Benchmarks extend previous session’s rally in early deals

Extending their previous session’s jubilation, Indian equity benchmarks have made a positive start of the F&O expiry session and are trading with traction in early deals with key indices surpassing their crucial 7,950 (Nifty) and 26,600 (Sensex) levels. Sentiments remained up-beat with Finance Minister Arun Jaitley’s statement that the General Anti Avoidance Rules (GAAR) were being revisited and that a decision would be taken soon, adding that the date of GAAR coming into force would also be looked at afresh. India Inc is also likely to cheer the announcement of Reserve Bank of India (RBI) simplifying external commercial borrowing (ECB) norms. The central bank also allowed companies to raise fresh funds through ECBs where the average maturity period (AMP) exceeds the residual maturity of the existing ECB under automatic route, with certain riders.

On the global front, the US markets ended flat with S&P holding the historic 2000 mark, traders remained on sidelines lacking any major economic announcements amid a mixed bag of corporate earnings and eyeing second estimate of gross domestic product to be announced on Thursday. The Asian markets were trading mixed at this point of time, although most of the indices are extending their gains the Japanese market has given up its early advances.

Back home, there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too equally participated in the rally. Meanwhile, Railway-related stocks edged higher after the government notified the liberalised foreign direct investment (FDI) norms for rail infrastructure, allowing 100% FDI through automatic route in the sector. On the sectoral front, oil and gas, capital goods and auto witnessed the maximum gain in trade, while realty remained the lone loser on the BSE sectoral space. The broader indices too were trading in-line with benchmarks, while the market breadth on the BSE was positive; there were 1098 shares on the gaining side against 770 shares on the losing side while 64 shares remain unchanged.

The BSE Sensex opened at 26620.18; around 60 points higher as compared to its previous closing of 26560.15, and has touched a high and a low of 26674.38 and 26596.67 respectively. The BSE Sensex is currently trading at 26,663.79, up by 103.64 points or 0.39%. There were 22 stocks advancing against 8 stocks declining on the index.

The overall market breadth remained in the favour of advances with 56.83% stocks advancing against 39.86% declines. The broader indices were trading in green; the BSE Mid cap index was up by 0.21%, while Small cap index up by 0.47%.

The gaining sectoral indices on the BSE were Oil & Gas up by 0.85%, Capital Goods up by 0.75%, Auto up by 0.53%, PSU up by 0.52% and Bankex up by 0.49% while, Realty down by 0.88% was the lone losing index on BSE.

The top gainers on the Sensex were GAIL India up by 1.57%, Tata Motors up by 1.41%, ICICI Bank up by 1.26%, Larsen & Toubro up by 1.13% and Wipro was up by 1.08%. On the flip side, Hindalco down by 0.76%, Hero MotoCorp down by 0.70%, Cipla down by 0.57%, Tata Power down by 0.51% and SBI was down by 0.45% were the top losers.

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.

The CNX Nifty opened at 7,942.25; around 6 points higher as compared to its previous closing of 7,936.05, and has touched a high and a low of 7,967.80 and 7,942.25 respectively.

The CNX Nifty is currently trading at 7964.50, up by 28.45 points or 0.36%. There were 31 stocks advancing against 19 stocks declining on the index.

The top gainers on Nifty were BPCL up by 2.75%, Asian Paints up by 1.89%, GAIL India up by 1.53%, Tata Motors up by 1.47% and ICICI Bank was up by 1.29%. On the flip side, DLF down by 2.46%, Jindal Steel & Power down by 1.19%, Hindalco down by 0.96%, Tata Power down by 0.68% and Hero MotoCorp was down by 0.65% were the top losers.

Asian markets were trading mixed; KOSPI Index surged by 5.32 points or 0.26% to 2,080.25, Hang Seng added by 20.52 points or 0.08% to 24,939.27, Jakarta Composite gained by 23.38 points or 0.45% to 5,188.63 and Straits Times was up 13.65 points or 0.41% to 3,355.11.

On the flip side, Nikkei 225 contracted by 80.46 points or 0.52% to 15,454.36, Taiwan Weighted tumbled by 14.21 points or 0.15% to 9,471.38, FTSE Bursa Malaysia KLCI declined by 0.21 points or 0.01% to 1,872.1 and Shanghai Composite was down by 8.09 points or 0.37% to 2,201.37.