Sensex rallies 153 as banks, metals, capital goods sparkle

Equity benchmarks rallied Monday, with the Sensex now having risen close to 1000 points from the low seen the Friday before last. Dealers said hopes of increased money flows into equities because of the recent weakness in commodity prices, as well an improvement in India's macroeconomic fundamentals, were driving the uptrend, brokers said.

Brokerage house Nomura has listed India, Korea, Thailand and Philippines as the biggest likely winners in terms of higher growth, lower inflation and/or better economic fundamentals, if the fall in commodity prices sustained.

The BSE Sensex closed at 19,169.83, up 153.37, up points over the previous close. The Nifty gained  51.30 points to close at 5834.40.

Metals, banks, capital goods and realty shares were among the best performers as bears scurried to square up their short positions in anticipation of further buying.

Tata Steel, Hindalco, Coal India, Larsen & Toubro, HDFC Bank, Bhel and Reliance Infra were among the key gainers in the Nifty, climbing 3-4 percent.

Reliance Communications was the star performer among midcaps, surging around 13 percent. HDIL, Unitech and Engineers India were the other notable performers in this space, climbing 8-12 percent.

However, near term outlook on the market is divided.

''The macro environment is certainly improving, but it is not translating into earning numbers; you are seeing some disconnect between the movement in stocks versus whatever improvement you are seeing in the earnings or lack of improvement in earnings,'' Sanjeev Prasad of Kotak Securities said in an interview to CNBC-TV18 earlier today.

Brokerage house Morgan Stanley said there were early signs of a reversal in the stagflation (high inflation- declining growth) environment with the government's steps to correct the bad growth mix  of high fiscal deficit and low investment.

''We believe that macro stability indicators-CPI inflation and current account deficit- will continue to show gradual improvement over the next 6-12 months. We expect the government to continue to take policy measures to increase investment spending to slowly improve productivity and growth mix,'' the brokerage said in its note to clients.

Today's rally was broad-based with mid and small cap shares rising in line with their large cap counterparts.

Brokerage house Edelweiss said that this was a good time to build a portfolio of quality midcaps.

''The broader market has corrected more than the Large-Cap stocks in the recent past due to concerns that these companies won't be able to withstand pressure from a weak macro-economic backdrop. While the macro outlook is still muted and political situation murky, stock valuations are not too demanding,'' the brokerage said in its note to clients.

Shares of Titan Industries rallied nearly 6 percent, shrugging off concerns that falling gold prices would hurt its earnings.

The market was on firm footing in the last trading hour of the day  as investors continued to lap up stocks. The Sensex was up 118.90 points at 19135.36, while the Nifty gained 45.05 points at 5828.15.

Big movers of the day were banking, capital goods, metals, realty and consumer durable stocks.

Videocon Industries rallied 5.02 percent as the company announced new huge discovery area in offshore Mozambique.

Jet Airways' shares surged over 7 percent after the company recently said it has plans to expand global operations by connecting 23 Indian cities to Abu Dhabi.

NIIT Technologies gained as much as 3.6 percent after getting Rs 185 crore worth of financial management contract from the finance department of Andhra Pradesh government.

However, technology stocks were still on the selling list as the index was down 2.6 percent. Most of the IT stocks were still reeling under weak corporate earnings as Wipro tanked 8.1 percent while Infosys lost 2.4 percent and TCS was down 1.4 percent.

The Sensex was consolidating around 19000 levels in the afternoon trade. European markets were trading flat. Japan's benchmark Nikkei average closed up 1.89 percent at 13,568 on Monday.

The Sensex was up 60 points at 19077, and the Nifty was up 24 points at 5807. About 1195 shares advanced, 985 shares declined, and 1381 shares remained unchanged.

IT stocks were biggest laggards of the day. Four heavyweights had forecasted mixed guidance for FY14. Wipro expects de-growth while Infosys forecast 6-10 percent growth. TCS and HCL Tech are optimist to beat the NASSCOM's guidance of 12-14 percent.

Banking, realty and auto stocks were biggest gainers on hopes of rate cut in the upcoming monetary policy on May 3.

