Stocks
Sensex, Nifty still on an uptrend: Friday Closing Report

However, any previous day’s low has to be watched out for a reversal 

 
The market settled higher on support from the auto sector despite reporting sluggish sales figures for April. However, any previous day’s low on the Nifty has to be watched out for a reversal. The National Stock Exchange (NSE) reported a volume of 51.83 crore shares and advance-decline ratio of 700:712.
 
The market opened marginally in the negative as cautiousness prevailed ahead of the release of the factory output data for March. Markets across Asia also were weak in morning trade tracking the US markets which closed lower as tech stocks Apple Inc and IBM disappointed investors.
 
The Nifty opened four points down at 6,046 and the Sensex started the day at 19,911, down 28 points from its previous close. Buying in consumer durables, auto, realty and power stocks supported the gains on the indices in early trade.
 
However, news of domestic auto sales dropping 10.43% in April 2013 pushed the market to its low in mid-morning trade. The Nifty fell to 6,046 and the Sensex slipped to 19,909 at their respective lows. The benchmarks remained range-bound near their previous closing levels till noon trade. 
 
Car sales fell an annual 10.43% in April, according to SIAM data, marking the first time sales have fallen for six consecutive months since data was first compiled in 1997. Sales fell 7% in FY13, the first annual fall for a decade.
 
An uptick in the country’s industrial production in the month of March saw the market move higher at around 12.30pm. Support from auto, consumer durables, healthcare, banks, oil & gas sectors helped the market in its northward journey in noon trade. A green opening of the key European markets also boosted investor sentiment.
 
The market hit its day’s high in the late session on a rally in auto, consumer durables, banks and FMCG stocks. The Nifty touched 6,105 and the Sensex climbed to 20,119.
 
The benchmarks pared a small part of their gains but closed around 0.75% higher. The Nifty settled 45 points (0.74%) up at 6,095 and the Sensex finished the session at 20,083, up 144 points (0.72%) over its previous close.
 
While the broader indices also settled higher, they underperformed the Sensex today. The BSE Mid-cap index rose 0.19% and the BSE Small-cap index gained 0.22%.
 
Barring BSE Power (down 0.30%) and BSE Metal (down 0.22%) all other sectoral indices settled higher. The top gainers were BSE Auto (up 2.20%); BSE Consumer Durables (up 2.03%); BSE Fast Moving Consumer Goods (up 1.42%); BSE Bankex (up 1.23%) and BSE PSU (up 0.41%).
 
Eighteen of the 30 stocks on the Sensex closed in the positive. The chief gainers were Maruti Suzuki (up 3.99%); Tata Motors (up 2.92%); Hindalco Industries (up 2.71%); ITC (up 2.47%) and Mahindra & Mahindra (up 2.33%). The key losers were Coal India (down 2.96%); Jindal Steel & Power (down 2%); Sun Pharmaceutical Industries (down 1.40%); NTPC (down 0.83%) and Reliance Industries (down 0.73%).
 
The top two A Group gainers on the BSE were—Mphasis (up 7.76%) and TV18 Broadcast (up 7.63%).
The top two A Group losers on the BSE were—Wockhardt (down 5.87%) and Indraprastha Gas (down 4.92%).
 
The top two B Group gainers on the BSE were—ABC India (up 20%) and Damodar Threads (up 20%).
The top two B Group losers on the BSE were—Florence Investech (down 19.99%) and Indus Fila (down 19.96%).
 
Of the 50 stocks on the Nifty, 32 ended in the green. The key gainers were Maruti Suzuki (up 4.41%); IndusInd Bank (up 3.14%); Tata Motors (up 2.93%); ITC (up 2.79%) and ACC (up 2.46%). The major losers were Coal India (down 2.90%); JSPL (down 2.16%); Punjab National Bank (down 1.92%); NTPC (down 1.82%) and UltraTech Cement (down 1.59%).
 
Most Asian markets closed higher as a weakening yen boosted prospects for exporters. Markets in South Korea settled lower as the won rose to its highest against the yen in more than four years.
 
The Shanghai Composite climbed 0.62%; the Hang Seng gained 0.47%; the Jakarta Composite rose 0.33%; the KLSE Composite rose 0.36%; the Nikkei 225 jumped 2.93% and the Straits Times settled 0.32% higher. On the other hand, the Seoul Composite tanked 1.75% and the Taiwan Weighted lost 0.07%.
 
