Post Session: Quick Review

Markets soared to record high level in the F&O expiry session of trade on Thursday despite Fed’s hawkish tone in its policy statement on growing bets that improving economy and government reforms would allow the country to better endure potential rate hikes from the U.S. Federal Reserve. Additionally, good quarterly earnings, majorly from select banks, also aided the sentiment.

Volatility, which usually plays at its best at the final session of F&O expiry, remained pleasantly absent through the session of trade as market vehemently went on adding ground, concluding not only at day’s highest point, but also near an all time high level. Both Sensex and Nifty, rallying over 3/ 4 of a percent ended past psychologically crucial 27,300 and 8,150 levels respectively. Meanwhile, broader indices also participating into the broad based rally, went home with gains in the range of 0.25%-0.60%. For the series, both Sensex and Nifty rallied over 3%, while BSE Smallcap index accumulated gains of over 3.50%.

On the global front, Asian stocks ended mixed after the Federal Reserve said it was ending its quantitative easing stimulus programme because of the stronger US economy, but at the same time said that it would maintain record-low interest rates for a considerable time. Meanwhile, European shares turned lower on Thursday as banks in countries such as Italy, Greece and Spain resumed their recent downtrend. Shares in peripheral banks have mostly been falling since the publication of the results of the European Central Bank's stress tests over the weekend.

Closer home, all the sectoral indices on BSE concluded in the positive territory, nevertheless much of the limelight was hogged by stocks from Real Estate, Information Technology (IT) and Technology counters. Realty stocks, like Sobha Developer, Unitech, Housing Development Infrastructure, Indiabulls Real Estate and DB Realty rallied as the government eased foreign investment rules in the sector by simplifying procedures to make it easier for investors to enter the market. The built-up area requirement was reduced to 20,000 sq. m from 50,000 sq. m and minimum capital requirement was halved to $5 million. Meanwhile, weakness of rupee on account of month end dollar demand from oil importers led IT counter recovery in today’s trading session. Most of the IT shares derive major chunk of their revenue from exports.

On the result front, shares of Private sector lender YES Bank hit a life time high after the bank delivered a whopping 30% rise in net profit for the quarter at Rs 482.5 crore on lower provisions and higher net interest income. Additionally, ICICI Bank shares also gained half a percent after country’s  biggest private sector lender reported 15% rise in net profit at Rs 2709 crore for second quarter ended September 30, 2014.  The market breadth on the BSE remained in the favour of advances; where advancing and declining stocks were in a ratio of 1575:1348, while 119 scrips remained unchanged. (Provisional)

The BSE Sensex ended higher at 27346.33, up by 248.16 points or 0.92% after trading in a range of 27088.65 and 27390.60. There were 22 stocks advancing against 8 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.66%, while Small cap index up by 0.34%. (Provisional)

The gaining sectoral indices on the BSE were Realty up by 3.44%, IT up by 2.04%, TECK up by 1.77% and Oil & Gas up by 1.65%, Consumer Durables up by 1.59%, while there were no losers on the index. (Provisional)

The top gainers on the Sensex were Reliance Industries up by 2.73%, TCS up by 2.29%, Hindalco up by 2.14%, Infosys up by 1.57% and GAIL India up by 1.40%. On the flip side, Sesa Sterlite down by 1.21%, Mahindra & Mahindra down by 0.88%, Cipla down by 0.85%, Tata Power down by 0.66% and Hero MotoCorp down by 0.51% were the top losers. (Provisional)

Meanwhile, in order to attract more foreign investments in cash-starved construction sector and to serve its objectives of faster job creation and housing for all people, the government has relaxed the foreign direct investments (FDI) norms for construction and real estate sector. 

The government decided to reduce the minimum built-up area requirement for FDI in construction projects to 20,000 sq metres from 50,000 sq metres and lowering the need for minimum capital requirement to $5 million from $10 million. Further government’s notification highlighted that subsequent tranches of FDI can be brought till the period of ten years from the commencement of the project or before its completion, whichever expires earlier. In case of development of serviced plots, the condition of minimum land of 10 hectares has been completely removed. Though the Cabinet has not reduced the 3-year lock-in period,  it has permitted the investor will be permitted to exit on completion of the project or after three years from the date of final investment, subject to development of trunk infrastructure.

Besides enhancing the inflows into the construction development sector, the move is also expected to result in creation of much needed low cost affordable housing in the country and development of smart cities. Meanwhile, the government has allowed 100% foreign direct investment in townships, housing and built-up infrastructure and construction developments since 2005. Over the period FY07- FY10, Indian construction sector witnessed high FDI inflow. After that, foreign investment started declining as the government had imposed certain conditions. During April 2000 and August 2014, the construction sector received FDI worth $23.75 billion or 10 percent of the total FDI attracted by India during the period.

India VIX, a gauge for markets short term expectation of volatility surged 1.99% at 13.26 from its previous close of 13.00 on Wednesday. (Provisional)

The CNX Nifty ended higher at 8169.20, up by 78.75 points or 0.97% after trading in a range of 8085.20 and 8181.55. There were 37 stocks advancing against 13 stocks declining on the index. (Provisional)

The top gainers on Nifty were DLF up by 5.08%, HCL Tech up by 4.28%, Tech Mahindra up by 3.45%, Reliance Industries up by 2.91% and Indusind Bank up by 2.59%. On the flip side, Cairn India down by 1.29%, Ambuja Cement down by 1.08%, Cipla down by 0.96%, Sesa Sterlite down by 0.90% and Mahindra & Mahindra down by 0.82% were the top losers. (Provisional)

European Markets were trading in the red; UK’s FTSE 100 was down 0.90%, France’s CAC was down by 0.77% and Germany’s DAX was down by 1.07%.

Asian markets ended mixed on Thursday, with Japanese stocks extending yesterday’s gain, as the yen fell after the Federal Reserve stated that it would end its bond-buying program. Indonesia’s central bank has instructed private firms to hedge more of their foreign debt to limit growth of offshore borrowings and reduce risks to the rupiah. Indonesia’s top fund managers have boosted cash holdings to the highest levels in three months amid concern President Joko Widodo will fail to push through policies to revive growth in Southeast Asia’s largest economy. South Korean Industrial Production rose to a seasonally adjusted annual rate of -1.9%, from -2.8% in the preceding month. The World Bank has warned that China’s current focus on meeting official growth target will hinder its reform to rebalance growth toward a more sustainable model. The bank acknowledged China has made progress this year in implementing reforms to restructure its economy, but challenges remain. China’s consumer sentiment tumbled to a three-year low in October as consumers downgraded their outlook on employment, housing and personal finances, a private report showed. The Westpac MNI China Consumer Sentiment Index fell 2% to 110.9 in October from 113.2 in September.