Post Session: Quick Review

Extending last session’s euphoria, local equity markets yet again closed at record closing high level on Friday, as bulls just refused to relent. Sustained buying activities by foreign funds as well as retail investors, triggered by a series of economic reforms undertaken by the Narendra Modi-led government and strong earnings by blue-chip companies, drove the market rally. After relaxing foreign direct investments (FDI) norms for construction and real estate sector, While, the government announced new austerity measures including 10 per cent cut in non-Plan expenditure and ban on creation of new posts to cut fiscal deficit. Additionally, sentiment also got buttressed after International rating agency, Moody’s, in its report titled 'Recent policy changes to support growth acceleration,'  termed recent measures by the government coupled with those unveiled by the Reserve Bank of India (RBI) on the economic, fiscal and financial fronts as ‘credit positive’ for the economy. By close of trade, Sensex and Nifty puffing up gains of around 2% settled above crucial 27,850 and 8,300 levels respectively. Meanwhile, broader indices also participating into the broad based rally, went home with gains in the range of 0.95%-1.25%.

On the global front, optimism was sensed across entire Asian pacific shares after the Bank of Japan (BoJ) unexpectedly increased its target for monetary expansion. The Bank of Japan has decided to increase the pace at which it expands base money to about 80 trillion yen per year, up from a previous target of 60-70 trillion yen. It also decided to increase its purchases of government debt by about 30 trillion yen and extend the average duration of JGB holdings to around 10 years, and decided to triple its purchases of exchange-traded funds and Japan real estate investment trusts. Meanwhile, receiving a positive handover from Asian counterparts, European shares too were trading higher.

Closer home, all the sectoral indices on BSE concluded in positive territory, except for stocks from Consumer Durable counters. Much of the demand was witnessed by stocks from Capital Goods, followed by Infrastructure and Oil & Gas counters. Shares of real estate and infrastructure companies extended their previous day’s rally after government relaxed foreign direct investment (FDI) rules in the construction sector by reducing minimum built up area as well as capital requirement and easing exit norms. Additionally, IT counter gains were led by Infosys stocks, which rallied to record high level.

On the earnings front, ITC stocks accumulated slender gains of over 0.10% after the company reported 8.73% rise in its net profit at Rs 2425.16 crore for the quarter under review as compared to Rs 2230.53 crore for the same quarter in the previous year. Meanwhile,  M&M stocks rallied over 2% even after the company reported 4.33% fall in its net profit after tax at Rs 946.63 crore for second quarter ended September 30, 2014 as compared to Rs 989.50 crore for the same quarter in the previous year.

The market breadth on the BSE remained in the favour of advances; where advancing and declining stocks were in a ratio of 1779:1207, while 126 scrips remained unchanged. (Provisional)

The BSE Sensex ended higher at 27865.83, up by 519.50 points or 1.90% after trading in a range of 27438.28 and 27894.32. There were 28 stocks advancing against 2 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 1.24%, while Small cap index gained 0.96%. (Provisional)

The gaining sectoral indices on the BSE were Capital Goods up by 2.66%, INFRA up by 2.38%, Oil & Gas up by 2.19%, PSU up by 2.08%, IT up by 1.96% while, Consumer Durables down by 3.18% was the lone losing index on BSE. (Provisional)

The top gainers on the Sensex were GAIL India up by 3.95%, Tata Power up by 3.80%, HDFC up by 3.57%, Larsen & Toubro up by 3.26% and Tata Steel up by 3.18%. On the flip side, Bharti Airtel down by 2.20% and ITC down by 0.24% were the only losers. (Provisional)

Meanwhile, to kick-start the development of stalled projects, the government is expected to make amendments to land acquisition act during the winter session of Parliament, which would commence since November 24, 2014. Among many things, Centre may decide upon dilution of the consent clause, restricting social impact assessment to large projects and giving states the powers to define 'emergency' under 'urgency clause' for acquiring land, which are some of the many demands sought by states. The Act has faced criticism from various quarters including some states.

Further, it is on account of contentious nature of the legislation, the government has been holding wide-ranging consultations to ensure a smooth sailing when the amendments are tabled in the Parliament. According to Commerce and Industry Minister Nirmala Sitharaman, the government is looking for amendments for making the acquisition process easier without making changes on the compensation clause. The Rural Development Ministry has already suggested a number of amendments that will ease provisions such as mandatory consent of at least 70% locals for acquiring land for PPP projects and 80% for private projects. 

Moreover, the bill could witness some drastic changes, if Prime Minister Narendra Modi approves Ministry's proposals which also include dilution of a key clause of Social Impact Assessment study criticised by states as time consuming for industrialization process. However, the centre will focus on the changes, which has consensus.

India VIX, a gauge for markets short term expectation of volatility rose 0.96% at 13.39 from its previous close of 13.26 on Thursday. (Provisional)

The CNX Nifty ended higher at 8322.20, up by 153.00 points or 1.87% after trading in a range of 8198.05 and 8330.75. There were 48 stocks advancing against 2 stocks declining on the index. (Provisional)

The top gainers on Nifty were IDFC up by 5.43%, HDFC up by 3.87%, Larsen & Toubro up by 3.61%, GAIL India up by 3.55% and Tata Power up by 3.53%. On the flip side, Bharti Airtel down by 2.11% and Zee Entertainment down by 0.89% were the top losers. (Provisional)

European Markets were trading in the green; UK’s FTSE 100 was up 1.19%, France’s CAC was up by 1.91% and Germany’s DAX was up by 1.60%.

Asian markets ended in green on Friday, after the Bank of Japan unexpectedly boosted monetary stimulus. The Bank of Japan surprised global financial markets by expanding its massive stimulus spending in a stark admission that economic growth and inflation have not picked up as much as expected after a sales tax hike in April. The jolt from the BOJ, which had been expected to maintain its level of asset purchases, came as the government signaled its readiness to ramp up spending to boost the economy and as the government pension fund, the world’s largest, was set to increase purchases of domestic and foreign stocks. BOJ Governor Haruhiko Kuroda portrayed the decision as a preemptive strike to keep policy on track, rather than an admission that his plan to reflate the long moribund-economy had derailed.

Japanese Housing Starts fell to a seasonally adjusted -14.3%, from -12.5% in the preceding quarter. Singaporean Unemployment Rate fell to 1.9%, from 2.0% in the preceding quarter. Taiwanese GDP rose to 3.78%, from 3.74% in the preceding month while Thai Industrial Production fell to a seasonally adjusted -3.9%, from 2.6% in the preceding month whose figure was revised up from -2.7%. Thai Trade Balance fell to a seasonally adjusted 1.13B, from 2.20B in the preceding month.