At the time of writing, the CAC 40 of France was up 0.59%; DAX of Germany gained 0.64% and UK’s FTSE 100 was trading 0.49% higher. At the same time, the US stock futures were in the positive, indicating a positive opening for US stocks later in the day.
 
Back home, foreign institutional investors were net buyers of shares amounting to Rs662.88 crore on Thursday while domestic institutional investors were net sellers of equities aggregating Rs476.69 crore.
 
Hyderabad-based bio-pharma major Suven Life Sciences has secured two product patents from Canada and one  product patent from Eurasia corresponding to the new chemical entities (NCEs) for the treatment of disorders associated with neurodegenerative diseases. These patents are valid through 2028. With these patents, Suven now has a total of 12 patents from Canada and 13 patents from Eurasia. The stock gained 2.26% to settle at Rs29.45 on the NSE.
 
Private sector telecom operator Reliance Communications today said it has made full payment of a syndicated ECB loan amounting to over Rs2,700 crore that was taken from a group of international banks in 2007.  The stock rose 0.27% to close at Rs110.05 on the NSE.
 
In a move to reach out to the first time home buyers, real estate promoter Parsvnath Developers has unveiled a variant of the subvention scheme now in vogue in the industry under which buyers making upfront payment of 25% cost would pay the balance only on possession. It said the scheme was different from the other subvention plans that were offered now in the realty market as it would not attract any EMIs as no bank loan was involved. The stock declined 0.42% to close at Rs35.40 on the NSE.
 

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India’s trade deficit to worsen in May despite large inflows

India's trade deficit worsened sharply in May, after improving in March due to seasonality. This likely explains why the rupee has been weak despite large portfolio inflows, says Nomura

 
After a sharp improvement in March, India's trade deficit worsened in April and much more sharply in May. The seasonal worsening in May is as large as during the festive month of October and reflects a seasonal pick up in the imports of oil, fertilizer and chemicals. Gold imports also would have risen due to the bringing forward of demand in response to lower prices.
 
“One of the puzzling trends in recent weeks has been a stable-to-weak US dollar and Indian rupee, despite large foreign institutional investor (FII) fund inflows. In our view, the reason lies in the seasonal pattern in the trade balance. After the positive surprise in the March trade deficit, which improved to a two-year low of $10.3 billion, we expect the trade deficit to worsen again in April to $15.5 billion and much more in May," says Nomura in a research note.
 
According to CEIC and Nomura estimates a higher seasonal factor implies a higher trade deficit and vice-versa. Hence, March is the best month for the trade deficit while May and October are seasonally the worst months. 
 
Portfolio inflows in India over the past fortnight have been robust with $5.6 billion invested in FII debt and equity together. Out of this $2.6 billion were invested in May alone. 
 

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Thin IIP growth recovery expected in FY14 on low capital goods output

A speedy industrial recovery is possible only by resolving issues related to power (coal and gas) and policy issues related to land, and project and environment clearances

 
India’s industrial growth bounced back to 2.5% in March on better performance of manufacturing and power sectors coupled with higher output of capital goods. Industrial production had seen a contraction of 2.8% in March last year. 
 
However, factory output, as measured in terms of Index of Industrial Production (IIP), grew by just 1% in 2012-13 compared to a growth of 2.9% in previous fiscal, according to official data released today.
 
India Ratings & Research expects a shallow recovery of the Index of Industrial Production (IIP) in FY14 due to the continued contraction of capital goods output in FY13. A speedy industrial recovery is possible only by resolving issues related to power (coal and gas) and policy issues related to land, and project and environment clearances. 
 
IIP growth has been affected by weak external demand and capital expenditure led fiscal consolidation. The y-o-y growth of Indian exports over May-December 2012 was negative. 
 
IIP growth was lacklustre during the same period barring October 2012, when IIP grew at 8.4% due to the festive demand. Indian exports growth from January-March 2013 migrated in positive territory and this is reflected by low positive IIP growth. 
 
India Ratings assigns a low probability of further monetary easing and expects the Reserve Bank of India (RBI) to continue its cautious monetary stance in the rest of FY14. 
 
The second successive year of contraction of capital goods output (4% in FY12, 6.3% in FY13) resulted in stagnant IIP in FY13. The cumulative growth in FY13 was 1% compared to 2.9% in FY12 and average growth of 8.8% during FY06-FY11.
 

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