Indian bourses continued to trade in red in late morning session as funds and retail investors engaged in reducing positions amid a weak trend in global markets. Profit booking in frontline blue chip stocks after a recent rally dragged the markets lower. However, some support came in from reports that foreign institutional investors (FIIs) bought shares worth a net Rs 575.09 crore on June 3, 2014. FMCG stocks extended their profit taking for the second day in a row on concerns that rising inflation levels would hurt volume growth, while Metal stocks extended their gains for a second straight day as China’s factory sector turned in its best performance in four months in May as export orders improved. In scrip specific development, shares of Wockhardt tumbled after the U.S. Food and Drug Administration found deficiencies in quality, hygiene and personnel training standards at the company’s plant in Chicago. On the other hand, shares of Biocon rallied after it announced a five-year extension of its drug discovery and development collaboration in India between its contract research subsidiary Syngene International and Bristol-Myers Squibb.

The market is likely to remain range bound in the near term as there is not much trigger on the domestic front and traders will keep an eye on Finance Minister’s pre-Budget talks with apex industry chambers and trade sector representatives on Friday. On the global front, most of Asian markets were trading in red as investors await a report on US jobs and a decision from the European Central Bank on monetary policy. Further, the US markets closed slightly lower on Tuesday, pausing after three straight days of gains that sent the S&P 500 and Dow Jones Industrial Average to record levels on Monday. Back home, traders were seen piling up positions in Consumer Durables, Realty and Metal stocks, while selling was witnessed in IT, Teck and FMCG sector stocks. The market breadth on BSE was positive, out of 2295 stocks traded, 1591 stocks advanced, while 610 stocks declined on the BSE.

The BSE Sensex is currently trading at 24836.63 down by 21.96 points or 0.09% after trading in a range of 24925.90 and 24805.17. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.24%, while Small cap index up by 1.20%.

The gaining sectoral indices on the BSE were Consumer Durables up by 1.68%, Realty up by 1.06%, Metal up by 1.04%, Capital Goods up by 0.79% and India Infrastructure Index up by 0.79%. While, IT down by 1.44%, Teck down by 1.02%, FMCG down by 0.44% and Oil & Gas down by 0.14% were the losing indices on BSE.

The top gainers on the Sensex were Hindalco up by 2.80%, Tata Steel up by 2.61%, Bajaj Auto up by 2.08%, BHEL up by 1.94% and Tata Motors up by 1.44%. On the flip side, TCS down by 1.90%, Mahindra & Mahindra down by 1.82%, Wipro down by 1.31%, Infosys down by 1.21% and ONGC down by 1.10%.

Meanwhile, Finance Minister Arun Jaitley has described the RBI’s status quo policy as a calibrated approach to maintain a balance between growth and inflation and asserted that the government on its part will address the problem of price rise through improving supplies. The Reserve Bank of India (RBI), in its Second Bi-Monthly Monetary Policy Statement for this financial year, kept the key policy rates unchanged at 8 percent. However, to improve availability of funds, central bank cut the statutory liquidity (SLR) ratio, the amount of deposits that banks need to park in government securities, by 0.5 percent to 22.5 percent.

Finance Minister further added that there should be a balancing act between inflation and growth and the government will soon take measures to contain the rising inflation through improving supplies, particularly in relation to food inflation. Retail inflation inched up to 8.59% in April on y-o-y basis as against 8.31% in March led by a sharp rise in the prices of food articles. Inflation in the food category stood at 9.66 percent in April. The RBI has raised lending rate three times since September’13 in order to tame price rise through cooling demand. Though tight monetary stance helps to crush marginal prices pressure, the apex bank’s move is adversely impacting the country’s economic growth.

Regarding the economic growth, Further Minister stated that fiscal consolidation, restarting the investment cycle and employment generations are the top priority for the government.  India’s economic growth stayed below 5 percent for the second year in a row at 4.7 percent during FY14.

The CNX Nifty is currently trading at 7,413.10 down by 2.75 points or 0.04% after trading in a range of 7,433.30 and 7,399.10. There were 32 stocks advancing against 18 declining on the index.

The top gainers of the Nifty were Hindalco up by 2.84%, NMDC up by 2.71%, PNB up by 2.65%, Tata Steel up by 2.42% and Bank of Baroda up by 2.31%. On the flip side, HCL Tech down by 2.18%, TCS down by 1.95%, M&M down by 1.54%, Infosys down by 1.33% and Wipro down by 1.18% were the major losers on the index.

Most of the Asian equity indices were trading in red; Shanghai Composite dropped by 1.03%, Hang Seng declined 0.61%, Jakarta Composite slipped by 0.33%, KLSE Composite tumbled 0.41%, Straits Times was down by 0.54%. On the flip side, Nikkei 225 soared 0.09% and Taiwan Weighted was up by 0.01%.

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Extending their previous session’s jubilation, Indian equity benchmarks ended the Friday’s trade near their intraday high levels with a gain of over a percentage point. There was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too equally participated in the rally. Though, some profit booking was witnessed during the trade amid report that foreign institutional investors (FIIs) sold shares worth a net Rs 294.99 crore on May 22, 2014, as per provisional data from the stock exchanges. But, domestic bourses maintained the steady trend on hopes that a Modi-led disposition would mark a paradigm shift in governance and herald a new era in economic reforms. Meanwhile, industry body Assocham in its action plan for the new government has pitched for liberalisation of ECB norms, GST implementation, incentives for investments and easing of processes for companies planning to set up manufacturing units.

