Benchmarks resume northward journey; Nifty reclaims 8,000 mark

Resuming their northward journey, Indian equity benchmarks ended Tuesday’s trade with a gain of around half a percent with frontline gauges recapturing their crucial 8,000 (Nifty) and 26,850 (Sensex) levels. Markets traded with caution in first half but gained momentum in the afternoon and closed near day’s high on the back of positive cues from European peers. Sentiments remained up-beat on report that foreign institutional investors (FIIs) were net buyers to the tune of around Rs 49.14 crore on October 27, 2014. Some support also came with a World Bank report saying that India’s GDP is likely to expand by 5.6 per cent this fiscal as reforms gain momentum and the growth is expected to accelerate as proposed measures such as GST will give a boost to manufacturing sector. World Bank has also said that implementation of the goods and service tax (GST) is the most critical reform needed for Indian manufacturing.

Buying got intensified after European markets made a positive opening as better-than-expected results from a number of blue-chips including Novartis and UBS helped lift sentiment. Though, Asian equity indices ended mixed with Japanese Nikkei ending with a cut of around half a percent after dismal results from Canon Inc. raised concerns about corporate earnings. On the other hand, China and Hong Kong shares edged higher on hopes of more reforms in the state-owned enterprises fuelled particularly by reports about a possible merger between China’s top train makers, China CNR and CSR Corporation in order to create a global entity. 

Back home, investors remained confident on report that private equity investments during July-September quarter of current fiscal grew by 47 percent to $3.1 billion over the corresponding period last year. According to the report prepared by advisory firm Grant Thornton, PE investments in India amounted to $3.12 billion through 157 deals in the reported quarter, while in the corresponding period last year there were 115 such transactions worth $2.12 billion.

Meanwhile, pharmaceutical stocks rallied on the back of impressive second quarter earnings from Lupin and Ranbaxy. On consolidated basis, Lupin’s net profit after taxes and minority interest for the quarter under review registered 55.11% growth at Rs 630.04 crore against Rs 406.18 crore in the September quarter of previous fiscal, while Ranbaxy has posted a net profit after taxes and minority interest of Rs 477.76 crore for the quarter as against a net loss of Rs 454.17 crore in the September quarter of previous fiscal. Moreover, public sector oil marketing companies (OMCs) edged higher after Brent crude prices extended its decline to a third day. Falling crude oil prices augur well for India as the country imports 80% of its crude oil requirement.

The NSE’s 50-share broadly followed index Nifty gained over thirty points to end above the psychological 8,000 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex rose by around one hundred and thirty points to end around the psychological 26,900. Broader markets too 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 1,510 shares on the gaining side against 1,370 shares on the losing side while 107 shares remain unchanged.

Finally, the BSE Sensex surged by 127.92 points or 0.48%, to 26880.82, while the CNX Nifty gained 35.90 points or 0.45% to 8,027.60.

The BSE Sensex touched a high and a low of 26907.14 and 26764.15, respectively. The BSE Mid cap index was up by 0.09%, while the Small cap index was up by 0.76%.

The top gainers on the Sensex were Sun Pharma up by 4.31%, Cipla up by 2.92%, Tata Power up by 2.48%, SBI up by 2.38% and GAIL India up by 1.96%. On the flip side, Hero MotoCorp down by 1.68%, Bharti Airtel down by 1.15%, Hindustan Unilever down by 0.83%, Dr. Reddys Lab down by 0.82% and Reliance Industries down by 0.81% were the top losers in the index.

On the BSE Sectoral front Healthcare up by 1.42%, Power up by 0.96%, Consumer Durables up by 0.75%, PSU up by 0.68% and Bankex up by 0.66% were the top gainers, while Oil & Gas down by 0.23%, FMCG down by 0.12% and Metal down by 0.03% were the only losers in the space.

Meanwhile, as the government is preparing for fresh auction of coal blocks cancelled by the Supreme Court, Industry Body Assocham has suggested the government to give preference in the auction to captive block allocatees whose end-use plants were operational at the time Supreme Court quashed allocations of mines.

Supreme Court had last month quashed allocation of 214 out of 218 coal blocks allotted to various companies since 1993, underscoring that common good and public interest have suffered heavily due to these allocations as there was no fair and transparent procedure. Among 218 allocated blocks, 105 blocks allocated to private companies, 99 were to state-owned firms, 12 went to ultra mega power projects (UMPP) and 2 to coal-to-liquid projects.

Assocham stated in a note submitted to the Prime Minister's Office (PMO) that coal blocks already allotted for end-use power projects should be auctioned only for power projects, while those for steel projects should be auctioned only for steel projects. Assocham is of the view that if coal block allocates to new bidder, it will lead to considerable delays in commencement of production from mines and adversely affect the end-use projects.

Industry body further noted that auctions should be opened for others only after coal for these projects is secured. Assocham further noted that reserve price and upfront payment should be based on actual mineable reserves and not on the basis of geological reserves. Bidding for end use power as well steel projects should be on the basis of upfront payment fixed by Ministry of Coal (MoC ) and extractable reserve linked payment quoted by the bidder in Rupee/tonne. Assocham also suggested that the auction process should accord the Right of First Refusal (RoFR) to the existing allocatees of the coal blocks who have end-use plants either operational or soon to be operational or to the allocatees that have taken substantial effective steps to set up end-use plants.

The CNX Nifty touched a high and low of 8,037.80 and 7,995.05 respectively.

The top gainers of the Nifty were Sun Pharmaceuticals Industries up by 4.56%, Cipla up by 3.17%, Tata Power Company up by 2.60%, BPCL up by 2.59% and State Bank of India up by 2.43%. On the other hand, Lupin down by 2.45%, Bharti Airtel down by 1.86%, Hero MotoCorp down by 1.39%, PNB down by 1.24% and Jindal Steel & Power down by 1.18% were the top losers.

European markets were trading in green, France’s CAC 40 was up by 0.29%, United Kingdom’s FTSE 100 was up by 0.36% and Germany’s DAX was up by 1.39%.

Asian markets ended mixed on Tuesday, with Japanese stocks closing in red as investors awaited central bank policy decisions. The BOJ will consider moderating its language on inflation in a report this week to take account of the impact of lower oil prices. The street expects that the bank will keep monetary policy unchanged at a meeting on October 31. It is also set to announce its semi-annual outlook on the economy and prices the same day. Singapore landlords are tapping the fourth-lowest local borrowing costs in Asia to fund record overseas purchases of hotels, office blocks and luxury apartments as property prices fall at home. Japanese retail sales growth accelerated for the third straight month in September in an encouraging sign that consumer spending could be strong enough to absorb a second sales tax increase scheduled for next year. The retail sales rose to a seasonally adjusted annual rate of 2.3%, from 1.2% in the preceding month. South Korean Consumer Confidence fell to 105, from 107 in the preceding month.