India : Sensex flat, Midcap underperforms; ONGC, GAIL, Tata Steel rally

Equity benchmarks closed Wednesday’s session on a flat note amid consolidation after rising more than 2 percent in previous two consecutive trading days, shrugging off better-than-expected May industrial output data. Investors waited for major companies’ quarterly earnings. Technology, oil and metals stocks gained while private banking & financials, pharma and auto stocks were under pressure.The 30-share BSE Sensex was up 7.04 points at 27815.18 while the 50-share NSE Nifty fell 1.55 points to 8519.50.

Gautam Trivedi of Religare Capital Markets says going forward, four triggers will help the equity markets in a big way.

“A good monsoon, the rollout of the 7th Pay Commission hike, passage of GST Bill and the appointment of the new Reserve Bank governor will be a positive,” he explains.

He also lauded the government for reportedly deciding to hike kerosene prices by 25 paise for the next eight-nine months. “We are really impressed. This government has done what no government has dared to do.”

Meanwhile, industrial output in May came in at 1.2 percent against contraction of 0.8 percent in April. The retail inflation for June was flat at 5.77 percent against 5.76 percent in May. This macro data was announced yesterday after market hours.

ONGC rallied 3 percent as analysts say if the government hikes kerosene prices on monthly basis then that will reduce subsidy burden on the company.

“Now with the oil companies likely to get a go ahead to hike kerosene price by 0.25 paise a litre per month till April 2017, the upstream companies will save around Rs 1000 crore annually. And with ONGC sharing 80 percent of the subsidy burden, it will save around Rs 800 crore,” says former Chairman and Managing Director of ONGC, RS Sharma.

Infosys and TCS gained 1.5 percent and 1.2 percent ahead of their first quarter earnings that will be announced on July 15 and July 14, respectively.

Crompton Greaves fell 3 percent after the company temporarily suspended operations of Mandideep unit in Madhya Pradesh due to heavy rains.

NBCC lost nearly 11 percent after the Cabinet has approved divesting 15 percent stake in the company that will help government to raise Rs 1,706 crore.

ITI rallied 19 percent as the Cabinet has approved transfer of company’s shares to Special National Investment Fund.

Tata Steel topped the buying list on Sensex, up 4.5 percent followed by GAIL, Coal India and BHEL with 2-3 percent upside while L&T, Lupin and Maruti Suzuki fell over a percent.

The broader markets underperformed benchmarks with the BSE Midcap and Smallcap indices falling 0.5-0.8 percent on weak breadth. About 1734 shares declined against 1013 advancing shares on the Bombay Stock Exchange.

Asian markets extended rally amid expectations of further easing from Japan and the resolution of some concerns over the UK political muddle. Japan’s Nikkei, Hong Kong’s Hang Seng and China’s Shanghai ended up 0.4-0.8 percent. Europe, too, was higher following Asia and US rally. France’s CAC, Germany’s DAX and Britain’s FTSE were up 0.2-0.6 percent