Benchmarks continue firm trade in late afternoon session

Indian equity markets continued to trade in green in the late afternoon session on account of buying in frontline blue chip counters taking cues from Asian counterparts. The sentiments were on optimistic note from the early trade on hopes for additional reforms after Narendra Modi’s party won election in two states. Additionally, slew of measures taken by the government in the past two days, like de-regulating diesel prices and raising the cost of natural gas also aided the sentiment. Traders were seen piling positions in PSU, Capital Goods and Oil & Gas while selling was witnessed in IT and TECK sector stocks. In scrip specific development, Jindal Steel & Power (JSPL) was trading in red on reports that CBI has registered a fresh case of alleged cheating and corruption against the company in connection with its probe into coal blocks allocation.

On the global front, the Asian markets were trading in green while the European markets were trading on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 7,850 and 26,400 levels respectively. The market breadth on BSE was positive in the ratio of 1591:1035 while 122 scrips remained unchanged.

The BSE Sensex is currently trading at 26437.08, up by 328.55 points or 1.26% after trading in a range of 26368.94 and 26517.90. There were 24 stocks advancing against 6 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.07%, while Small cap index up by 0.71%.

The gaining sectoral indices on the BSE were PSU up by 2.45%, Capital Goods up by 2.04%, Oil & Gas up by 2.00%, Auto up by 1.84%, Bankex up by 1.83% while, IT down by 0.55%, TECK down by 0.14% were the losing indices on BSE.

The top gainers on the Sensex were ONGC up by 6.21%, Hindalco up by 4.87%, Axis Bank up by 4.23%, Tata Motors up by 3.60% and Larsen & Toubro up by 2.64%. On the flip side, Wipro down by 1.50%, Infosys down by 0.83%, Reliance Industries down by 0.47%, TCS down by 0.30% and ITC down by 0.11% were the top losers.

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.

The CNX Nifty is currently trading at 7875.15, up by 95.45 points or 1.23% after trading in a range of 7856.95 and 7905.95. There were 42 stocks advancing against 8 stocks declining on the index.

The top gainers on Nifty were ONGC up by 6.14%, Ultratech Cement up by 5.27%, Hindalco up by 4.98%, Axis Bank up by 4.21% and BPCL up by 3.67%. On the flip side, Jindal Steel & Power down by 7.48%, Wipro down by 1.55%, HCL Tech. down by 1.18%, Infosys down by 0.74% and Reliance Industries down by 0.51% were the top losers.

The Asian markets were trading in green; FTSE Bursa Malaysia KLCI increased 9.5 points or 0.53% to 1,797.81, Shanghai Composite increased 15.54 points or 0.66% to 2,356.73, Straits Times increased 19.73 points or 0.62% to 3,187.46, KOSPI Index increased 29.4 points or 1.55% to 1,930.06, Hang Seng increased 47.05 points or 0.2% to 23,070.26, Jakarta Composite increased 48.96 points or 0.97% to 5,077.91, Taiwan Weighted increased 150.26 points or 1.77% to 8,663.14 and Nikkei 225 increased 578.72 points or 3.98% to 15,111.23.

The European markets were trading in red; Germany’s DAX decreased 91.36 points or 1.03% to 8,758.91, France’s CAC decreased 39.67 points or 0.98% to 3,993.51 and UK’s FTSE 100 decreased 34.76 points or 0.55% to 6,275.53.