Post Session: Quick Review

What looked as yet another session of consolidation turned out to be of another record high close, thanks to last hour buying activities by market-participants, especially ahead of the crucial elections result on Friday, i.e., May 16 amidst continued optimism that Bharatiya Janata Party (BJP), led by Narenda Modi, would emerge victorious. Sudden break-out which was witnessed during last hour of trade due to aggressive bets placed in by the optimistic set of investors mainly played the trick for Dalal Street, which after a session of consolidation, yet again resumed their three consecutive sessions’ record breaking run against the backdrop of mixed global cues. By close of trade, both Sensex and Nifty, settled not far away from record highs, above the psychological 23,900 and 7, 100 levels respectively, with gains of around quarter of a percent. However, the session turned out to be harrowing for broader indices, which went home with massive loss of close to one percent.

On the global front, though most of the Asian pacific shares though settled for positive close, some of losses were partially led by Japanese stock index which lost ground despite better than expected GDP data. The Japanese economy expanded an annualized 5.9% from the previous three months in the first quarter, beating analysts’ estimates for a 4.2% expansion, a report showed on Thursday. Additionally, European shares edged lower in early deals as mixed national GDP data from France and Germany contrasted with some upbeat corporate earnings, keeping key indexes within striking distance of multi-year highs.

Closer home, hopes that BJP-led NDA would comfortably cross the required number of seats and will finish with 279 seats, pumped in some euphoria. Some amount of recovery also crept into street during afternoon deals post the release of good set of macro-economic data. In a complete divergence to Retail Inflation data, the annual rate of inflation, based on monthly WPI, eased at two month low of 5.20% in month of April, 2014, as compared to 5.70% for the March and 4.77% during the corresponding month of the previous year, on account of decline in Fuel & Power Index.

Sectorally, stocks from Consumer Durables, Oil & Gas and Power counters were pillars of strength, while those from Realty, Capital Goods and Metal counters were the weakest links of trade. Meanwhile, banking stocks which bore the brunt of profit-booking up-till first half of trade, recovered later despite disappointing earnings from Bank of India, which plunged over 3% after bank’s net profit fell 26.31% to Rs 557.51 crore on 21.68% increase in total income to Rs 11274.09 crore in fourth quarter ended March 31,2014 on Y-o-Y basis. Meanwhile, tyre stocks too witnessed demand after Apollo Tyres reported good set of Q4 numbers. The company’s fourth quarter consolidated net profit doubled to Rs 281.6 crore from Rs 141.7 crore in same quarter last year on strong growth in Europe business and strong operational performance. The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 1173: 1716, while 146 scrips remained unchanged. (Provisional)

The BSE Sensex gained 90.48 points or 0.38% to settle at 23905.60. The index touched a high and a low of 23971.78 and 23742.75 respectively. Among the 30-share Sensex, 18 stocks gained, while 12 stocks declined. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 0.83% and Small cap index was down by 0.86%. (Provisional)

On the BSE Sectoral front, Consumer Durables up by 1.52%, Power up by 0.97%, Oil & Gas up by 0.95%, PSU up by 0.42% and FMCG up by 0.29% were the gainers while, Realty down by 1.11%, Capital Goods down by 0.90%, Metal down by 0.71%, Teck down by 0.49% and Auto down by 0.46%  were the losers in the space. (Provisional)

The top gainers on the Sensex were ONGC up by 2.82%, Tata Power up by 2.65%, Gail India up by 2.55%, NTPC up by 2.43% and Tata Steel up by 2.36% while, Bajaj Auto down by 4.19%, Hindalco Inds down by 2.62%, SSLT down by 1.90%, ICICI Bank down by 1.68% and Dr Reddys Lab down by 1.47% were the top losers in the index (Provisional).

Meanwhile, with an aim to enhance the investment in domestic equity benchmarks, the Securities and Exchange Board of India (SEBI) will soon propose for rationalization of tax structure of financial products to make them more attractive to retail investors.

The SEBI has notified that tax incentive scheme similar to the US 401(k) plan can be introduced in the country. The scheme can enhance long term investments and bring greater depth in capital markets through mobilising household savings to the capital markets. High investment brought by domestic investors would help in curbing the unwanted volatility in domestic equity markets and would reduce the excessive reliance on the foreign investors. In India, only about 8% of the country's households invest in equities, directly or indirectly through mutual funds which is very low as compare to major economies like the US at 42% and China with 14% of households’ invest in equity markets. The market regulator also wants to increase the tax exemptions limits for retail investors in mutual fund retirement plans. Besides, the SEBI will also pitch for increasing investment limit in various mutual fund schemes such as equity-linked savings scheme and RGESS.

The rational tax structure is viewed as an important factor which could draw investors towards equity markets. However, to enhance the investment in markets, the government had already introduced various schemes such as Rajiv Gandhi Equity Savings Scheme in the 2012-13 Budget, offering 50% tax rebate to new retail investors who invest up to 50,000 directly in equities. However, the scheme remained ineffective to encourage retail investors due to its complex structure including a lock-in period. India VIX, a gauge for markets short term expectation gained 13.40% at 36.76 from its previous close of 32.42 on Wednesday. (Provisional)

The CNX Nifty gained 14.40 points or 0.20% to settle at 7,123.15. The index touched high and low of 7,152.55 and 7,082.55 respectively. Out of 50 stocks in Nifty, 22 stocks ended in the green and 28 in red.

The major gainers of the Nifty were ONGC up 3.36%, Tata Power up by 2.65%, GAIL up by 2.59% , Power Grid up by 2.54% and NTPC up by 2.39%.  On the flip side, the key losers were Asian Paint down by 5.73%, Bajaj-Auto down by 4.30%, Bank Baroda down by 3.88%, NMDC down by 3.33% and Mcdowell-N down by 2.43%. (Provisional)

European markets were trading in red; France’s CAC 40 was down by 0.17%, UK’s FTSE 100 was down by 0.02% and Germany’s DAX was down by 0.31%.

The Asian markets concluded Thursday’s trade mostly in green, with Hong Kong closing marking a sixth-straight gain, as traders brushed off losses on Wall Street. Jakarta Stock Exchange was closed today on account of Vesak Day holiday. China will accelerate the development of production-oriented service industries in a bid to step up industrial restructuring and prop up economic growth. Priorities will be given to the development of research and design, commercial services, marketing and after-sales services. Southeast Asian currencies rallied as US economic data that trailed estimates weakened the greenback, and political developments in Indonesia spurred the rupiah to its biggest gain since March. Japan’s GDP rose to a seasonally adjusted 1.5%, from 0.1% in the preceding quarter whose figure was revised down from 0.2%. Japan’s GDP price index rose to a seasonally adjusted annual rate of 0.0%, from -0.3% in the preceding quarter. Singaporean Retail Sales rose to a seasonally adjusted -3.9%, from -9.7% in the preceding month whose figure was revised down from -9.5%.