Post Session: Quick Review

Celebrations extended for yet another session at Dalal Street on continued optimism of robust  foreign fund inflows after a Narendra Modi-led Bharatiya Janata Party (BJP) won a majority in the country's general elections, which was termed as ‘credit positive’ by global rating agency, Moody's Investors Service. Overseas investors, which have been the backbone for the current market rally, purchased equities worth Rs 3,635 crore (net) in the cash market on Friday, their biggest one-day investment this year.

Markets after an initial hiccup in early deals, picked up an astonishing pace and went on capturing ground to conclude near day’s high level. By close of trade, both Sensex and Nifty, ended not far away from their record highs and above the crucial 24,300 and 7,250 levels respectively. Nevertheless, broader indices participated more aggressively into the rally and went home with hefty gains of over four and half a percent.

On the global front, Asian markets eased on Monday, undermined by the concerns about slower growth in China, which led to mainland Chinese shares falling more than 1 percent to two-month lows on news that Beijing is tightening its grip on interbank lending to defuse risks in the shadow banking system. Meanwhile, European shares edged lower on Monday, as investors remained cautious amid sustained expectations for further easing measures by the European Central Bank (ECB).

Closer home, majority of the sectoral indices on BSE ended in positive terrain, the prominent gainers were stocks from Power, Public Sector Undertaking (PSU) and Capital Goods, which rallied in the range of 7-5%-10.50%. On the flip side, stocks from defensive Information Technology, Fast Moving Consumer Goods and Health Care counters were hammered down on rupee’s further appreciation fears. Indian currency strengthened to eleven month high below the psychological 58.50/$ level in intra-day trade. These shares also plunged as investors churned their money to sectors with a domestic focus such as banks and infrastructure on hopes the government led by Narendra Modi will spark a recovery in the domestic economy. Meanwhile, in non-sectoral gauge activity, Railway stocks rode the Modi bandwagon, with all Texmaco Rail, Kalindee Rail Nirman, Titagarh Wagons, Kernex Microsystems and Hind Rectifiers gaining in the range of 4.5%-20%. The market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 2156:694, while 97 scrips remained unchanged. (Provisional)

The BSE Sensex gained 241.31 points or 1.00% to settle at 24363.05. The index touched a high and a low of 24448.47 and 24107.99 respectively. Among the 30-share Sensex, 19 stocks gained, while 11 stocks declined. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 4.19% and Small cap index was up by 5.82%. (Provisional)

On the BSE Sectoral front, Power  up by 10.15%, PSU up by 9.00%, Capital Goods up by 8.34%,  Realty up by 6.91% and Metal up by 6.81% were the gainers while, IT down by 4.95%,  FMCG down by 4.00%,  Health Care down by 3.66%, Teck down by 3.46% were the losers in the space. (Provisional)

The top gainers on the Sensex were BHEL up by 15.52%, Coal India up by 12.66%, NTPC up by 11.64%, Tata Power up by 8.66% and ONGC up by 8.20% while, Tata Steel down by 4.68%, ITC down by 3.15%, Wipro down by 3.09%, Dr Reddys Lab down by 2.86% and Infosys down by 2.53% were the top losers in the index (Provisional).

Meanwhile, in a bid to increase the investments in India’s mutual fund industry, the Securities and Exchange Board of India (SEBI) has urged the finance ministry to consider various tax sops for mutual funds products to make them more attractive to retail investors. The move is a part of SEBI’s efforts to incentivise and channelise household savings into equity long-term investment products and final decision in this regard would be taken by the new government. Further, high investments by domestic investors would help in curbing the unwanted volatility in domestic equity markets and would reduce the excessive reliance on the foreign investors. 

The market regulator has now submitted the draft to Finance Ministry comprising measures to enhance investments in mutual fund industry. Among various proposals, the SEBI proposed for creation of a long-term investment product, Mutual Fund Linked Retirement Plan, with an additional tax incentive of Rs 50,000. In order to make various mutual fund schemes eligible for such tax benefits, the SEBI wants the new government to enhance the tax exemption limit under Section 80C of the Income Tax Act from Rs 1 lakh to Rs 2 lakh. The regulator also wants the Rajiv Gandhi Equity Savings Scheme to be brought under the enhanced tax exemption limit. Besides, SEBI wants all Central Public Sector Enterprises (CPSEs) to be permitted to invest their surplus funds in mutual fund schemes. At present, only miniratna, navratana and CPSEs are allowed to invest in such schemes.

There are about 45 fund houses present in the country with total assets worth over Rs 9 lakh crore. Over the past couple of years, the fund mobilisation to mutual fund houses has remained lower owing to the lack of tax benefits which has made mutual funds products unattractive to investors.

India VIX, a gauge for markets short term expectation lost 15.07% at 20.63 from its previous close of 24.29 on Friday. (Provisional)

The CNX Nifty gained 60.55 points or 0.84% to settle at 7,263.55. The index touched high and low of 7,291.10 and 7,193.55 respectively. Out of 50 stocks in Nifty, 29 stocks ended in the green and 21 in red.

The major gainers of the Nifty were BHEL up 14.42%, Coal India up by 13.20%, NTPC up by 12.16%,PNB up by 11.23% and ONGC up by 8.11%.  On the flip side, the key losers were TCS down by 6.24%, DR Reddy down by 5.48%, Infosys down by 5.27%, HUL down by 4.95% and ITC down by 4.75%. (Provisional)

European markets were trading in red; France’s CAC 40 was down by 0.72%, UK’s FTSE 100 was down by 0.65% and Germany’s DAX was down by 0.73%.

The Asian markets concluded Monday’s trade mostly in red, as investors await the release of key manufacturing data from China later in the week. China’s top economic planning agency stated that the country will try to quicken the pace of economic reform this year as part of the government’s efforts to arrest a slowdown in the world’s second-largest economy. The National Development and Reform Commission reaffirmed nine reform priorities for 2014, including deepening reforms in the power and the oil and gas industries and cutting red tape for investment approvals. Japan’s Core Machinery Orders rose to 19.1%, from -8.8% in the preceding month. Hong Kong Unemployment Rate remained unchanged at a seasonally adjusted 3.1%, from 3.1% in the preceding month. Malaysian GDP rose to a seasonally adjusted 6.2%, from 5.1% in the preceding month. Thailand’s gross domestic product fell less-than-expected last month. Thai GDP fell to a seasonally adjusted -0.6%, from 0.6% in the preceding month.