Firework continues at Dalal Street ahead of Diwali

Extending the winning streak to fourth session in a row, boisterous benchmarks once again showcased an enthusiastic performance on Wednesday, by rallying around one percentage point on sustained buying by fund and retail investors ahead of Diwali. Sentiments remained jubilant since start, as key bourses opened with a huge gap on up-side and there appeared not even an iota of profit booking in the session as investors continued hunt for fundamentally strong stocks. Frontline indices not only ended the session near intraday high levels but also recaptured their crucial 7,950 (Nifty) and 26,750 (Sensex) bastions as investors took to hefty across the board buying.

Sentiments remained up-beat on government’s decision of diesel de-regulation. The sentiments also got supported with global credit rating agency Moody’s saying that the decisions to deregulate diesel prices and hike the natural gas prices are ‘credit positive’ as it would bring in fiscal discipline. It has further stated that the diesel deregulation will reduce the subsidy burden for the government, although fiscal savings are ‘likely to be limited’. Marketmen also cheered the Finance Minister Arun Jaitley’s statement that the constitution amendment bill to implement the long pending Goods and Services Tax (GST) would be introduced in the forthcoming winter session of parliament.

Global cues too remained supportive with the US markets rallying in last session reacting to some positive earnings with the Nasdaq and the S&P 500 closing higher for the fourth consecutive session; also supported the National Association of Realtors’ report of bigger than expected rebound in existing home sales in the month of September. The Asian markets ended mostly in the green amid speculation Europe will expand its economic stimulus, led by the Japanese market, which is up by around two percent in early deals. However, European counters made a mixed opening with CAC and FTSE trading slightly in the red, while DAX was trading in green.

Back home, there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too participated strongly in the rally. Appreciation in Indian rupee too supported the sentiments. The rupee firmed up against the US dollar and was trading at 61.24 at the time of equity markets closing as compared to Tuesday’s close of 61.31, tracking gains in domestic equity markets. Meanwhile, shares of automobiles companies remained in demand on expectation of robust sales in the ongoing Diwali season. Stocks related to banking and realty counters too remained on buyers’ radar on rate cut hopes. Capital goods counter’s gains were led by L&T stocks which rose after company’s closure of foreign currency convertible bonds offering.

The NSE’s 50-share broadly followed index Nifty gained around seventy points to end near its psychological 8,000 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged by over two hundred and ten points to end above its crucial 26,750 mark. The broader markets too traded jubilantly throughout the session and ended the session with a gain of over a percentage point. The market breadth remained in favour of advances, as there were 1,784 shares on the gaining side against 1031 shares on the losing side while 114 shares remain unchanged.

Finally, the BSE Sensex surged by 211.58 points or 0.80%, to 26787.23, while the CNX Nifty soared by 68.15 points or 0.86% to 7995.90.

The BSE Sensex touched a high and a low of 26818.33 and 26712.21, respectively. The BSE Mid cap index was up by 1.21%, while the Small cap index was up by 0.17%.

The top gainers on the Sensex were Hero MotoCorp up by 4.03%, Tata Motors up by 3.54%, Maruti Suzuki up by 3.44%, Bajaj Auto up by 3.43% and Cipla up by 3.43%. On the flip side, ONGC down by 1.97%, ITC down by 0.65%, Coal India down by 0.58%, NTPC down by 0.58% and ICICI Bank down by 0.43% were the top losers.

On the BSE Sectoral front Auto up by 2.97%, Capital Goods up by 2.08%, Consumer Durables up by 1.16%, IT up by 0.71% and TECK up by 0.64% while, PSU down by 0.42% was the lone losing index on BSE.

Meanwhile, as gold imports are witnessing a sudden spike over the past few months, the government is planning to impose some restrictions on yellow metal imports after Diwali. Inward shipments of gold increased by 450% y-o-y to $3.75 billion during September 2014. High gold imports pushed trade deficit to 16-month high at $14.25 billion in September as compared to $10.84 in August and $6.12 billion in the same month previous year.

In September 2013, the government imposed restrictions such as high custom duty and 80/20 rule to check the gold imports. However, in May, the government partly relaxed the gold norms by permitting nine premium and star trading companies to import gold along with banks and nominated trading agencies like MMTC and STC. Since then, Indian gold import has been increasing. Quantity wise, gold imports which averaged 10-15 tonnes till June, increased to 38.3 tonnes in July, 63 tonnes in August and 92 tonnes in September.

Commerce Ministry is likely to organize a meeting with the RBI’s representatives and stakeholders of bullion and gold industry to discuss gold imports issue. The meeting is likely to deliberate on restricting again the premium and star trading companies from gold imports following the complaints received by the domestic bullion industry.  As per the import norms, 20% of gold imports have to be exported. Gold jewellery and bullion industry have suggested the government that their business has affected by premium and star trading firms as these firms are not selling imported gold to them for further exports.

The CNX Nifty touched a high and low of 8005.00 and 7974.55 respectively.

The top gainers on Nifty were Jindal Steel & Power up by 10.11%, Kotak Mahindra Bank up by 4.86%, Hero MotoCorp up by 3.99%, Cairn India up by 3.75% and Tata Motors up by 3.53%. On the flip side, ONGC down by 2.10%, NMDC down by 1.17%, DLF down by 1.03%, ICICI Bank down by 0.70% and NTPC down by 0.68% were the top losers.

European Markets were trading mixed; UK’s FTSE 100 was down 0.13% and France’s CAC was down by 0.04%, while Germany’s DAX was up by 0.02%.

Asian markets ended mostly in green on Wednesday, amid speculation that Europe’s central bank would add stimulus. Malaysian Stock Exchange and Singapore Stock Exchange were closed today on account of ‘Deepavali’ holiday. Chinese Premier Li Keqiang stated that the country’s economy for the first three quarters of this year has remained within a reasonable range, accompanied by some positive and profound changes. Acknowledging improvement in structural optimization, employment and energy conservation, Li enlightened that new impetus for the economy have gathered speed, resulting from streamlining administration, delegating powers and other reformative measures. Japan’s three biggest banks may need to raise as much as about $100 billion of capital that can be written down in a crisis to meet proposed global rules for lenders deemed too big to fail. Japan’ trade balance fell unexpectedly last month. The country’s trade balance fell to a seasonally adjusted -1.07T, from -0.91T in the preceding month whose figure was revised up from -0.92T. 

Indonesian banks have enough capital to withstand as much as a 25% drop in government bonds price in the event of foreign capital outflow, according to the latest stress test by the central bank released. The stress test was conducted earlier this month to see the impact of declining assets value and a weakening rupiah to the banks balance sheet.