Post Session: Quick Review

Bulls went completely berserk at Dalal Street after RBI’s surprise rate cut, which led markets to rally over 2.25% on Thursday that took Sensex and Nifty above psychologically crucial 28,000 and 8,450 levels respectively. Meanwhile, broader indices also participating into the rally went home with modest gains in the range of 0.25%-0.50%. Markets were taken by a positive surprise after Reserve Bank of India (RBI), well ahead of its monetary policy scheduled on February 3, 2015, slashed repo rate by 25 basis points to 7.75% with immediate effect, which was the first rate cut by RBI since January 2014. Rate sensitive stocks, especially banking stocks turned euphoric after India’s central bank signaled it could cut further, amid signs of cooling inflation and what it said was a government commitment to contain the fiscal deficit. Besides, positive global set-up also provided fodder to bulls, which held the charge for the entire trading session.

On the global front, Asian shares markets swung higher on Thursday, led by a surge in Chinese shares, which roused gains as investors second guess uncertain prospects for the world economy. Additionally, European shares rebounded on Thursday, boosted by a bounce in mining and oil companies, as well as by strong results at retailer H&M and Nivea cream-maker Beiersdorf. However, gains were limited as Switzerland's central bank ended its minimum exchange rate policy that was meant to keep the euro from falling below 1.20 Swiss francs. The Swiss National Bank highlighted that the measure, introduced in Sept. 2011, 'protected the Swiss economy from serious harm' but is no longer justified.

Back on the home turf, amidst broad based buying activities, most of the sectoral indices on BSE concluded into positive territory, nevertheless stocks from Realty, Banking and Capital Goods counters outperformed. Meanwhile, auto stocks also gathered a lot of steam after surprise cut move, which would make vehicle financing a little cheaper. Besides, better than expected result of Bajaj Auto also added to positive sentiment for the counter. The company’s third-quarter operating margin widened by almost a percentage point on the back of robust exports of its motorcycles. The firms, however, posted 4.79% drop in net profit to Rs 861.24 crore in three months ended December 31, 2014 from Rs 904.55 crore in the corresponding quarter of the previous year. The overall market breadth on BSE was in the favour of advances, which thumped decliners in the ratio of 1692:1201, while 111 shares remained unchanged (Provisional).

The BSE Sensex ended at 28075.55, up by 728.73 points or 2.66% after trading in a range of 27703.70 and 28194.61. There were 26 stocks advancing against 4 stocks declining on the index. (Provisional)

The broader indices ended in the red; the BSE Mid cap index was down by 0.20%, while Small cap index down by 0.45%. (Provisional)

The gaining sectoral indices on the BSE were Realty up by 7.99%, Bankex up by 3.29%, Capital Goods up by 2.40%, Auto up by 2.13% and Infrastructures up by 2.12%, while there were no losers on the index. (Provisional)

The top gainers on the Sensex were HDFC up by 6.57%, SBI up by 4.28%, ICICI Bank up by 4.11%, Reliance Industries up by 3.23% and Larsen & Toubro up by 3.19%. On the flip side, Hindalco down by 0.67%, BHEL down by 0.60%, Sesa Sterlite down by 0.24% and ONGC down by 0.06% were the top losers. (Provisional)

Meanwhile, all India Gems and Jewellery Trade Federation (GJF), the national nodal and the largest single trade body in India for the promotion and growth of trade in gems and jewellery across India,  has suggested government to lower down the duty on gold to '2%' from current '10%'. The Federation, while drawing out its budget wish-list suggested that the government should cut the custom duty of gold to help check the smuggling of the precious metal, which was impacting the government coffers, now that the current account deficit (CAD) remains under control.

At present, the current account deficit (CAD) has been under control due to reduction in global gold prices, which is 40% lower to $1,200 from $1,900. Additionally, crude prices (which account for the highest bill for imports) also have reduced by 60% in last six months.

According to GJF, high import duty on gold has neither helped the government nor the trade and instead smuggling has increased. The industry body also reiterated its demand for the government to formulate a comprehensive gold policy for India and make the country a global jewellery hub.

Besides, it asked the government to exclude jewellery from all bilateral or multi-lateral free trade agreements (FTAs) and create a comprehensive gold mining policy for domestic exploration and for cluster development for 'Make in India' fashion jewellery.

India VIX, a gauge for markets short term expectation of volatility declined 4.18% at 16.52 from its previous close of 17.22 on Wednesday. (Provisional)

The CNX Nifty ended at 8494.15, up by 216.60 points or 2.62% after trading in a range of 8380.55 and 8527.10. There were 46 stocks advancing against 4 stocks declining on the index. (Provisional)

The top gainers on Nifty were DLF up by 10.84%, HDFC up by 7.34%, IDFC up by 7.25%, Ultratech Cement up by 5.99% and SBI up by 5.12%. On the flip side, Asian Paints down by 0.39%, Tech Mahindra down by 0.35%, Hindustan Unilever down by 0.27% and Hindalco down by 0.18% were the top losers. (Provisional)

European Markets were trading in the green; UK's FTSE 100 was up by 0.10%, France's CAC was up by 0.41% and Germany's DAX was up by 0.51%.

The Asian equity benchmarks ended mostly in green on Thursday, with Japanese stocks rising for the first time in three days, as yen retreated from its strongest level this year. The Bank of Japan maintained its upbeat economic assessment for eight of Japan’s nine regions in a quarterly report, signaling that the country is on track to emerge from recession without additional monetary easing. It cut its assessment for one region, the northernmost prefecture of Hokkaido, where factory output took a hit from declines in public works spending. Japan’s economy slipped into recession in the third quarter of last year as a sales tax hike in April cooled household spending. BoJ governor Haruhiko Kuroda stuck to his optimistic outlook, stating that the world’s third-largest economy is recovering moderately as a trend. Japan’s Core Machinery Orders rose to 1.3%, from -6.4% in the preceding month. Japan’s Corporate Goods Price Index fell to a seasonally adjusted annual rate of 1.9%, from 2.7% in the preceding month. South Korea’s central bank cut its forecast for economic growth this year to 3.4% from 3.9% predicted in October. Bank of Korea Governor Lee Ju-yeol noted that the fourth quarter of last year was unexpectedly weak.

Cautious Chinese banks issued far less credit in December than expected despite a surprise rate cut by the central bank, driving cash-starved companies into the shadow banking system in a major blow to the government’s financial reform efforts. The weaker-than-expected loan data indicates Beijing’s traditional reliance on credit to spark the economy is losing its effectiveness, posing a further challenge to policymakers as they look for ways to avert a sharper slowdown in 2015. Singaporean Retail Sales fell to a seasonally adjusted 6.5%, from 7.9% in the preceding month whose figure was revised down from 8.1%.