Benchmarks rally for third consecutive session

Extending their previous session’s rally, Indian equity benchmarks ended the volatile day of trade with a gain of over half a percent on Tuesday. After trading jubilantly in early deals, markets succumbed to profit-booking as negative opening in European counter played spoil sport. Domestic markets staged a smart recovery in later half of trade and ended the session near intraday high levels. Overall, sentiments remained up-beat on report that foreign funds were net buyers in Indian stocks to the tune of Rs 1,040 crore on October 20, 2014. Further, the announcement by the government to cap the subsidy on domestic gas cylinders and to take up ordinance route to resolve issues arising out of the cancellation of coal blocks has improved sentiments.

Some support also came with Cabinet recommending promulgation of an Ordinance to facilitate e-auction of coal blocks for private companies for captive use and allot mines directly to state and central PSUs. For private sector the actual users of coal in the cement, steel and power sectors who apply for a certain number of coal mines will be put in the pool and there would be an e-auction, while central and state public-sector entities will be allotted blocks on a nomination basis. Also, there will be buzz in India Inc. as the government has further extended the validity of industrial licences to as much as seven years from three, to encourage domestic manufacturing.

On the global front, European markets recovered after a weak start as hopes of a monetary stimulus program to be undertaken by European Central Bank are gaining ground though investors remain cautious about the impact of Chinese growth data. However, the Asian markets ended mostly in red as the third-quarter Chinese growth data failed to boost sentiments. Chinese GDP grew at 7.3% in the third quarter which is higher than the market expectations of 7.2% however lower than the 7.5% figure of the preceding quarter.

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. Frontline indices managed to settle near intraday high levels with Nifty surpassing its crucial 7,900 bastion, while Sensex ended near its crucial 26,600 mark. Appreciation in Indian rupee too supported the sentiments. The rupee firmed up against the US dollar and was trading at 61.28 at the time of equity markets closing as compared to Monday’s close of 61.36, tracking gains in domestic equity markets.

Meanwhile, shares of metal and power companies edged higher after the government on Monday said it would promulgate an ordinance to resolve issues arising out of the cancellation of coal blocks. Buying was also witnessed in metal stocks which surged on the back of strong industrial data from China. Also, rate sensitive stocks also ended higher on rate cut hopes. Additionally, Jewellery related stocks remained on buyers’ radar as buying activity picked up pace on the occasion of ‘Dhanteras’ amidst a firming trend overseas.

The NSE’s 50-share broadly followed index Nifty rose by around fifty points and ended above the psychological 7,900 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex rose by over one hundred and forty points to finish above the psychological 26,550 mark. Broader markets traded with traction and ended the session with a gain of around half a percent. The market breadth remained in favour of advances, as there were 1485 shares on the gaining side against 1,337 shares on the losing side while 105 shares remain unchanged.

Finally, the BSE Sensex surged by 145.80 points or 0.55%, to 26575.65, while the CNX Nifty soared by 48.35 points or 0.61% to 7,927.75.

The BSE Sensex touched a high and a low of 26615.41 and 26407.00, respectively. The BSE Mid cap index was up by 0.91%, while the Small cap index was up by 0.19%.

The top gainers on the Sensex were GAIL India up by 4.43%, Sesa Sterlite up by 4.42%, BHEL up by 4.28%, Wipro up by 3.04% and NTPC up by 2.75%. On the flip side, ONGC down by 2.57%, Mahindra & Mahindra down by 2.45%, Coal India down by 1.57%, Infosys down by 0.99% and Sun Pharma down by 0.70% were the top losers in the index.

On the BSE Sectoral front Realty up by 2.63%, Power up by 2.55%, Infrastructure up by 2.41%, Metal up by 1.71% and Capital Goods up by 1.38% were the top gainers, while Oil & Gas down by 0.77% and Healthcare down by 0.13% were the only losers in the space.

Meanwhile, with an aim to boost manufacturing sector in the country, the Government has increased the validity of industrial licences to seven years from the existing validity period of three years. The Department of Industrial Policy & Promotion (DIPP) notified that as a measure of 'ease of doing business', two extensions of two years each in the initial validity of three years of industrial licence shall be allowed up to seven years. The government is currently working to promote India as a manufacturing hub with Make in India’ campaign, aimed at ensuring investor-friendly environment for businessmen in the country.

Furthermore, the DIPP also decided to deregulate the annual capacity for defence items for industrial licence to encourage more companies to enter the sector and allow manufacturers to scale up. However, the licensee shall submit half yearly production return to DIPP and Department of Defence Production (DoDP).

To ensure faster clearances, all applications related to DIPP will be processed within 90 days and in case of defence manufacturing, the ministry of home affairs will give security clearance within three months. To promote indigenization of India’s defence production and to cut imports bill, the government has enhanced FDI limit to 49% from 26% in August. It also allowed more than one Indian company to hold a 51% share in a defence production company.

The CNX Nifty touched a high and low of 7,936.60 and 7,874.35 respectively.

The top gainers of the Nifty were Jindal Steel & Power up by 7.34%, DLF up by 4.91%, BHEL up by 4.80%, GAIL up by 4.78% and SSLT up by 4.19%. On the other hand, PNB down by 2.89%, ONGC down by 2.60%, Mahindra & Mahindra down by 2.53%, UltraTech Cement down by 2.05% and Coal India down by 1.73% were the top losers.

European markets were trading in green, France’s CAC 40 was up by 2.07%, United Kingdom’s FTSE 100 was up by 1.00% and Germany’s DAX was up by 1.61%.

Asian markets ended mostly in red on Tuesday, as China growth tempers stimulus bets. China grew at its slowest pace since the global financial crisis in the September quarter and risk missing its official target for the first time in 15 years, adding to concerns the world’s second-largest economy is becoming a drag on global growth. Premier Li Keqiang has stated repeatedly that authorities will tolerate growth slightly below target as they try to reshape the economy so it is driven more by domestic consumption and less by exports and investment. China’s gross domestic product fell less-than-expected last month. Chinese GDP fell to an annual rate of 7.3%, from 7.5% in the preceding month. Chinese Retail Sales fell to an annual rate of 11.6%, from 11.9% in the preceding month while Chinese Fixed Asset Investment fell to a seasonally adjusted 16.1%, from 16.5% in the preceding month. Chinese Industrial Production rose to 8.0%, from 6.9% in the preceding month. Japan’s All Industries Activity Index fell to a seasonally adjusted -0.1%.