Post Session: Quick Review

Thursday’s session turned out to be heart-warming session of trade at Dalal-Street, wherein benchmark equity indices adding on previous sessions’ gains, rallied over 1.50% on continued buying activities by funds and retail investors. Sentiments bolstered on optimism that trade ties with China would attract foreign inflows and revive country's economic growth, which triggering a flurry of buying by participants, aided Sensex and Nifty to regain psychologically crucial 27,000 and 8100 marks respectively. 

Reports suggest that China plans to invest around $500 billion overseas in the next five years, a large share of which is expected to find its way in India. Additionally, benchmarks also got a shot in the arm after US Federal Reserve decided to keep interest rates near zero for 'a considerable time'. In the extremely sanguine session of trade, both Midcap and Smallcap indexes outperforming larger peers with fat margins, went home with gains of over 1.80%-2.70%.

On the global front, Asian markets mostly rose on Thursday while the dollar rallied after the Federal Reserve stuck to its timetable on hiking interest rates but indicated they could rise more sharply than initially envisaged. After a closely watched meeting, the Fed said on Wednesday it would stick to its steady-as-she-goes policy on interest rates, keeping them at a record low of 0-0.25% despite growing calls for a rise as the economy strengthens. Markets had been on the watch for a change in its language, which could have signalled a rate hike before the mid-2015 timeline currently in place. Meanwhile, European shares too were trading jubilantly, tracking gains on Wall Street after the U.S. Federal Reserve renewed its pledge to keep ultra-low interest rates for 'a considerable time'. However UK stocks underperformed, losing ground as the voting got underway in Scotland's referendum on independence, keeping investors on edge ahead of the result, expected early on Friday.

Closer home, all the sectoral indices on BSE concluded into positive territory, nevertheless prominent gainers were the stocks from Realty, Consumer Durables and Capital Goods counters. Shares of real estate companies rallied on reports that the Real Estate (Regulation and Development) Bill, 2013 is likely to come up for consideration in Rajya Sabha in the forthcoming Winter Session. Meanwhile, gains on pharmaceuticals stocks were led by 2% rally in Sun Pharmaceutical Industries after the drug maker underscored it has entered into a licensing agreement with Merck & Co Inc for investigational therapeutic antibody candidate, Tildrakizumab to be used for treatment of plaque psoriasis, a skin ailment. Sugar stocks gained ground after industry body ISMA’s estimated India's sugar output to rise up to five percent at 25.5 million tonnes in the next marketing year starting October despite drop in sugarcane area. The market breadth on the BSE remained in the favour of advances; advancing and declining stocks were in a ratio of 2235:828, while 93 scrips remained unchanged. (Provisional)

The BSE Sensex ended higher by 480.92 points or 1.81% at 27112.21 after trading in a range of 26503.08 and 27132.20. There were 27 stocks advancing against 3 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 1.83%, while Small cap index up by 2.69%. (Provisional)

The gaining sectoral indices on the BSE were Realty up by 4.65%, Consumer Durables up by 3.17%, Capital Goods up by 2.84%, Auto up by 2.67% and Power up by 2.23%, while there were no losers on the BSE sectoral indices. (Provisional)

The top gainers on the Sensex were Hero MotoCorp up by 5.64%, Larsen & Toubro up by 3.90%, HDFC up by 3.73%, Dr. Reddys Lab up by 3.67% and BHEL up by 3.60%. On the flip side, Infosys down by 1.35%, Hindustan Unilever down by 0.47% and Sesa Sterlite down by 0.11% were the few losers. (Provisional)

Meanwhile, giving a reason to cheer to the India Inc. Reserve Bank of India (RBI) has allowed companies to issue equity shares to a resident outside India against any type of fund, subject to certain conditions like entry route, sectoral cap, pricing guidelines and compliance with the applicable tax laws. RBI reviewed the existing guidelines in consultation with the Government of India and, accordingly, decided to permit issue of equity shares against any other funds payable by the investee company, remittance of which does not require prior permission of the Government of India or Reserve Bank of India under FEMA, 1999 or any rules/ regulations framed or directions issued thereunder

As per the latest RBI guidelines the equity shares shall be issued in accordance with the existing FDI guidelines on sectoral caps, pricing guidelines and the issue of equity shares under this provision shall be subject to tax laws as applicable to the funds payable and the conversion to equity should be net of applicable taxes.

Earlier, an Indian company under the automatic route could issue shares/convertible debentures to a person resident outside India against lump-sum technical know-how fee, royalty External Commercial Borrowings (other than import dues deemed as ECB or Trade Credit) and import payables of capital goods by units in Special Economic Zones. Through government route, FDI in activities not covered under the automatic route requires prior approval of the Government which are considered by the Foreign Investment Promotion Board (FIPB), Department of Economic Affairs, Ministry of Finance. Indian companies having foreign investment approval through FIPB route do not require any further clearance from RBI for receiving inward remittance and issue of shares to the foreign investors.

India VIX, a gauge for markets short term expectation of volatility declined 4.80% at 12.32 from its previous close of 12.94 on Wednesday. (Provisional)

The CNX Nifty ended higher by 139.25 points or 1.75% at 8114.75 after trading in a range of 7939.70 and 8120.85. There were 47 stocks advancing against 3 stocks declining on the index. (Provisional)

The top gainers on Nifty were Hero MotoCorp up by 5.80%, DLF up by 3.67%, BPCL up by 3.65%, Tata Motors up by 3.64% and Larsen & Toubro up by 3.62%. On the flip side, Infosys down by 1.18%, United Spirits down by 0.95% and Hindustan Unilever down by 0.66% were the few losers. (Provisional)

European Markets were trading in the green; France’s CAC was up by 0.77%, Germany’s DAX was up by 0.98% and UK’s FTSE 100 was up by 0.53%.

Asian markets ended mostly in green on Thursday, with Japanese market closing at a six-year high as the yen tumbled after the Federal Reserve raised its estimates for interest rates. Japan’s exports declined in August as shipments to the United States contracted, another sign the economy is struggling to rev up after a deep slump in April-June. Exports fell 1.3 percent in August from a year ago, less than the median estimate for a 2.6 percent annual decline. That followed a 3.9 percent annual gain in the previous month after having fallen in June and May. The patchy performance has dashed hopes that external demand can offset a consumer spending slump caused by an April sales tax hike to 8 percent from 5 percent, heaping pressure on policymakers to do more to spur economic growth. Japan’s trade balance rose to a seasonally adjusted -0.92T, from -1.02T in the preceding month. Hong Kong Unemployment Rate remained unchanged at a seasonally adjusted 3.3%, compared to the preceding month.

The People’s Bank of China lowered the rate on the 14-day repurchase agreement to 3.50% from 3.75%, sending money market rates tumbling. One year interest rate swaps fell to 3.46% after the news from 3.51% while five-year swaps were down at 3.75% from 3.79%. A lower repo rate is aimed at lowering other rates in the market, part of the government’s ongoing attempt to lower corporate financing costs without instituting high profile measures such as a cash reserve cut or interest rate cut.