Benchmarks log fresh record highs on F&O expiry day; Nifty surpasses 8,950 mark

Indian stock markets snapped the January futures and options series on a strong note with a massive gain of over nine percent. Moreover, the expiry session turned out to be a fabulous day of trade for the Indian equity markets, which scaled fresh all time closing highs for yet another session amid sustained foreign fund inflow. The markets, on the January F&O expiry day, traded choppy for most part of the session, but sudden spurt witnessed in dying hour of trade helped markets to end near intraday high levels.

Sentiments got some support with the government fast-tracking reforms. Some optimism also came with Global credit rating agency Moody’s Investor Service saying that India’s international credit ratings might be boosted if the government frames policies for the food sector based on the recommendations of a high-powered panel on reforming the Food Corporation of India (FCI) as it will reduce inflationary pressures and government’s fiscal deficit. Some support also came with report that foreign institutional investors were net buyers in Indian equities worth Rs 1,723 crore on January 28, as per provisional stock exchange data. 

Global cues remained somber with European markets made negative start after the US Federal Reserve took an upbeat view on the US economy and signalled that it remains firmly on track to raise interest rates this year. Asian markets ended in the red with most of the indices edging lower by over half a percent with Japanese market retreating from a seven-week high, tailing US market and as oil traded below $45 a barrel.

Back home, depreciation in rupee dampened the sentiments. Rupee was trading at 61.69 per dollar at the time of equity markets closing compared with its previous close of 61.41 per dollar. Meanwhile, shares of telecom companies edged lower after the Cabinet on Wednesday approved a higher base price for 3G spectrum auction. The Cabinet approved a base price of Rs 3,705 crore per megahertz (MHz) for 3G spectrum auction, a move which would help the government garner over Rs 1 lakh crore along with sale of other mobile frequencies. Meanwhile, telecom minister Ravi Shankar Prasad has said that the amount of spectrum that is being offered for auctioning is sufficient and that no shortage will result. Additionally, Coal India dropped in volatile trade after the government announced that it will sell up to 10% stake in the state-run coal major through the stock exchanges mechanism on January 30, 2015. The share sale price will likely be at a discount to the current market price to attract investors. Retail investors will get another 5% discount on the bid price.

The NSE’s 50-share broadly followed index Nifty edged higher by around forty points to end above its psychological 8,950 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex rose by over one hundred and twenty points to finish above the psychological 29,650 mark. Broader markets, however, ended mixed. The market breadth remained in favour of decliners, as there were 1427 shares on the gaining side against 1448 shares on the losing side while 132 shares remain unchanged.

Finally, the BSE Sensex surged by 122.59 points or 0.41%, to 29681.77, while the CNX Nifty gained 38.05 points or 0.43% to 8,952.35.

The BSE Sensex touched a high and a low of 29740.63 and 29378.30, respectively. The BSE Mid cap index was down by 0.35%, while the Small cap index was up by 0.08%.

The top gainers on the Sensex were Dr. Reddys Lab up by 3.74%, HDFC Bank up by 3.42%, BHEL up by 2.96%, Reliance Industries up by 2.43% and ITC up by 2.01%. On the flip side, HDFC down by 2.61%, Coal India down by 2.32%, SBI down by 2.30%, Mahindra & Mahindra down by 1.46% and ICICI Bank down by 1.02% were the top losers.

On the BSE Sectoral front Realty up by 3.14%, Oil & Gas up by 1.55%, Healthcare up by 1.08%, FMCG up by 1.07% and Capital Goods up by 0.82% were the top gainers, while PSU down by 0.74%, INFRA down by 0.54%, Metal down by 0.21% and TECK down by 0.11% were the only losing indices on BSE.

Meanwhile, in a bit of a disappointment for the sugar industry, the Food Ministry although in favour of extending export subsidy, will only do it to the extent of 1.4 million tonnes of raw sugar in the ongoing 2014-15 marketing year. Last year, the Centre had announced a subsidy for exports of raw sugar up to 4 million tonnes in order to help the cash-starved industry clear sugarcane arrears to farmers. However, the subsidy scheme ended in September 2014.

The sugar industry has been seeking extension of the export subsidy for this year as mills are facing liquidity crunch to make cane payment in the wake of depressed local prices due to higher production in the last few years. Sugar production in India, the world's second biggest producer after Brazil, has increased by 27.3 percent to 7.46 million tonnes in the first three months of the current 2014-15 season, according to the ISMA.

The industry is estimated to have incurred losses to the tune of Rs 3000 crore, resulting from imbalance between input costs and the output since cane prices continue to be regulated by government, while sugar prices continue to remain market determined.

So far, the food ministry has reviewed the quantum of subsidy every two months. While, first fixed subsidy at Rs 3,300 per tonne for February-March, it has been later reduced to Rs 2,277 for April-May. Nevertheless, the same has been reinstated at Rs 3,300 for June- July before hiking it to Rs 3,371 for August-September period of last marketing year. Sugar mills have exported about 750,000 tonnes of raw sugar in 2013-14 marketing year (October-September) with an incentive of about Rs 200 crore.

The CNX Nifty touched a high and low of 8,966.65 and 8,861.25 respectively.

The top gainers on Nifty were Dr. Reddy's Laboratories up by 3.80%, BPCL up by 3.65%, HDFC Bank up by 3.27%, BHEL up by 2.78% and Ambuja Cements up by 2.41%. On the flip side, PNB down by 3.43%, Asian Paints down by 3.30%, Bank of Baroda down by 2.84%, HDFC down by 2.57% and State Bank of India down by 2.44% were the top losers.

European Markets were trading in the red; France's CAC was down by 0.09%, Germany's DAX was down by 0.26% and UK's FTSE 100 was down by 0.67%.

The Asian equity benchmarks ended in red on Thursday, with Chinese stocks falling for a third day, sending the benchmark index to a one-week low, amid speculation increased regulatory scrutiny of margin loans will spur some leveraged investors to reduce holdings. Bank of Japan Governor Haruhiko Kuroda stated that he was focusing on the long-term inflation trend, which showed the country remained on track to hit his ambitious price target. Kuroda added that while consumer inflation may slow in the short-term due to slumping oil prices, it will accelerate in the latter half of the next fiscal year beginning in April as companies raise wages and an economic recovery pushes up prices. Japan’s retail sales fell to a seasonally adjusted annual rate of 0.2%, from 0.4% in the preceding month. Thai Industrial Production rose to a seasonally adjusted -0.4%, from -3.5% in the preceding month.

A Philippine official stated that the country no longer deserves to be branded the ‘sick man of Asia’ after its economy grew more than 6% for a third consecutive year. Hampered by natural disasters, growth of the $300 billion economy slowed to 6.1% in 2014, but still outpaced most other countries in Asia. The 2014 performance ranks the Philippines as the second fastest growing Asian country behind China. Philippines GDP rose to a seasonally adjusted annual rate of 6.9%, from 5.3% in the preceding month.