Markets hold on to their early gains

The domestic markets have held on to their early gains in late morning session on the back of positive global cues and reforms announced by the government regarding diesel price deregulation and hike in natural gas price. The momentum is bullish, not only in large cap but also in mid and small cap too. Sentiment on the street improved on the growth track after Narendra Modi-led BJP emerged as the largest party in Maharashtra, the country's largest industrial State and is poised to form a government in Haryana after acquiring a majority. Some strength also came in from IMF’s latest world economic outlook that, India is poised to become a  two trillion dollar economy this year, while its GDP size would cross another milestone of three trillion dollars after five years in 2019.

On the sectoral front, stocks from PSU, Banking and Infrastructure counters were supporting the markets’ uptrend, while those from IT and Teck counters were adding to the underlying cautious undertone. In scrip specific development, shares of Repco Home finance have surged on the back of Reserve Bank of India permission to the company to raise its foreign shareholding to 49%. On the other hand, Shares of Jindal Steel and Power declined after the Central Bureau of Investigation (CBI) registered a case for alleged cheating and criminal conspiracy related to one of its largest functional coal mines in Chhattisgarh.

On global front, Asian stocks were trading higher tracking gains on Wall Street because of robust earnings from US corporations and upbeat economic data. However, investors will closely watch the developments with regards to the ongoing pro-democracy protests. Back home, Indian rupee strengthened by 25 paise to 61.19 against the dollar in early trade on increased selling of the US currency by exporters and banks amidst oil and gas reforms announced by the government. The market breadth on BSE was positive, out of 2153 stocks traded, 1549 stocks advanced, while 527 stocks declined on the BSE.  

The BSE Sensex is currently trading at 26444.07 up by 335.54 points or 1.29% after trading in a range of 26501.04 and 26399.84. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.47%, while Small cap index gained 1.39%.

The gaining sectoral indices on the BSE were PSU up by 2.60%, Bankex up by 2.14%, INFRA up by 1.95%, Oil & Gas up by 1.93% and Auto up by 1.78% while, IT down by 0.48% and TECK down by 0.08% were the losing indices on BSE.

The top gainers on the Sensex were ONGC up by 5.70%, HDFC up by 3.24%, Tata Motors up by 3.17%, Axis Bank up by 2.87% and Hindalco up by 2.76%. On the flip side, Infosys down by 1.01%, Reliance Industries down by 0.74%, Wipro down by 0.67%, Hero MotoCorp down by 0.49% and TCS down by 0.34% were the top losers

Meanwhile, the government has approved raising natural gas price to $5.61 per mmBtu. 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. However, Reliance Industries will continue to get current $4.2 per mmBtu rate till it makes up for shortfall in output from KG-D6 block.  

RIL will get the higher rates if it is legally able to prove that output fall was a result of geological reasons as it claims and it did not deliberately cut production. As per the RIL agreement with government, natural gas output from D1&D3 gas fields in KG-D6 block should be 80 mmscmd, but it is languishing at less than 8 mmscmd.

The Cabinet modified the Rangarajan formula approved by previous UPA government to bring down the increase in rates from $8.4 to $5.61 per mmBtu. Gas price increase had been deferred on three occasions previously. Higher gas prices would increase inflation in the country by rising operating cost of fertilizer plants, running power stations and prices of food.

Every dollar increase in gas price will lead to Rs 1,370 per tonne rise in urea production cost and 45 paise per unit increase in electricity tariff. However, there is only 7 percent of the nation’s power generation capacity based on gas. Furthermore, there would be a minimum Rs 1.89 per standard cubic metre hike in piped cooking gas and Rs 2.81 per kg increase in CNG price.

The CNX Nifty is currently trading at 7,884.00 up by 104.30 points or 1.34% after trading in a range of 7,898.80 and 7,872.20. There were 41 stocks advancing against 9 declining on the index.

The top gainers on Nifty were ONGC up by 5.74%, BPCL up by 5.29%, Ultratech Cement up by 4.11%, PNB up by 3.84% and HDFC up by 3.30%. On the flip side, Jindal Steel & Power down by 8.30%, Infosys down by 0.96%, Reliance Industries down by 0.73%, Wipro down by 0.72% and Hero MotoCorp down by 0.34% were the top losers.

Asian markets were trading in the green; Nikkei 225 spurted by 3.85%, Hang Seng improved 0.41%, KOSPI Index increased by 1.61%, Straits Times surged 0.58%, Jakarta Composite added 1.04%, Shanghai Composite gained 0.22%, FTSE Bursa Malaysia KLCI jumped 0.80% and Taiwan Weighted was up by 1.82%.