Wipro was down 9 percent after disappointing earnings performance and the Q1 guidance pointing to a possible de-growth at minus 0.6 to 1.57 percent. Most brokerages have cut the FY14 dollar revenue growth slipping to single digit around 7-8% from 10%.

The Budget session resumed today. The biggest worry for the government will be to get the general budget passed in the Parliament. Also on the agenda are several important bills like Pension and Insurance Regulatory, Food Security Bill, Land Regulation Bill.

The Nifty was trading in a narrow band of 5800-5820 in the afternoon trade. Bank Nifty was star performer of the day with close to 2 percent gains. It has rallied close to 11 percent in this series. Rupee depreciated today and was trading above 54 mark. Brent Crude was trading below 100 dollars per barrel while Gold was up 0.7 percent.

The Sensex was up 74 points at 19090, and the Nifty was up 32.45 points at 5815. The breadth of the market was also positive. About 1077 shares advanced, 867 shares declined, and 1617 shares remained unchanged.

Coal India, HDFC Bank, IndusInd Bank, BPCL and Power Grid were top gainers on the Nifty. DLF, IDFC, Mahindra and Mahindra, HCL Tech and Infosys were top losers.

HDFC Bank was trading firm ahead of quarterly results tomorrow. HDFC Bank is up 2.6 percent, ICICI Bank is up 1.8 percent. Tata Motors surged 1.3 percent after unit Jaguar Land Rover China chief said it aims to increase its sales by 20-30 percent this year in China, its biggest market.

Shares in Wipro, India's third-largest software services provider, fall 10 percent in trade after it gave weaker-than-expected quarterly sales forecast on Friday.

Brokerage views on India

Nomura is of the view that if the recent downtrend in prices of gold and oil sustain, India's current account deficit for 2013 would reduce by one percentage point.

Meanwhile, Morgan Stanley has said there were early signs of a reversal in the stagflation (high inflation- declining growth) environment with the government's steps to correct the bad growth mix of high fiscal deficit and low investment.

The market was holding firm after a long weekend as investors seem to building hopes on a rate cut by the Reserve Bank of India in its monetary policy review on May 3. The Sensex was up 37.92 points at 19054.44 and the Nifty gained 25.25 points to be at 5808.35.

Rate sensitive stocks were holding up the market. BSE Bankex, Capital Goods and Metal index gained more than 1 percent each.

Coal India (up 3.3 percent), HDFC Bank (up 2.4 percent), L&T, Tata Steel and ICICI Bank were the lead gainers of the day.

Continuing its rally from last week, HMT surged 7 percent as Rs 1080 crore revival plan for the company has been approved by the government that aims to modernise the company and help turn it around in the next five years.

MTNL gained 3 percent after the government formed a panel to look into the revival of BSNL and MTNL.

Meanwhile, investors were still actively offloading technology stocks as Wipro led down the index by around 10 percent.  It hit lowest level since July 2012 post disappointing earnings and Q1FY14 guidance of -0.6 percent to +1.6 percent.

Infosys continued to be sellers' this morning as the stock lost another 3 percent. Other major stocks that dragged in the Sensex were Dr Reddys' Lab, M&M and ONGC.

The market opened on a positive note. The Sensex was up 64.62 points or at 19081.08, and the Nifty gained 26.45 points at 5809.55. Investors are building hopes on reform action as the Parliament session resumes today. Analysts, however, warn that the market could be volatile as it is a truncated week and also F&O expiry is lined up on Thursday.

Capital goods and banking stocks were lending strength to the indices  while technology stocks led by Wipro were under pressure. Wipro fell around 7 percent on weak guidance for the first quarter of FY14.

Wipro guided for a revenue of USD 1,575-1,610 million from IT services in the first quarter, up just 1.6 percent at the higher end.  Analysts on average had expected Wipro to guide for 1.5-3.5 percent growth in dollar revenue.

Other losers in the Sensex were Infosys, Sterlite, ONGC and TCS.

Meanwhile, gold-loan companies recovered today. Both Muthoot Finance and Manappuram Finance surged around 4 percent each.

Sun Pharma, Cola India, HDFC Bank, L&T and Bharti Airtel were the lead gainers in the Sensex.