Benchmarks extend rally for fourth straight day; Nifty reclaims 8,800 mark

Extending their rally for fourth straight session, Indian equity benchmarks staged an enthusiastic performance on Friday, by rallying over a percentage point and breaking lots of psychological levels in their northward rally. 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.

Some support also came in with the government stating that it has collected Rs 4.27 lakh crore, or 68.6 percent of budget target for indirect tax, in the April-January period of this fiscal. The budget target for indirect tax collections is Rs 6.23 lakh crore. Meanwhile, retail inflation inched up in January but hovered within the central bank’s comfort levels. CPI inflation with changed base year came at 5.1% in January, compared to previous month’s 4.3%. On the other hand, the Index of Industrial Production (IIP) growth was subdued at 1.7% year on year (yoy) in December compared with 3.9% in November on slow growth in mining and electricity segments.

Global cues too remained supportive with European counters making a firm start, helped by positive growth figures from Germany, where L’Oreal rallied after posting forecast-beating sales growth. Asian markets ended mostly in the green on news of a ceasefire accord in Ukraine, while Sweden’s surprise move to cut its main rate into negative territory and hopes of a resolution between debt-strapped Greece and its creditors burnished the risk appetite.

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. Frontline indices managed to settle near intraday high levels with Nifty surpassing its crucial 8,800 bastion, while Sensex ended near its crucial 29,100 mark. Recovery in Indian rupee too supported the sentiments. The rupee firmed up against the US dollar and was trading at 62.18 at the time of equity markets closing as compared to Thursday’s close of 62.30, tracking gains in domestic equity markets.

Rally in shares of pharmaceutical companies too supported the sentiments after reporting a good set of numbers for the quarter ended December 2014 and expectation of strong export growth backed by better regulatory compliance track record and patent expiry. Meanwhile, shares of State Bank of India (SBI) rallied 8% after the state-owned bank’s gross non-performing assets (NPA) as a percentage to total advances rose marginally at 4.90% as on December 31, 2014 (Q3FY15) compared to 4.89% in September quarter. Gross NPA stood at 5.73% at the end of December 2013 quarter. On the flip side, oil and gas counters witnessed somberness, as the government has asked oil producers to provide $1.8 billion in subsidies to cover some of the losses of the oil marketing companies.

The NSE’s 50-share broadly followed index Nifty rose by over ninety points and ended above the psychological 8,800 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex rose by around two hundred and ninety points to finish near the psychological 29,100 mark. Broader markets too were traded with traction and ended the session with a gain of around half a percentage point. The market breadth remained in favour of advances, as there were 1,455 shares on the gaining side against 1,419 shares on the losing side while 103 shares remain unchanged.

Finally, the BSE Sensex surged by 289.83 points or 1.01% to 29094.93, while the CNX Nifty gained 93.95 points or 1.08% to 8805.50.

The BSE Sensex touched a high and a low of 29154.67 and 28835.70, respectively. The BSE Mid cap index was up by 0.74%, while Small cap index ended higher by 0.35%.

The top gainers on the Sensex were SBI up by 7.96%, Mahindra & Mahindra up by 5.11%, TCS up by 3.08%, Coal India up by 2.37% and ITC up by 2.01%. On the flip side, GAIL India down by 3.96%, BHEL down by 3.12%, ONGC down by 1.99%, HDFC Bank down by 1.09% and Infosys down by 0.82% were the top losers.

The top gaining sectoral indices on the BSE were FMCG up by 1.77%, Healthcare up by 1.56%, Bankex up by 1.32%, Auto up by 1.08% and Metal up by 1.01% while, Realty down by 0.95%, Infrastructure down by 0.27% and Oil & Gas down by 0.16% were the losing indices on BSE.

Meanwhile, the government has asked oil producers to provide Rs 10,896 crore in subsidies to offset some of the losses incurred by state retailers that have been selling fuel at government-set low rates. In addition, the federal finance ministry has agreed to support the retailers with a Rs 5085 crore subsidy for the December quarter.

Since the government regulates retail prices of liquefied petroleum gas and kerosene, State-run producers Oil and Natural Gas Corp , Oil India and GAIL (India) sell crude and related products at a discount to the retailers get cash subsidies from the government for selling fuel at below market rates. The three fuel retailers i.e. Indian Oil Corporation (IOC), Bharat Petroleum Corp and Hindustan Petroleum Corp, had suffered revenue losses of Rs 15981 crore during the quarter.

According to reports, while IOC, the country’s biggest refiner and fuel retailer will get a subsidy of Rs 8982 crore, HPCL and BPCL will get subsidy 3586 crore and Rs 3413 crore respectively. On the flip side, ONGC will pay a subsidy of Rs 9458 crore while Oil India`s share is pegged at Rs 1438 crore.

The CNX Nifty touched a high and low of 8822.10 and 8729.65 respectively.

The top gainers on Nifty were SBI up by 7.97%, Mahindra & Mahindra up by 5.12%, Lupin up by 3.82%, Jindal Steel & Power up by 3.75% and TCS up by 3.11%. On the flip side, GAIL India down by 4.37%, BHEL down by 3.12%, DLF down by 2.24%, ONGC down by 1.99% and HDFC Bank down by 0.95% were the top losers.

European Markets were trading in the green; Germany’s DAX was up by 0.55%, France’s CAC gained 0.70% and UK’s FTSE 100 was higher by 0.64%.

The Asian indices ended mostly in green on Friday, buoyed by news of an agreement to bring an end to Ukraine’s 10-month conflict and on hopes Greece would reach a deal to restructure its debt. The Indonesian rupiah may depreciate to a level that has not been seen since the 1998 Asian financial crisis by the end of this year, as investors may reduce inflow to the Southeast Asian country in line with United States’ economy regaining strength. Inflation in Japan is forecast to slow further in coming quarters pressured by the collapse in crude oil prices, but the Bank of Japan (BOJ) is set to sit tight for now as it assesses the broad impact of the oil slump on consumption and prices. BOJ is expected to embark on more stimulus later this year, to top up its latest round launched in October, to support economic growth and safeguard its 2% inflation target. Singaporean Retail Sales fell to a seasonally adjusted 2.6%, from 6.6% in the preceding month whose figure was revised up from 6.5%.