like being a second week of losses.

With more than 75 percent of the seats counted in the UK, the Conservatives were set to govern for another five years, quashing the pre-election fears the result could have been too close to form a stable government.

“The surprisingly decisive result reduces uncertainty over the next (UK) government,” analysts at Morgan Stanley wrote in a note.

Confidence was also given a big lift as bond markets recovered after one of the most turbulent weeks in Europe for decades.

Most government bond yields dropped back in early trading but the pounding of recent days which has been triggered by signs of a rebound in inflation, still left normally rock-solid German Bunds on course for a big weekly spike in yields.

The bond stabilisation helped investors cast off their normal caution ahead of monthly U.S. non-farm payroll jobs data and its implications for when the Federal Reserve raises interest rates.

Economist polled by Reuters expect the figures to show a jump of 224,000 new jobs in April after 126,000 in March and a run of generally disappointing U.S. data since then.

“The U.S. economy had virtually a zero growth in January-March. If it remains weak after April, a rate hike by the Federal Reserve may be delayed further,” said Shuji Shirota, head of macro economics strategy at HSBC Securities in Tokyo.

The dollar inched up ahead of the data but it was completely in the shadow of sterling following the election outcome.

As well as against the dollar, the UK currency 1.7 percent against the euro and yen to notch its biggest trade-weighted rise since 2010.

“Viewed within the context of the UK’s large current account deficit, the policy uncertainty removed by today’s result will be a relief for some previously nervous foreign investors,” said Adam Myers, European head of FX strategy at Credit Agricole.

EURO SAGS

Overnight in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.5 percent as it recovered from a one-month low.

Tokyo ended up 0.5 percent, but China’s mainland stock index was the stand-out as it jumped 2 percent to claw this week’s losses back to 4 percent. The gains came despite Chinese exports sharply missing forecasts with surprise 6.4 contraction in April.

Bonds were also helped by a dip in oil prices: A steady rise in oil prices since March had been cited as one reason behind the rout in bonds as higher oil prices tend to boost inflation – a major risk for fixed-income investors.

Brent crude oil futures hovered at $65.88 per barrel , stepping back from Wednesday’s five-month high of $69.63.

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