Defensive stocks lift Sensex 164 points higher

Markets have finished the first session of the week on a positive note as investors buy defensive stocks at lower and attractive valuations amid weakness in rupee.

Next set of Q4 FY16 earnings, progress of monsoon along with election poll outcome will dictate the trend of markets this week.

The S&P BSE Sensex gained 164 points to end at 25,653 and the Nifty50 climbed 46 points to end at 7,861.

“Reports of delay in monsoons, weak results posted by PSU banks and uptick in WPI weighed on investor sentiment.

"However, buying in defensive shares has capped further downside. Meanwhile, the Nifty could see levels of 8,200/8,350 if it breaches 7,850/7,920 levels while a breakdown below 7,860 could lead to a correction,” said AK Prabhakar head-research, IDBI Capital.

Wholesale prices rose by 0.34% in April after seventeen consecutive months of decline, against -0.85% in March. The wholesale price index had recorded deflation for a complete year in 1975-76.

Furthermore, the onset of the southwest monsoon over Kerala is likely to be delayed from the normal date of June 1. This update further hurt the investor sentiments.

Globally, the Asian stocks finished the day on a firm note shrugging off the gloom from soft Chinese data amid a strong dollar. Hang Seng, Nikkei and Shanghai closed up between 0.3%-1%. However, European equities took a hit in today’s trade with FTSE 100 and CAC 40 trading lower between 0.3%-1%. Meanwhile, markets in Germany are closed today.

LEADERS & LAGGARDS

Dr Reddy’s Lab gained over 3% after India’s second largest drug maker by sales, said that fiscal first-quarter profit rose 14%, beating analyst estimates, on the back of strong sales in North America, Europe and India.

Cigarette maker ITC ended 2% higher ahead of the quarter results due this week. Its peer HUL ended over 1.5% higher.

Depreciation of rupee helped the defensive stocks. In the technology pack, TCS, Wipro and Infosys climbed between 0.3%-1.5%.

On the flip side, SBI lost nearly 5% ahead of its March quarter earnings on 27 May.

Meanwhile, Punjab National Bank shed over 4% ahead of the earnings this week.

Among other banking stocks, Axis Bank and ICICI Bank declined between 1.5%-2.5%.

Public sector banks (PSBs) closed lower by up to 9% on the bourses after reporting a disappointing set of numbers for the quarter ended March 31, 2016 (Q4F16).

Bank of Baroda (BOB), Union Bank of India, Central Bank of India, Dena Bank, Allahabad Bank, Bank of India (BOI), Syndicate Bank, Indian Overseas Bank and State Bank of India (SBI) declined between 1%-9% on the BSE.

State-run engineering firm BHEL bagged a Rs 1,600 crore order from a joint-venture company of NTPC and SAIL to set up a coal-based thermal power project in Odisha. The stock closed 1% lower.

Among other notable companies, Lupin, IDBI, Britannia Industries, JSW Energy, Just Dial, Bharat Forge and JK Tyre will slate their earnings results during the week.