Late hour buying help markets to keep their head above water

Buying activity which took place during last leg of trade mainly drove the markets higher and key domestic benchmarks managed to keep their head above water on Monday with Sensex recapturing its crucial 27,850 mark, while Nifty ended tad below its crucial 8,350 mark. Sustained foreign funds inflow and widespread buying by investors on hopes of acceleration in economic reforms process after Prime Minister Narendra Modi expanded his Council of Ministers, mainly buoyed the trading sentiment. Domestic sentiment was also buoyed in early trade as Finance Minister Arun Jaitley had yesterday said that the government will amend the tough land acquisition law. However, gains on the up-side remained capped on RBI’s deputy governor’s hawkish statements, HR Khan, who pouring cold water on hopes of rate cut in upcoming monetary policy, highlighted that recent decline in inflation did not mean the decline was permanent. He also emphasized that though decline in crude oil prices and other commodities were beneficial to Indian economy, but policy makers just could not jump their guns until they were convinced the trend was firmly established.

Global cues too remained supportive with European markets making a firm start with CAC and FTSE were trading with decent gains in early deals, reversing some of the previous session's losses, with Nutreco surging 14% as SHV sweetened its takeover bid for the Dutch animal feed and Nutrition Company. Asian markets ended mostly higher after US jobs data pointed to solid economic growth, with Hong Kong leading the gains after regulators set a date for a long-awaited trading link between the Hong Kong and Shanghai stock exchanges to open.

Back home, appreciation in Indian rupee too supported the sentiments. The partially convertible rupee was trading at 61.49 per dollar at the time of equity market closing against the Friday’s close of 61.62 on the Interbank Foreign Exchange.  Sentiments also remained supportive on report that foreign institutional investors were net buyers in Indian equities worth Rs 2,537.13 crore on Friday, as per provisional stock exchange data.

Meanwhile, FMCG counter topped the list on BSE, led by gains of Colgate-Palmolive (India) stocks, which rallied  over 5%, after reporting an 18% increase in net profit at Rs 130 crore for the second quarter ended September 30, 2014, on back of strong volume growth. Also, buying was witnessed in pharmaceutical sector led by rally in Sun Pharma after its US subsidiary, Taro Pharmaceutical Industries, reported a strong 49% year on year growth in net profit to $143.4 million for the quarter ended September 2014. Additionally, shares of railway-related companies witnessed buying interest after Bharatiya Janata Party (BJP) leader Suresh Prabhu took charge as the new Union Railways Minister replacing Sadananda Gowda in a Cabinet reshuffle on Sunday. On the flip side, auto shares continued to remain weak on report that car sales in India fell 2.55 per cent in October as purchases remained subdued during the festival season, marking the second consecutive month of decline.

The NSE’s 50-share broadly followed index Nifty rose marginally and ended near the psychological 8,350 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex rose by just six points to finish above the psychological 27,850 mark. Broader markets too traded cautiously during the session and ended slightly in the green. The market breadth evenly divided, as there were 1504 shares on the gaining side against 1510 shares on the losing side while 111 shares remain unchanged.

Finally, the BSE Sensex added 6.10 points or 0.02%, to 27874.73, while the CNX Nifty gained 7.25 points or 0.09% to 8,344.25.

The BSE Sensex touched a high and a low of 28027.96 and 27764.75, respectively. The BSE Mid cap index was up by 0.14%, while the Small cap index was up by 0.16%.

The top gainers on the Sensex were ITC up by 4.27%, Sun Pharma Inds. up by 2.09%, Tata Power up by 2.03%, Dr. Reddys Lab up by 1.34% and Coal India up by 1.32%. On the flip side, ONGC down by 3.59%, Hindalco down by 2.37%, Tata Motors down by 2.26%, Larsen & Toubro down by 1.98% and Axis Bank down by 1.83% were the top losers in the index.

On the BSE Sectoral front FMCG up by 2.81%, Consumer Durables up by 1.00%, Power up by 0.84% HEALTHCARE up by 0.47% and Infrastructure up by 0.17% were the top gainers, while Oil & Gas down by 1.29%, Capital Goods down by 1.01%, Bankex down by 0.53%, PSU down by 0.48% and Auto down by 0.34% were the top losers in the space.

Meanwhile, Finance Minister Arun Jaitley has asserted that India will amend tough land acquisition and bring tax reforms to boost investments and kick start the domestic economic growth. Highlighting importance of business friendly regulations in the country, Arun Jaitley stated that there is a need to change tough land acquisition law to speed up the process of buying land for industrial use, a contentious issue in India which has long delayed projects.

Finance Minister also promised a reasonable, non-aggressive and rational tax policy to make India a hub of low-cost manufacturing. On the insurance sector, Jaitley expressed hope that the long-pending Insurance Amendment Bill, that seeks to raise FDI in the sector from existing 26 percent to 49 percent, will get Parliament nod in the upcoming Winter Session. Regarding the Goods and Services Tax (GST), Jaitley stressed that the government is in the final stages of talks with states on the issue, hinting that amendments to GST may be introduced in the Winter session of Parliament.

On ambitious divestment programme in public sector banks, Finance Minister Arun Jaitley emphasized that the government is planning to bring down its stake in public sector banks to 52 percent so that a large amount of capital, almost close to Rs 3 lakh crore, can be introduced into banks.

The CNX Nifty touched a high and low of 8,383.05 and 8,304.45 respectively.

The top gainers on Nifty were ITC up by 4.08%, Power Grid Corporation of India up by 2.76%, Bank of Baroda up by 2.36%, Sun Pharmaceuticals Industries up by 2.23% and Tata Power Company up by 2.03%. On the flip side, Jindal Steel & Power down by 3.93%, Oil & Natural Gas Corporation down by 3.73%, Hindalco Industries down by 2.47%, Larsen & Toubro down by 2.10% and Axis Bank down by 1.91% were the top losers.

Most of European markets were trading in the green, United Kingdom’s FTSE 100 was up by 0.24% and France’s CAC 40 was up by 0.45%, however Germany’s DAX was down by 0.92%.

Asian markets ended mostly in green on Monday, as regulators stated that a stock-trading link between Hong Kong and Shanghai will start next week. China’s annual consumer inflation remained near a five-year low in October at 1.6%, further evidence that the world’s second-largest economy is cooling and reinforcing expectations that authorities will roll out more measures to support growth. Chinese PPI fell to an annual rate of -2.2%, from -1.8% in the preceding month while, Chinese CPI remained unchanged at an annual rate of 1.6% compared to the preceding month. Annual growth in China’s exports and imports slowed in October, reinforcing signs of fragility in the world’s second-largest economy that could prompt policymakers to roll out more stimulus measures. Chinese Trade Balance rose to 45.41B, from 31.00B in the preceding month. China’s President Xi Jinping appeared to signal his country’s economic growth rate may continue to slow in the coming year. He however added that even a growth rate of about 7 percent will put China among the top performers in the world in terms of both speed and size.