Supportive cues from US markets too provided support to local markets where sentiments remained up-beat on report from the National Association of Realtors showing that existing home sales rose for the first time this year in April. Asian markets too ended mostly in the green with Nikkei, Shanghai, Straits Times and Taiwan gaining up-to half a percent each as investors welcomed signs of a turnaround in the world’s biggest economies. But the European markets, including the FTSE, CAC and DAX, are trading virtually unchanged due to caution ahead of weekend elections in Ukraine and European Union.

Back home, markets changed gear in last leg of trade to end near intraday high after State Bank of India (SBI) moved higher by nearly 10%, its highest level since May 2011, on reporting a better-than-expected net profit of Rs 3,041 for the quarter ended March 31, 2014 (Q4FY14). Other PSU banks like Canara Bank, Andhra Bank, Syndicate Bank, Oriental Bank of Commerce, Allahabad Bank, IDBI Bank and Indian Overseas Bank too edged higher.

Meanwhile, stocks related to power sector too remained on buyers’ radar on the buzz that the incoming government will have a major thrust on the area, while infra and realty stocks witnessed buying on hopes of some recovery of the economy coming out of stagflation type of situation. Additionally, select gold related stocks continued their bull run for second day in a row after RBI permitted exporters, long-term export advance up to a maximum period of 10 years on a satisfactory track record and eased gold import norms.

The NSE’s 50-share broadly followed index Nifty gained by ninety points to end above its psychological 7,350 support level, while Bombay Stock Exchange’s Sensitive Index — Sensex surged by around three hundred and twenty points to end tad below its crucial 24,700 mark. The broader markets too traded jubilantly throughout the session and ended the session with a gain of around two percent. The market breadth remained in favour of advances, as there were 2,203 shares on the gaining side against 833 shares on the losing side while 92 shares remain unchanged.

Finally, the BSE Sensex soared by 318.95 points or 1.31%, to 24693.35, while the CNX Nifty surged by 90.70 points or 1.25%, to 7,367.10.

The BSE Sensex touched a high and a low of 24745.86 and 24470.78, respectively. The BSE Mid cap index was up by 1.76%, while the Small cap index rose by 1.87%.

The top gainers on the Sensex were SBI up by 9.69%, Tata Power up by 6.33%, Maruti Suzuki up by 5.32%, NTPC up by 4.39% and ONGC up by 3.68%. While Hindalco Inds down by 2.03%, HDFC Bank down by 1.63%, Infosys down by 1.31%, ITC down by 0.77% and Hindustan Unilever down by 0.22% were the top losers in the index.

On the BSE Sectoral front, PSU up by 3.87%, Power up by 3.66%, Oil & Gas up by 2.16%, Capital Goods up by 2.15% and Realty up by 2.10% were the top gainers, while Consumer Durables down by 0.82% and FMCG down by 0.47% were the only losers in the space.

Meanwhile, Industry body Assocham has outlined an action plan suggesting measures for new government to boost the economic growth.  The action plan is aimed at achieving economic growth of 9 to 10 percent over the medium term and sustaining the high-growth path.Assocham’s action plan highlighted that the new government must introduce single-window clearance for pending projects, relax FDI limits across key sectors, privatise sick PSUs, divest its holding in top 10-15 PSUs to generate over Rs 1 lakh crore of capital. Further, the industry body has also pitched for GST implementation, liberalisation of ECB norms, incentives for investments, restoration of the SEZ policy to its original form and easing of processes for companies planning to set up manufacturing units.

Emphasizing the need to create an environment for increasing investments, Assocham President Rana Kapoor said that new government should introduce suitable policy framework to improve the business sentiments in the country. Further, a long term approach to fiscal consolidation along with clear policies is urgently needed for addressing structural bottlenecks and high inflation. Rana Kapoor further added that in order to expedite the implementation of big infrastructure projects, new government must accelerate land acquisition and environment clearances process for mega projects by setting up a joint task force comprising central ministries like environment, finance, administrative along with the states ministries. New government must take measures soon to replace existing state and central levies with a uniform tax as implementation of Goods and Services Tax (GST) can boost India’s economy by up to two percentage points.

Currently, Indian economy is struggling with slowdown and the factors like low investments, slow execution of infrastructure projects and prevailing high interest rates in order to combat elevated inflation have been adversely impacting the domestic economy. Indian economy’s growth slowed down to 4.6% during the first three quarter of FY14 and is likely to remain at sub-5% level in FY14.

The CNX Nifty touched a high and low of 7,381.00 and 7,293.90 respectively.

The top gainers of the Nifty were State Bank of India up by 10.28%, Tata Power Company up by 6.99%, Jindal Steel & Power up by 6.39%, IDFC up by 5.70% and Maruti Suzuki India up by 5.53%. On the other hand, Kotak Mahindra Bank down by 1.58%, HDFC Bank down by 1.57%, Hindalco Industries down by 1.48%, ITC down by 1.39% and Infosys down by 1.38% were the top losers.

Most of the European markets were trading in green, France’s CAC 40 was up by 0.02% and Germany’s DAX was up by 0.21%, while United Kingdom’s FTSE 100 was down by 0.29%.

The Asian markets concluded Friday’s traded mostly in green, heading for a four-month high, after data showed US manufacturing expanded and as the yen held yesterday’s losses. Japan’s trade deficit narrowed again last month as a sales tax hike weighed on imports – denting demand for foreign fruit, lobsters and crude oil – while shipments of goods to overseas markets picked up pace. The finance ministry data showed the trade deficit shrank 7.8% year on year in April, with Japan logging a shortfall of 808.9 billion yen ($8 billion) against the year-before deficit of 877.4 billion yen. Industrial production in Taiwan rose more-than-expected last month. Taiwanese Industrial Production rose to a seasonally adjusted annual rate of 4.80%, from 3.05% in the preceding month.

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