Post Session: Quick review

Indian equity markets resumed their northbound journey after two straight sessions of consolidation on Wednesday as market-participants took-up to buying fundamentally strong blue chip stocks available at attractive valuations. Besides, persistent covering up of positions by market-participants on penultimate session of F&O expiry combined with sustained investments by foreign funds, also supported to the uptrend of markets, which took a hit for the worse in the afternoon deals, but staged substantial recovery in the last hour of trade to conclude near day’s high point. By close of trade, both Sensex and Nifty puffed up gains of over half a percent to settle past the psychologically crucial 26,550 and 7,900 levels respectively. Meanwhile, broader indices outperforming larger peers with fat margins were up with gains in the range of 3/4th of a percent.

On the global front, most Asian markets concluded higher on Wednesday, with gains in technology stocks helping the Taiwan market outperform, amid hopes that the European Central Bank will introduce new stimulus measures. Improved optimism about the global economy and anticipation of new product launches, including the latest iteration of Apple’s iPhone expected next month, fueled bargain hunting in Taiwan market. However, European shares pausing after their brisk 2 and 1/ 2 week rally, were reeling under pressure with data showing German consumer morale falling for the first time in more than 1-1/2 years denting investors' appetite for stocks.

Closer home, majority of the sectoral indices on BSE concluded into positive territory, however stocks from Metal, Realty and Infrastructure counters were the top losers of the session. On the flip side, stocks from Oil & Gas, Information Technology and Technology counters outperformed rest of their peers to top the gainers list on BSE. Oil & Gas witnessed strong demand after Oil Ministry proposed for deregulation of diesel prices after retail rates achieve parity with global levels. The gains were also led by ONGC’s stocks, which rallied over 2% amidst hopes of reforms on subsidies and gas prices ahead of the state-owned company's share sale.

In other stock-specific activity, shares in the companies engaged in broadcasting and cable TV business like TV Today Network and New Delhi Television (NDTV) rallied up to 20% on back of heavy volumes on the bourses. Besides, shares of defense equipment manufacturers were in limelight after government notified the increase in foreign direct investment (FDI) limit to 49% in the defence sector through approval route.

The BSE Sensex ended higher by 117.34 points or 0.44% at 26560.15 after trading in a range of 26492.50 and 26599.12. 21 stocks advanced against 9 stocks declining on the index. (Provisional)

The broader indices outperformed larger peers; the BSE Mid cap index ended up by 0.73%, while Small cap index settled higher by 0.79 %. (Provisional)

On BSE sectoral front, Oil & Gas up by 0.84%, Auto up by 0.81%, IT up by 0.75%, Consumer Durables up by 0.64%, PSU up by 0.63%  were the top gainers. On the flip side, Realty down by 1.35%, Power down by 0.61%, INFRA down by 0.36%, Metal down by 0.21% were the top losers on BSE. (Provisional)

The top gainers on the Sensex were ONGC up by 2.31%, ICICI Bank up by 2.05%, Tata Motors up by 1.70%, Hero MotoCorp up by 1.61% and Bajaj Auto up by 1.49%. On the flip side, Sesa Sterlite down by 1.67%, NTPC down by 1.45%, BHEL down by 1.29%, HDFC Bank down by 0.70% and Tata Steel down by 0.41% were the top losers. (Provisional)

Meanwhile, Oil Ministry will seek Cabinet's nod for deregulation of diesel prices after retail rates achieve parity with global levels. The Ministry has also proposed that the Government and upstream companies should share under-recoveries for the financial year 2014-15 and onwards equally.

Earlier, in January 2013, the government decided to gradually deregulate diesel prices by rising diesel prices in small proportions of 40-50 paise monthly, until the difference between the retail price and the cost of production is bridged. The under-recovery has now come down to Rs 1.78 a litre. By the end of October this year, diesel fuel might be completely deregulated like petrol. Deregulation of diesel prices would empower state-owned oil firms to change rates in tandem with costs as it is done for petrol.

Oil ministry also proposed to cut subsidy payout by upstream firms like ONGC and Oil India by half. Currently, state fuel retailers sell diesel, domestic LPG and kerosene at government controlled rates which are way below their cost. The loss is filled by government through cash subsidy and upstream firms like Oil and Natural Gas Corp (ONGC) by way of discounts on crude oil.

The under-recovery burden imposed unilaterally on upstream oil companies include ONGC and OIL by the government has increased to Rs 67,021 crore in 2013-14 from Rs 32,000 crore in 2008-09 which has significantly constrained the capacity of these companies to invest in exploration for oil and gas. The Ministry also proposed that the fuel under-recovery which is expected at Rs 98,622 crore for the current fiscal is to be split equally between the government and upstream firms ONGC/OIL. However, under-recovery payout by upstream companies would be after accounting for oil cess paid by them to the government.India VIX, a gauge for markets short term expectation of volatility declined 6.04% at 13.06 from its previous close of 13.32 on Tuesday. (Provisional)

The CNX Nifty concluded at 7936.05, higher by 31.30 points or 0.40% after trading in a range of 7916.55 and 7946.85. 30 stocks advanced against 20 stocks declining on the index. (Provisional)

The top gainers on Nifty were Jindal Steel & Power up by 3.08% and HCL Tech. up by 3.02% and Indusind Bank up by 2.67% and ONGC up by 2.43% and ICICI Bank up by 2.14%. On the flip side, DLF down by 4.57%, BHEL down by 1.65%, Sesa Sterlite down by 1.60%, IDFC down by 1.47% and Kotak Mahindra Bank down by 1.34% were the top losers. (Provisional)

European markets were reeling under pressure; with Germany’s DAX losing 11.14 points or 0.12% to 9,577.01 and France’s CAC decreased 3.67 points or 0.08% to 4,389.74. However, UK’s FTSE 100 was trading up by 6.28 points or 0.09% to 6,829.04.

Asian markets ended mostly in green on Wednesday, after US data on durable goods and consumer confidence boosted optimism in the strength of the world’s largest economy. Hong Kong stocks fell, with the benchmark index capping its biggest two-day drop in almost three weeks. China’s benchmark money-market rate rose the most in a month as initial public offerings and month-end demand reduced cash supply. Lenders in China typically need to boost holdings of funds at the end of the month to meet regulatory requirements. Thailand is planning new rules to check stock-market manipulation by allowing the regulator to file civil lawsuits and impose hefty fines on the law-breakers. Indonesia’s central bank’s deputy governor Perry Warjiyo stated that the country’s annual inflation is expected to slow to 3.7% in August, down from 4.53%. Bank Indonesia’s inflation target for all of 2014 is between 3.5% and 5.5%. Separately, Warjiyo added that the current account deficit is expected fall to around 3.8% of gross domestic product in the third quarter, down from 4.27% in the previous three months. The current level of consumer confidence in South Korea rose unexpectedly last month. South Korean Consumer Confidence rose to 107, from 105 in the preceding month.