Markets climb to day’s high on frenzied buying activities; broader indices outperform

Markets extending gains have climbed to day’s high on frenzied bargain buying activities by funds and retail investors on hopes of continued robust foreign buying in equities and debt after minutes of the U.S. Federal Reserve's last meeting backed bets of a slower withdrawal of the stimulus. The gains of bourses were mainly led by index-heavy weight, Reliance Industries, Maruti Suzuki and Coal India, which have all rallied in the range of 3%-6%. At day’s high, while Sensex adding over 3/ 4 of a percent gains was trading little shy of the crucial 24,500 level, Nifty has reclaimed the psychological 7300 mark. Meanwhile, broader indices yet another were outperforming their larger peers and were trading with hefty gains of over 2.5%.

On the global front, Asian shares were edging higher tracking overnight cues from the Wall Street, after minutes of the US Federal Reserve's last meeting reassured investors that policy makers will continue to support the world's biggest economy. While, sentiment also improved on indication of an improvement in Chinese manufacturing activity. The HSBC Flash China Manufacturing Purchasing Managers' Index (PMI) recovered to 49.7 in May from April's final reading of 48.1.

Closer home, all the sectoral indices on BSE were trading in positive territory, barring stocks from Technology and Healthcare counters which were trading flat with negative bias. While the Information technology bounced back into green, prominent gainers were stocks from Consumer Durables, Realty and metal counters. Besides, Shares jewellery companies, including Titan Co, Gitanjali Gems, Tribhovandas Bhimji Zaveri and Shree Ganesh Jewellery House were shinning in trade and up with gains in the range of 5%-20% after the Reserve Bank of India (RBI) eased gold import rules by allowing seven more private agencies to ship the precious metal.

In stock-specific activities, while Coal India rallied up to 7% on reports that Prime Minister-elect Narendra Modi was exploring the possibility of splitting up the state-owned company and opening the sector to foreign investment to boost output and cut imports, Maruti Suzuki surges 4.3 percent after brokerage underscored the stock price of Maruti could double in three years in a bull scenario in which personal vehicle industry volume grows at a compounded annual growth rate of 20 percent due to pent-up demand should the economic growth pick up. The overall market breadth on BSE was in the favour of advances which outnumbering declines in the ratio of 2105:540; while 84 shares remained unchanged.

The BSE Sensex is currently trading at 24492.92, up by 194.90 points or 0.80% after trading in a range of 24493.47 and 24347.78. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices too extended gains; the BSE Mid cap index was up by 2.31%, while Small cap index up by 2.51%.

The gaining sectoral indices on the BSE were Consumer Durables up by 6.96%, Realty up by 5.42%, Metal up by 2.88%, Power up by 2.68% and PSU up by 2.55%. On the flip side, Healthcare down by 0.08% and Teck down by 0.05% were the losing indices on BSE.   

The top gainers on the Sensex were Coal India up by 6.68%, NTPC up by 4.49%, Maruti Suzuki up by 4.16%, SSLT up by 3.57% and RIL up by 2.61%. On the flip side, Bharti Airtel down by 1.64%, HDFC Bank down by 1.22%, Wipro down by 1.04%, Infosys down by 1.00% and BHEL down by 0.92%.  

Meanwhile, in order to enhance Indian exports, the Reserve Bank of India (RBI) has eased norms for loans to exporters. The RBI, in its notification, stated that the domestic exporters can now get long-term loans from banks for up to 10 years to service export contracts. Earlier the exporters were allowed to get loans up to one year.

Further, the central bank notified that banks can make such payments to exporters with a satisfactory track record of three years and adjust these payments against future exports. However, banks cannot charge interest rates exceeding 200 basis points above LIBOR. Furthermore, exporters who receive loans of $100 million or above need to report the transaction immediately to the central bank, the notification added.

During the financial year 2014, Indian exports shipments touched $312.35 billion, registering 3.98% growth over the previous fiscal year but remained below the set export target at $325 billion. India’s export has been hovering near $300 billion over the last three fiscal years and it has become imperative to boost country’s exports and enhance its contribution in the world trade. In India, Foreign Trade Policy (FTP) governs all exports and imports related activities and mainly aims at enhancing the country's exports.

The five-year FTP (2009-14) ended on March 31 and the new government formed after the general elections will introduce new FTP for the period 2014-19 in June 2014. Meanwhile, new FTP is likely to promote exports of specific products in specific geographies and would also abolish conventional method of exports by focusing more on areas like branding of products in the global markets, exports of services and hi-tech products and new strategy for marketing.

 The CNX Nifty is currently trading at 7,303.05, up by 50.15 points or 0.69% after trading in a range of 7,306.50 and 7,258.15. There were 30 stocks advancing against 20 declining on the index.

The top gainers of the Nifty were DLF up by 8.25%, Coal India up by 7.08%, NTPC up by 4.74%, Maruti Suzuki up by 3.96% and NMDC up by 3.80%. On the flip side, Grasim down by 1.34%, Bharti Airtel and Wipro down by 1.24%, BHEL and HDFC Bank down by 1.22% were the major losers on the index.

Asian equity indices were trading in green; Straits Times up by 0.07%, Nikkei 225 up by 2.11%, Jakarta Index up by 1.05%, Taiwan Weighted up by 1.21%, Hang Seng added 0.60% and Shanghai Composite advanced 0.14%