Benchmarks extend rally for fifth straight session

Thursday’s session turned out to be a fabulous day of trade for the Indian equity markets, with frontline gauges recapturing their crucial 28,850 (Sensex) and 8,750 (Nifty) levels. Buying activity which took place during last leg of trade mainly drove the markets higher and benchmarks ended the session near intraday high levels, extending their rally for fifty straight session. Overall, sentiments remained up-beat on reports that Moody's Investors Service has changed India’s outlook to positive from stable. Though, the country’s Baa3 rating (the lowest investment grade) was affirmed but the outlook was revised from stable on increasing probability that actions by policymakers will enhance the country’s economic strength and, in turn, the sovereign’s financial strength over coming years.

Some support also came with reports that India’s summer monsoon rains are expected to be normal this year. Monsoon rains are vital for India’s farm sector, which accounts for 14 per cent of the $2 trillion economy, as half of the country's farmland lacks irrigation. Weak monsoon rains have cut farm output in the past, stoking inflation.

Buying got intensified as European counters made a firm start drawing support from European auto sales and German trade data, while expectations that the first US interest rate increase will come in the latter part of the year continue to grow. Investors also breathed a sigh of relief as Greece confirmed it will pay a 450 million-euro loan tranche to the International Monetary Fund, meeting a deadline and taking the immediate heat off the cash-strapped country. However, Asian markets ended mostly in the red on Thursday, though Japanese Nikkei outperformed after data from Japanese finance ministry showed foreign investors bought a net Yen 1.036-trillion of Japanese shares last week, their biggest net buying since early April 2013.

Back home, appreciation in Indian rupee too supported the sentiments. The partially convertible rupee was trading at 62.20 per dollar at the time of equity market closing against the Wednesday’s close of 62.23 on the Interbank Foreign Exchange. Rally in banking shares too aided the sentiments after Moody's Investors Service changed India's outlook to 'positive' from 'stable' earlier and affirmed 'Baa3' credit rating. On the flip side, healthcare stocks edged lower on profit-booking activities a day after the government has allowed pharmaceutical companies for hiking prices of 509 essential medicines used for treating various diseases like diabetes, hepatitis and cancer by 3.84% with effect from April 1.

The NSE’s 50-share broadly followed index Nifty rose by over sixty points to end above the psychological 8,750 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged by around one hundred and eighty points to finish above its psychological 28,850 mark. Broader markets too traded with traction and ended the session in the green with a gain of around half a percent. The market breadth remained in favor of advances, as there were 1,584 shares on the gaining side against 1,256 shares on the losing side while 84 shares remain unchanged.

Finally, the BSE Sensex surged by 177.46 points or 0.62% to 28885.21, while the CNX Nifty soared by 63.90 points or 0.73% to 8,778.30.

The BSE Sensex touched a high and a low of 28906.71 and 28622.44, respectively. The BSE Mid cap index was up by 0.25%, while Small cap index was up by 0.71%.

The top gainers on the Sensex were Reliance Industries up by 3.40%, Axis Bank up by 2.88%, Tata Steel up by 2.69%, SBI up by 2.50% and HDFC Bank up by 1.68%. On the flip side, Sun Pharma down by 3.21%, Bharti Airtel down by 2.97%, GAIL India down by 2.96%, Cipla down by 2.34% and BHEL down by 1.19% were the top losers.

The gaining sectoral indices on the BSE were Bankex up by 2.58%, Metal up by 1.43%, PSU up by 0.89%, IT up by 0.50% and Power up by 0.37% while, Healthcare down by 2.08%, Realty down by 0.94%, Capital Goods down by 0.45%, Consumer Durables down by 0.31% and Auto down by 0.03% were the losing indices on BSE.

Meanwhile, following government's approval, the Reserve Bank of India (RBI) has notified the increase in foreign direct investment (FDI) limit in the insurance sector to 49%. RBI in its notification said that the extant FDI policy for insurance sector has since been reviewed and further liberalised. Accordingly, with immediate effect, FDI in insurance sector shall be permitted up to 49 per cent subject to the revised conditions. The central bank further said that 'Foreign direct investment up to 26% shall be under automatic route and beyond 26% and up to 49% shall be with government approval an Indian insurance company shall ensure that its ownership and control remains at all times in the hands of resident Indian entities.'

RBI has included a new term 'Other Insurance Intermediaries appointed under the provisions of Insurance Regulatory and Development Authority Act, 1999' under the definition of 'Insurance'. RBI added that 'any increase of foreign investment of an Indian insurance company shall be in accordance with the pricing guidelines specified by Reserve Bank under the Foreign Exchange Management Act, 1999.'

The government has already notified rules to implement the decision to increase foreign direct investment limit in the insurance sector to 49 per cent. The Indian Insurance Companies (Foreign Investment) Rules, 2015 allow up to 26 per cent foreign investment through the automatic route, while foreign partners can increase their stake beyond that limit up to 49 per cent with the approval of the Foreign Investment Promotion Board (FIPB). The rules will also apply to insurance brokers, third party administrators, surveyors and loss assessors, and other insurance intermediaries appointed under the provisions of the IRDA Act, 1999. Foreign portfolio investment in an Indian insurance company shall be governed by the provisions contained in the relevant sub-regulations/regulations under FEMA Regulations, 2000 and provisions of the Securities Exchange Board of India (Foreign Portfolio Investors) Regulations.

The CNX Nifty touched a high and low of 8,785.50 and 8,682.45 respectively.

The top gainers on Nifty were PNB up by 6.68%, IndusInd Bank up by 4.88%, Zee Entertainment Enterprises up by 4.48%, Kotak Mahindra Bank up by 4.26% and Reliance Industries up by 3.59%. On the flip side, Sun Pharmaceuticals Industries down by 3.50%, Lupin down by 3.27%, GAIL (India) down by 3.27%, Bharti Airtel down by 3.26% and Idea Cellular down by 2.71% were the top losers.

European Markets were trading in the green; Germany's DAX was up by 0.43%, France's CAC was up by 0.83% and UK's FTSE 100 was up by 0.60%.

The Asian markets closed mostly in red on Thursday, while Japan’s Nikkei rose to a fresh 15-year high, after US shares had modest gains and hopes rose that foreigners will continue to buying Japanese stocks. China’s Ministry of Finance stated that it would reopen a March 25 issue of three-year bonds, auctioning an additional 30 billion yuan ($4.8 billion) on April 17. The bonds will be issued until April 22 and begin secondary market trading on April 24. Singapore’s central bank could loosen monetary policy for a second time this year, but analysts are divided over the magnitude of any easing as authorities contend with slowing growth, a pickup in core inflation and risks of fund outflows. Indonesian car sales in the first quarter fell 14 percent last year as slowing economic growth took its toll on consumers’ purchasing power. Car manufacturers shipped 282,569 units to dealers in the January-March period, down from 338,500 units in the same period last year. Taiwan’s trade balance fell unexpectedly last month to a seasonally adjusted annual rate of 4.07B from 4.56B in the preceding month.