Benchmarks continue to log fresh high; Nifty surpasses 8,300 mark

Extending their winning streak to fourth straight session, Indian equity benchmarks scaled yet another lifetime closing high levels on Friday, which took Nifty above its crucial 8,300 mark, while Sensex surpassed psychological 27,850 mark with gains of around two percentage points. Sentiments remained positive since beginning of the trade and there appeared not even an iota of profit booking in the session as the benchmarks managed to fervently gain from strength to strength as investors continued hunt for fundamentally strong but oversold stocks.

Sentiments remained up-beat on sustained fund inflows, driven by a slew of economic reforms announced by the government amid optimism over strong corporate earnings. Some support also came after government announced austerity drive. The Finance Ministry in wake of lower revenue realisation till date, has issued new austerity measures, including 10 per cent cut in non-Plan expenditure and ban on creation of new posts. Also, the government has said that it is committed to improving the savings rate and plans to launch new products to achieve the objective.

Buying got intensified after European markets made a strong start on Bank of Japan (BoJ) surprise move to substantially expand its bond buying program which is likely to increase liquidity in the global equity market. Moreover, Asian markets rallied on Friday with shares in Japan surging the most in the Asia-Pacific region and the benchmark Nikkei ended at seven-year high after the Bank of Japan surprisingly expanded its monetary easing measures in an effort to boost the economy which was saddled by the sales tax hike.

Back home, there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too equally participated in the rally. Sentiments also remained jubilant on report that foreign institutional investors turned aggressive buyers in Indian equities after they remained net buyers to the tune of Rs 1,257 crore on Thursday. Appreciation in Indian rupee too supported the sentiments. The partially convertible rupee was trading at 61.35 per dollar at the time of equity market closing against the Thursday’s close of 61.46 on the Interbank Foreign Exchange as stronger Asian currencies and local equities aided the Indian unit.

Meanwhile, shares related to real estate and infrastructure counters extended their previous session’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, software stocks gained on positive economic data in US, the biggest outsourcing market for the Indian IT firms.

The NSE’s 50-share broadly followed index Nifty rose by over one hundred and fifty points to ended above the psychological 8,300 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex zoomed by around five hundred and twenty points to finish above the psychological 27,850 mark. Broader markets too traded with traction and ended the session with a gain of around a percentage point. The market breadth remained in favour of advances, as there were 1788 shares on the gaining side against 1207 shares on the losing side while 117 shares remain unchanged.

Finally, the BSE Sensex surged by 519.50 points or 1.90%, to 27865.83, while the CNX Nifty soared by 153.00 points or 1.87% to 8,322.20.

The BSE Sensex touched a high and a low of 27894.32 and 27438.28, respectively. The BSE Mid cap index was up by 1.24%, while the Small cap index was up by 0.96%.

The top gainers on the Sensex were HDFC up by 4.13%, GAIL India up by 3.83%, Larsen & Toubro up by 3.61%, Tata Power up by 3.36% and Tata Steel up by 3.15%. On the flip side, Bharti Airtel down by 2.26% was the only loser in the index.

On the BSE Sectoral front Capital Goods up by 2.66%, Infrastructure up by 2.38%, Oil & Gas up by 2.19%, PSU up by 2.08% and IT up by 1.96% were the top gainers, while Consumer Durables down by 3.18% was the only loser in the space.

Meanwhile, in a bid to enhance the thriftiness of the people, the government has asserted that it is committed to improve the savings rate and has planned to launch new products to achieve the objective.

Joint Secretary of Department of Economic Affairs (DEA) Rajat Bhargava, has asserted that, two new products will be launched soon by the government which will be of tremendous significance in increasing the savings rate and giving more choices to small savers. Higher saving plays an important role to boost the economic growth as more money is deposited into the banks and thus allocated to finance the infrastructure projects.

To bring unbanked sections of the society into the formal financial sector and promote the savings of people, the government launched ‘Pradhan Mantri Jan Dhan Yojana’ to help the poor open bank accounts. Under the Jan Dhan Yojana, the person opening the bank account will get a debit card and the family will get Rs 1 lakh insurance cover.

The PMJDY has set an ambitious target of bringing in more than 7.5 crore un-banked families into India's banking system by opening more than 15 crore bank accounts. If the account remains active for 6 months the account holder will become eligible for an overdraft facility of up to Rs 2,500. This will further be enhanced by the bank to Rs 5000 over time.

The CNX Nifty touched a high and low of 8,330.75 and 8,198.05 respectively.

The top gainers of the Nifty were IDFC up by 5.40%, Tata Power Company up by 4.25%, GAIL up by 3.58%, BPCL up by 3.52% and Larsen & Toubro up by 3.48%. On the other hand, Bharti Airtel down by 1.89%, Zee Entertainment Enterprises down by 0.96%, ACC down by 0.14%, ITC down by 0.06% and DLF down by 0.04% were the only losers.

European markets were trading in green, France’s CAC 40 was up by 1.99%, United Kingdom’s FTSE 100 was up by 1.14% 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.