Post Session: Quick Review

Markets made a stellar start to the Diwali week as fire-works were seen across Dalal Street. Barometer gauges making most of government’s victory in two state elections, soared 1.25%, concluding past the psychologically crucial 26, 100 (Sensex) and 7,850 (Nifty) levels respectively. Meanwhile, broader indices also pulling up their act together ended in the range of 0.50%-1.20%. The assembly elections, seen as the first major test of Narendra Modi's popularity since the Lok Sabha success, reflected the continued dominance of BJP in Maharashtra and Haryana, where they mounted an aggressive campaign. In Haryana, the party got a majority on its own for the first time winning 47 of the 90 seats, up from a meagre 4 in the last elections, while BJP also put up a remarkable show in Maharashtra, where it junked its oldest ally Shiv Sena over seat sharing, by bagging 122 seats in the 288-member Assembly, 23 short of majority figure of 145. Slew of reforms, namely gas pricing and diesel de-regulation reform by Modi led government, which underpinned the hopes of further reforms to fast track the economic recovery, mainly got the bulls’ bersek at Dalal Street despite negative global set-up.

On the global front, Asian pacific shares rallied on Monday after solid US data and earnings calmed tumult in global financial markets and reassured investors worried about the health of the world economy. Meanwhile, European stocks fell early on Monday, trimming lofty gains made in the previous session, with SAP's profit warning hitting shares in the tech sector.

Closer home, with across the board buying activity taking place, most of the sectoral indices on BSE concluded into positive territory, however stocks from Information Technology counter proved to be an exception. Nevertheless, prominent gainers were stocks from PSU, Auto, Capital Goods. Also, State-run oil companies such as ONGC, HPCL and IOC rallied after the Modi government de-regulated diesel prices and raised natural gas prices to $5.6 per unit from $4.2 unit. The new gas price will be implemented from November 1 and will be revised every six months with the next revision being on April 1. Additionally, banking stocks fired up on hopes of lower inflation as sharp cut in diesel price is expected to bring down freigh rates. In the biggest wave of economic reforms since coming to power, the NDA government on de-regulated the price of diesel and announced a new price for domestically-produced natural gas. With this, immediate price of diesel was reduced by Rs 3.37 a litre (ex-Delhi) with effect from Saturday midnight. The market breadth on the BSE remained in the favour of advances; where advancing and declining stocks were in a ratio of 1627:1211, while 113 scrips remained unchanged. (Provisional)

The BSE Sensex ended higher at 26429.85, up by 321.32 points or 1.23% after trading in a range of 26368.94 and 26517.90. There were 25 stocks advancing against 5 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 1.12%, while Small cap index up by 0.48%. (Provisional)

The gaining sectoral indices on the BSE were PSU up by 2.64%, Auto up by 2.17%, Capital Goods up by 2.14%, Oil & Gas up by 1.94% and Infrastructure up by 1.93% while, IT down by 0.83% and TECK down by 0.26% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were ONGC up by 5.10%, Hindalco up by 4.51%, Coal India up by 4.01%, Axis Bank up by 3.89% and Tata Motors up by 3.44%. On the flip side, Wipro down by 1.91%, Infosys down by 1.01%, TCS down by 0.78%, ITC down by 0.54% and Reliance Industries down by 0.36% were the top losers. (Provisional)

Meanwhile, in a major and much awaited reform, the government de-regulated retail prices of diesel, which will now reflect international movement in oil prices. This development, which would bring an immediate respite of about Rs 3.50 per litre on diesel prices, marks the first reduction in diesel rates in over five years. Diesel rates were last cut by Rs 2 a litre to Rs 30.86 in January 29, 2009.

Also, the government decided to re-launch the direct benefit transfer scheme for cooking gas and link with the new bank account opened under Pradhan Mantri Jan Dhan Yojna and for those who lacked bank accounts could continue to enjoy the benefits of subsidized LPG cylinders. The programme would be implemented 'in a mission mode' between November 10 and January 1, 2015.

Diesel reduction comes right after the state elections and also at a time when international crude prices have been running at four year low. However, originally, petrol and diesel prices were deregulated in April 2002 when the NDA government was in power. But, administered pricing regime made a silent entry towards the end of NDA regime in the first quarter of 2004 when crude prices started inching up. It was back in January 2010, the previous government decided to raise diesel prices by up to 50 paisa a litre every month. Nevertheless, with the over-recovery or the profit of diesel climbing to Rs 3.56 per litre, the centre decided to take the guards off.

Deregulation would mean that the government and state-owned explorers including Oil and Natural Gas Corp (ONGC) from now on, would no longer would be subsidising diesel. Finance Minister Arun Jaitley had budgeted Rs 63,400 crore for petroleum subsidies which was 25 per cent lower than previous fiscal.

Lastly, a cut in these prices leads to a lower subsidy bill and will eventually help the government cut taxes on petro products, which in turn, will help cushion the shocks when global crude prices rise again since India imports two-thirds of its energy need.

India VIX, a gauge for markets short term expectation of volatility dropped 13.47% at 14.19 from its previous close of 16.40 on Friday. (Provisional)

The CNX Nifty ended higher at 7879.40, up by 99.70 points or 1.28% after trading in a range of 7856.95 and 7905.95. There were 41 stocks advancing against 8 stocks declining on the index. (Provisional)

The top gainers on Nifty were Ultratech Cement up by 5.72%, ONGC up by 5.51%, Hindalco up by 5.06%, BPCL up by 4.51% and DLF up by 4.11%. On the flip side, Jindal Steel & Power down by 8.23%, Wipro down by 1.68%, Infosys down by 1.02%, TCS down by 0.73% and HCL Tech. down by 0.61% were the top losers. (Provisional)

European Markets were trading in red; UK’s FTSE 100 was down 0.57%, France’s CAC was down by 0.41% and Germany’s DAX was down by 0.79%.

Asian markets ended in green on Monday, with Chinese stocks trading in Hong Kong climbing the most in a week amid speculation as the central government is accelerating measures to support economic growth. This week is expected to be an important one for Chinese markets because the Communist Party gathers in Beijing for an important planning meeting. China is also expected to release third quarter GDP data scheduled on Tuesday and the Hong Kong and Shanghai stock exchanges are expected to launch a program allowing investors from both sides to access each other’s stocks, opening up a crucial channel for fresh capital flows. China’s central bank is planning the injection of about 200 billion yuan ($32.7 billion) into some national and regional lenders as Prime Minister Li Keqiang steps up stimulus to support economic growth. The injection comes after the central bank provided 500 billion yuan of liquidity to China’s five biggest banks last month.

Indonesian financial markets rose as Joko Widodo became the country’s seventh president, lifting optimism that he will guide the nation toward improving the economy and the public’s livelihood through reforms such as reducing costs on fuel subsidies. Hong Kong Unemployment Rate remained unchanged at a seasonally adjusted 3.3% compared to the preceding month.