Post Session: Quick Review

Indian equity markets resumed trade after a day’s break on Wednesday in high spirits and logged life time high level amidst hopes of victory of business-friendly reformer Modi’s Bharatiya Janata Party (BJP) led government in General elections with the start of second phase of polls in four states today, namely Meghalaya, Nagaland, Manipur and Arunachal Pradesh. Last hour buying mainly underpinned markets clock record high closing levels, lifting both Sensex and Nifty higher past the crucial 22,700 and 6800 levels respectively by close of trade, with hefty gains of more than one and a half percent. Broader indices, too following suite, ended with gains in line with its larger counterparts.

In the stable session of trade, benchmarks gyrated in narrow range for most part of the session after a gap-up start, however the frenzied buying activity which crept in the last hour of trade mainly led to record high close of Dalal Street. IMF's forecast of better growth prospects for India in 2014 buttressed sentiment in early deals, triggering fresh spell of buying by foreign funds and retail investors. This combined with positive regional counterparts led to euphoria at Dalal Street.

On the global front, Asia's markets mostly rose following a slight rebound on Wall Street, but Tokyo took another hit from a stronger yen. Meanwhile, European shares too opened higher Wednesday, aiming for gains after two sessions of declines.

Closer home, on BSE sectoral front, while, Banking, Metal and Capital Goods counters were the major pillars of market’s strength, Information Technology (IT) and Technology counters were the only losers. Healthcare stocks too hogged the limelight after Sun Pharmaceuticals, adding to previous sessions’ gains, spiked close to 7% post agreeing to acquire Ranbaxy Laboratories for $3.2 billion.  On the flip side, IT stocks were beaten blue in anticipation of muted revenue growth in the January-March period, a seasonally weak quarter for India’s $108-billion software sector.

Amidst non-sectoral space, Aluminium stocks, viz Hindalco Industries, National Aluminium, Hind Aluminium Industries shone after global metal giant Alcoa Inc, which is also the largest U.S. aluminium producer, forecasted stronger aluminum demand globally. Alcoa reported adjusted earnings of $0.09 cents per share, which was stronger than the $0.05 expected and $5.5 billion dollar revenue in Q1.  Additionally, Steel stocks, viz Tata Steel, JSW Steel, SAIL and Sesa Sterlite firmed up after Steel & Tube Holdings of New Zealand agreed to acquire Tata Steel International (Australasia) for a cash consideration of NZ $27.5 million. Besides, entire power space lit up after GVK Power & Infrastructure secured conditional clearance from the Land Court of Queensland in Australia for its $10 billion Alpha Coal Mine project. The market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 1862: 884, while 112 scrips remained unchanged. (Provisional)

The BSE Sensex gained 391.96 points or 1.75% to settle at 22735.41. The index touched a high and a low of 22740.04 and 22379.95 respectively. Among the 30-share Sensex, 26 stocks gained, while 4 stocks declined. (Provisional)

The BSE Mid cap and Small cap indices ended higher by 1.66% and 1.99% respectively. (Provisional)

On the BSE Sectoral front, Bankex up by 3.53%, Metal up by 2.34%, Capital Goods up by 2.18%, Healthcare up by 2.15% and Auto up by 1.93% were the top gainers, while IT down by 1.10% and Teck down by 0.86% were the top losers in the space. (Provisional)

The top gainers on the Sensex were Sun Pharma up by 6.60%, Tata Motors up by 4.65%, Axis Bank up by 4.52%, Hindalco up by 4.19% and ICICI Bank up by 3.79%. On the other hand, Infosys down by 1.34%, ONGC down by 1.24%, TCS down by 1.04% and Wipro down by 0.55% were the top losers in the index. (Provisional)

Meanwhile, the inflation indexed National Savings Securities have failed to attract retail investors as total mobilisation through these 10-year instruments, which was meant to be a hedge against inflation, has recorded at around Rs 100 crore. The factors like lack of awareness, absence of tax benefits, and a fall in retail inflation can be attributed to the poor response.

In 2013, the Government had issued two inflation-indexed products such as Inflation Indexed Bonds based on the Wholesale Price Index (WPI) and Inflation Indexed National Saving Securities-Cumulative for retail investors based on Consumer Price Index (CPI) inflation. The Government was expecting to mop up around Rs 20,000 crore from these two instruments. Meanwhile, the total mobilisation through both the instruments was around Rs 6,000 crore out of which approximately Rs 5,900 crore was garnered from inflation indexed bonds based on WPI and Rs 100 crore from the securities based on CPI inflation. Money collected through such instruments will be part of the Government’s borrowings plan for Rs 3.68-lakh crore between April and October’ 2014. 

Recently, the Reserve Bank of India (RBI) has doubled the maximum limit for investment in inflation-indexed bonds to Rs 10 lakh per annum for individuals. Further, the investment limit for institutions like Hindu undivided family (HUF), Charitable Trusts, Education Endowments and similar institutions that are not profit-seeking in nature has been increased from Rs 5 lakh to Rs 25 lakh per annum.

The absence of tax benefits in the scheme has detracted individuals as there is no benefit available either on the principal investment or interest paid. Further, the declining retail inflation could also be reason for poor retail investors’ response. The CPI inflation in February came down to an over-two-year low of 8.1 percent from 8.79 percent in January.India VIX, a gauge for markets short-term expectation volatility gained 7.85% at 26.91 from its previous close of 24.95 on Monday. (Provisional)

The CNX Nifty gained 107.65 points or 1.61% to settle at 6,802.70. The index touched high and low of 6,808.70 and 6,705.10 respectively. Out of the 50 stocks on the Nifty, 39 ended in the green, while 11 ended in the red. 

The major gainers of the Nifty were Sun Pharma up 6.78%, Bank of Baroda up by 5.32%, Axis Bank up by 4.54%, Tata Motors up by 4.50% and PNB up by 4.02%. The key losers were Tech Mahindra down by 3.01%, HCL Tech down by 2.04%, Infosys down by 1.30%, ONGC down by 1.11% and TCS down by 0.87%. (Provisional)

The European markets were trading in green; France’s CAC 40 was up by 0.53%, Germany’s DAX was up by 0.45% and UK’s FTSE 100 up by 0.76%.

The Asian markets concluded Wednesday’s trade mostly in green with a gauge of regional shares heading for the highest close in five months. South Korea’s won surged to the strongest level since 2008 versus the dollar. The IMF predicted global growth of 3.6% this year, compared with a January estimate of 3.7%. Japan, however, is forecast to expand just 1.4% next year, down from the IMF’s previous projection of 1.7%, and just 1% in 2015. Higher sales taxes are expected to weigh on growth. Growth in China, the world’s second-largest economy, is expected to continue its slowdown from its double-digit pace of a few years ago. That will have repercussions for many nations that export raw materials and parts to Chinese factories. China is projected to expand 7.5% in 2014 and 7.3% in 2015, down from 7.7% last year. South Korean Unemployment Rate fell to a seasonally adjusted annual rate of 3.5%, from 3.9% in the preceding month.