Benchmarks start June F&O series on strong note; Nifty regains 8,400 mark

Indian equity benchmarks started June Future and Option (F&O) series on strong note on Friday, by rallying over one percentage points and breaking lots of psychological levels in their northward journey as investors opted to buy beaten down but fundamental strong stocks. Markets after a cautious start gains ground and ended near intraday high levels ahead of GDP data for the March quarter. There has been wide debate on CSOs new method of calculating GDP which had earlier said that India’s real or “inflation adjusted” GDP in 2013-14 grew 6.9 percent instead of the earlier 4.7 percent and by 5.1 percent in the year before compared to 4.5 percent in the earlier system.

Sentiments remained up-beat on hopes of rate cut at Reserve Bank of India’s (RBI) policy meet due on June 2, 2015. The RBI is likely to cut its benchmark interest rates by 25 basis points to 7.25% when it meets early next week and make a similar move before December. Sentiments also remained jubilant after global rating agency Moody’s Analytics said that India’s economic growth rate in the January-March quarter is likely to slip to 7.2 percent from 7.5 percent in the previous three months, mainly on account of lower production and weak global demand.

On the global front, European markets have made a weak start and were trading lower amid uncertainty as to whether Greece will be able to reach a debt deal before a key payment deadline. Asian markets ended Friday’s session mostly in the red as the region showed lackluster movements ahead of a batch of US economic data due out later in the night that could provide fresh hints on the timing of a possible interest-rate hike by the Federal Reserve. 

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 Sensex recapturing its crucial 27,800 bastion, while Nifty ended above its crucial 8,400 mark. Appreciation in Indian rupee too supported the sentiments. The partially convertible rupee was trading at 63.76 per dollar at the time of equity market closing against the Thursday’s close of 63.80 per dollar.

Stocks related to infra space remained on buyers’ radar as the Minister for road transport and highways and shipping Nitin Gadkari has said that the government is planning to launch 1,231 projects for 37,000 km to meet its target for highways sector this year. Additionally, stocks of public sector oil marketing companies (OMCs) edged higher after better-than-expected Q4 March results from BPCL and HPCL which were announced yesterday.

The NSE’s 50-share broadly followed index Nifty rose by over one hundred and ten points and ended above the psychological 8,400 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex rose by over three hundred and twenty points to finish above the psychological 27,800 mark. Broader markets too traded with traction and ended the session with a gain of around one and a half percentage points. The market breadth remained in favour of advances, as there were 1,444 shares on the gaining side against 1,234 shares on the losing side while 120 shares remain unchanged.

Finally, the BSE Sensex surged by 321.73 points or 1.17% to 27828.44, while the CNX Nifty soared by 114.65 points or 1.38% to 8,433.65.

The BSE Sensex touched a high and a low of 27888.32 and 27467.23, respectively. The BSE Mid cap index was up by 1.48%, while Small cap index up by 1.22%.

The top gainers on the Sensex were Bharti Airtel up by 5.98%, Mahindra & Mahindra up by 4.89%, GAIL India up by 2.30%, Maruti Suzuki up by 2.26% and Coal India up by 2.14%. On the flip side, Hindalco down by 2.16%, Tata Motors down by 0.40%, BHEL down by 0.14% and Vedanta down by 0.10% were the top losers.

The gaining sectoral indices on the BSE were Auto up by 2.08%, INFRA up by 1.84%, Healthcare up by 1.63% TECK up by 1.58% and Bankex up by 1.45% while, Realty down by 0.13% was the losing indices on BSE.

Meanwhile, in a good news for the new airlines, the Civil Aviation Ministry would soon submit a draft note on the proposed changes in the controversial 5/20 norm to the Cabinet for approval. As per the present norms Indian carriers needs to be in operation for at least five years and have a fleet of 20 aircraft to be eligible to fly on international routes. By bringing in changes in the more than decade-old rule, the government seeks to address the imbalance between domestic and foreign carriers.

The Ministry of Civil Aviation has however proposed a complicated formula replacing 5/20 norms, in which domestic flying credits would still be needed for new airlines to fly overseas. As per the proposed norms, a new airline would be eligible to apply for international operations once it has operated on domestic routes and deployed capacity equivalent to at least 200 domestic flying credits (DFCs). On reaching the 300 DFC milestone, the air carrier can approach the government for being designated on a long haul international route of more than 6 hours flying time. Civil Aviation Minister Ashok Gajapati Raju had earlier said that sooner the 5/20 rule was thrown out the better.

There is wide difference among the different players of the industry over change of rules as the Federation of Indian Airlines, which has IndiGo, SpiceJet, Jet Airways and GoAir as its members has objected to any relaxations, while new entrants Vistara and AirAsia India strongly pitched for scrapping of the rule.

The CNX Nifty touched a high and low of 8,443.90 and 8,305.70 respectively.

The top gainers on Nifty were Mahindra & Mahindra up by 4.64%, Grasim Industries up by 3.87%, Bharat Petroleum Corporation up by 3.73%, Ambuja Cements up by 3.59% and ACC up by 3.28%. On the flip side, Hindalco Industries down by 1.98%, PNB down by 1.82%, NMDC down by 1.48%, ONGC down by 0.23% and Tata Motors down by 0.13% were the top losers.

Most of European Markets were trading in the red; Germany's DAX was down by 0.87% and France's CAC down by 0.94% while, UK's FTSE was up by 0.06%.

Asian markets closed mostly in red on Friday, while Shanghai also finished its volatile session slightly down, following a painful sell-off in the previous session. Japanese Finance Minister Taro Aso stated that a weakening of Japan’s yen currency in recent days had been rough and he would monitor moves in the foreign exchange markets carefully. Japanese Economics Minister Akira Amari stated that the current pace of yen declines cannot necessarily be described as excessive. Amari enlightened that it has generally become difficult for any country to conduct currency intervention or take steps to directly weaken its currency. Japan’s industrial production rose to a seasonally adjusted 1.0%, from -0.8% in the preceding month. Japanese Housing Starts fell to a seasonally adjusted 0.4%, from 0.7% in the preceding quarter while Japanese Household Spending rose to a seasonally adjusted -1.3%, from -10.6% in the preceding month. South Korean Industrial Production fell to a seasonally adjusted annual rate of -2.7%, from 0.0% in the preceding month whose figure was revised up from -0.1%. South Korea warned that it would undertake smoothing operations when needed to tame the won’s rapid appreciation against the yen, as the yen/won cross fell to its lowest in more than seven years.