Post Session: Quick Review

The penultimate session of F&O expiry turned out to be smooth ride for Indian equity markets, which steadily gaining momentum throughout the session, concluded at day’s highest point on account of renewed optimism ahead of outcome of Fed’s two days meeting. Last hour spike mainly took Sensex and Nifty past psychologically crucial 27,050 and 8,050 levels respectively, with gains of around three fourth of a percent. Besides, covering-up of short positions by speculators ahead of monthly expiry in the derivatives segment also supported the rally. Broader indices, however underperforming larger counterparts, went home with gains of around half a percent.

On the global front, Asian shares climbed to one-month highs on Wednesday, steered by a robust Wall Street on optimism over corporate earnings and prospects the U.S. Federal Reserve will reaffirm its willingness to wait for an extended period before raising interest rates. Meanwhile, European stocks inched higher early on Wednesday on the back of good quarterly earnings. France’s Schneider Electric rose 3.1% after reporting a 7% rise in third-quarter sales and saying Western Europe showed long-awaited but fragile signs of stabilization.

Closer home, most of the sectoral indices on BSE concluded into positive territory, however stocks from Banking and Healthcare counters were the only weak links of trade. Much of disappointment crept into the banking space, especially PSU banks on account of 5% plunge in stocks of OBC, which reported 15.91% rise in its net profit at Rs 291.42 crore for the quarter ended September 30, 2014 as compared to Rs 251.41 crore for the same quarter in the previous year. Banking stocks also took a hit after Moody's Investors Service, while maintaining its 'negative' outlook on the country's banking sector underscored that high leverage in the Indian corporate sector could prevent any meaningful recovery in asset quality at lenders over the next 12-18 months. This report came right after global ratings agency Standard & Poor’s, in its Country Risk Assessment report on the Indian banking sector, underscored that country’s plan to grant new banking licences to companies could heighten the risk for banking sector as the aggressive market share gaining tactics, like underwriting standards or undercutting prices by new entrants may adversely impact the banking sector's stability. Additionally, Healthcare counter sunk in trade after drug maker Dr Reddy's Laboratories’ second quarter consolidated net profit fell 16.8% to Rs 574 crore compared to Rs 690.2 crore in the year-ago period.

On the flip side, stocks from Realty, Metal and Auto counters were the outperformers of the session. Realty stocks gained much on traction on reports which suggested that cabinet, in its meeting on Wednesday, may take on final call on the issue of relaxing foreign direct investment (FDI) norms in construction sector. The market breadth on the BSE remained in the favour of advances; where advancing and declining stocks were in a ratio of 1591:1370, while 113 scrips remained unchanged. (Provisional)

The BSE Sensex ended higher at 27098.17, up by 217.35 points or 0.81% after trading in a range of 26971.16 and 27126.30. There were 19 stocks advancing against 10 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.52%, while Small cap index up by 0.62%. (Provisional)

The gaining sectoral indices on the BSE were Realty up by 2.97%, Metal up by 2.63%, Auto up by 1.79%, IT up by 1.47% and TECK up by 1.31% while, Bankex down by 0.23% and Healthcare down by 0.29% were the only losing indices on BSE. (Provisional)

The top gainers on the Sensex were Hindalco up by 6.32%, Tata Steel up by 4.77%, Tata Motors up by 3.24%, Infosys up by 2.59% and Bajaj Auto up by 2.09%. On the flip side, NTPC down by 1.52%, Sun Pharma down by 1.26%, Dr. Reddys Lab down by 0.90%, Bharti Airtel down by 0.84% and SBI down by 0.43% were the top losers. (Provisional)

Meanwhile, in the much awaited decision, the cabinet, in its meeting on Wednesday, may take on final call on the issue of relaxing foreign direct investment (FDI) norms in construction sector. Earlier, reports suggested government to ease norms for foreign direct investment in the construction sector ahead of Prime Minister Narendra Modi’s visit to the United States late in September. However, this did not fructify.

The Department of Industrial Policy and Promotion (DIPP), the nodal agency for FDI rules, proposed bringing down the minimum built-up area requirement for FDI in construction projects from 50,000 sq. metres to 20,000 sq. metres along with reducing the minimum capital requirement for such projects from $10 million to $5 million. Currently, the requirements are for built up area of 50,000 square metre and capital of $10 million.

The agency also has proposed additional relaxations for projects which commit at least 30% of the total project cost for low cost affordable housing. Such projects will be exempt from minimum built up area and capitalisation requirements. However, a decision on the minimum lock-in period for FDI, still needs to be firmed up. Notably, the proposal also remains silent on land-use rules for the sector including agricultural land. Nevertheless, the proposal, if approved would also help infuse more funds into the debt burdened sector and facilitate faster completion of projects.

Although, a 100% foreign direct investment is allowed in townships, housing and built-up infrastructure and construction developments, the government has imposed conditions. So far, in the period between April 2000 and August 2014, construction development, including townships, housing and built-up infrastructure in the country received FDI worth $23.75 billion or 10 per cent of the total FDI attracted by India during the period.

India VIX, a gauge for markets short term expectation of volatility dropped 2.38% at 13.00from its previous close of 13.32 on Tuesday. (Provisional)

The CNX Nifty ended higher at 8090.45, up by 62.85 points or 0.78% after trading in a range of 8052.25 and 8097.95. There were 35 stocks advancing against 15 stocks declining on the index. (Provisional)

The top gainers on Nifty were Hindalco up by 6.23%, DLF up by 6.15%, Tata Steel up by 4.54%, Jindal Steel & Power up by 4.18% and Tata Motors up by 3.45%. On the flip side, PNB down by 1.82%, Bank Of Baroda down by 1.46%, Dr. Reddys Lab down by 1.15%, NTPC down by 1.02% and Sun Pharma down by 0.98% were the top losers. (Provisional)

European Markets were trading in the green; UK’s FTSE 100 was up 0.68%, France’s CAC was up by 0.35% and Germany’s DAX was up by 0.85%.

Asian markets ended in green on Wednesday, after Japanese industrial production jumped the most since January and as investors awaited a decision by the US Federal Reserve on quantitative easing. Singapore’s finance minister stated that the country’s longest stretch of property price declines since the global financial crisis may not be enough to prompt the city to ease its housing curbs. Singapore’s private home prices fell 0.7% in the three months ended September, the fourth quarter-on-quarter drop, bringing the slide in the past year to almost 4%. That’s the longest losing streak since 2009, when the government started housing curbs with some of the strictest measures implemented last year, including a cap on debt.

Japanese industrial production rose the most since January in a sign that companies are recovering from the blow of a higher sales tax. Bank of Japan Governor raised concern that it would be hard to deal with risks should confidence in the nation’s finances be shaken by a delay while a finance official in Abe’s ruling party warned the economy isn’t strong enough. Industrial production in Japan rose more-than-expected last month. The industrial production rose to a seasonally adjusted 2.7%, from -1.9% in the preceding month. The BOJ, in an economic assessment earlier this month after August output unexpectedly declined, stated that some weakness was showing, particularly on the production side. Abe will look at third-quarter data when he decides whether to proceed with an increase in the sales levy to rein in the world’s largest debt burden.