Benchmarks snap six-day losing streak; Nifty recaptures 8,100 mark

Snapping six days losing streak, Indian equity benchmarks staged an enthusiastic performance on Wednesday, by rallying over a percentage point and breaking lots of psychological levels in their northward journey. 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. Frontline indices not only ended the session near intraday high levels but also recaptured their crucial 8,100 (Nifty) and 26,800 (Sensex) bastions as investors took to hefty across the board buying.

Sentiments remained up-beat as US index provider MSCI has deferred the inclusion of China's A stocks to its benchmark indices, rather choosing to sort out regulatory issues, which triggered buying by foreign funds. MSCI has told China it must further liberalise its capital markets before it will include Chinese domestic shares in one of its global benchmarks, in a setback to Beijing's efforts to promote its currency and attract foreign capital. Some support also came with World Bank’s report that India has figured in top five emerging economies for highest investment commitments despite a drop in investment commitments of USD 6.2 billion last year. According to World Bank, the five sectors in which India has still topped are private, infrastructure, energy, transport and water.

On the global front, European markets after a cautious start were trading higher, as Greek Prime Minister Alexis Tsipras prepares to meet German Chancellor Angela Merkel and French President Francois Hollande in Brussels to try and make progress on debt talks. Asian markets ended mixed, apart from China the Japanese market lost ground, as the yen surged after Bank of Japan Governor Haruhiko Kuroda said it was hard to see his nation’s currency falling further.

Back home, there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too participated strongly in the rally. Appreciation in Indian rupee also supported the sentiments. The partially convertible rupee was trading at 63.83 per dollar at the time of equity market closing against the Tuesday’s close of 63.91 on the Interbank Foreign Exchange. Meanwhile, shares of auto sector remained in focus after Society of Indian Automobile Manufactures (SIAM) reported a jump in the domestic passenger car sales segment. Financial shares gained momentum after the RBI allowed banks to take control of debt-laden companies by converting loans into equity. Additionally, sugar stocks remained on buyers’ radar on talks that the food ministry has decided to provide an interest-free loan worth Rs 6,000 crore to the sugar companies.

The NSE’s 50-share broadly followed index Nifty rose by over hundred points and ended above the psychological 8,100 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex rose by around three hundred and sixty points to finish above the psychological 26,800 mark. Broader markets too traded with traction and ended the session with a gain of over a percentage point. The market breadth remained in favour of advances, as there were 1,708 shares on the gaining side against 941 shares on the losing side while 109 shares remain unchanged.

Finally, the BSE Sensex surged by 359.25 points or 1.36% to 26840.50, while the CNX Nifty soared by 102.05 points or 1.27% to 8,124.45.

The BSE Sensex touched a high and a low of 26934.74 and 26493.29, respectively. The BSE Mid cap index was up by 1.08%, while Small cap index up by 1.11%.

The gaining sectoral indices on the BSE were IT up by 2.08%, Capital Goods up by 2.04%, Auto up by 1.82%, TECK up by 1.77%, and Oil & Gas up by 1.33%, while there were no losers.

The top gainers on the Sensex were BHEL up by 4.21%, Wipro up by 3.60%, Bajaj Auto up by 3.08%, Reliance Industries up by 2.49% and Larsen & Toubro up by 2.37%. On the flip side, Cipla down by 0.01% were the top losers. Meanwhile, the Finance Ministry has clarified that only air-conditioned or air-heated restaurants are required to pay service tax. Reiterating that consumers will not be charged any service tax for eating in non-air conditioned restaurants while those who eat in an AC restaurant will have to pay the service tax on only 40 per cent of the total amount.

A finance Ministry statement said that restaurants, eating-joints or messes, which do not have the facility of air-conditioning or central-heating in any part of the establishment are exempt from service tax. At present, service tax is chargeable on services provided by restaurants, eating-joints or messes which have the facility of air-conditioning or central air-heating in any part of the establishment at any time during the year in relation to serving of food or beverages.The statement further added that in respect to such air-conditioned or air-heated restaurants which are required to pay service tax, 60 per cent of the value is to be deducted from the total amount charged while applying the rate, and the tax is to be calculated on the balance 40 per cent.

The statement has elaborated that with the increase in the rate of service tax to 14 per cent (subsuming the education cesses) with effect from June 1, 2015, the effective rate of tax will be 5.6 per cent of the total amount charged, while prior to June 1, when the rate of service tax was 12.36 per cent (including education cess), the effective rate was 4.94 per cent. Finance Minister Arun Jaitley in his Budget had proposed to raise service tax from 12.36 per cent (including education cess) to 14 per cent.

The CNX Nifty touched a high and low of 8,152.25 and 8,023.80 respectively.

The top gainers on Nifty were Cairn India up by 5.95%, Bharat Heavy Electricals up by 4.04%, Wipro up by 3.62%, Bajaj Auto up by 3.39% and Tech Mahindra up by 3.24%. On the flip side, Idea Cellular down by 1.30%, NMDC down by 1.19%, Lupin down by 0.91%, Bharat Petroleum Corporation down by 0.56% and Power Grid Corporation of India down by 0.51% were the top losers.

European Markets were trading in the green; Germany's DAX was up by 0.99%, UK's FTSE was up by 0.32% and France's CAC up by 0.62%.

Asian markets closed mixed on Wednesday, following a tepid lead from Wall Street while Shanghai was hit by news Chinese A shares would not yet be included in a global benchmark index of equities. Bank of Japan Governor Haruhiko Kuroda stated that aggressive easing will continue as financial markets and asset prices are not overheated. He added that there is no asset bubble in Japan at this point. The governor declined comment on daily fluctuations in the currency market but repeated foreign exchange rates must reflect economic fundamentals. Earlier, BoJ board member Takehiro Sato stated to business leaders in central Japan that there was no need to change the pace of government bond buying now around 80 trillion yen annually. Mitsuhiro Furusawa, deputy managing director of the International Monetary Fund (IMF) stated that policymakers in Asia need to put greater emphasis on growth-friendly fiscal policy to sustain growth momentum in the face of demographic changes that could weigh on their economies. Japan’s Corporate Goods Price Index remained unchanged at a seasonally adjusted annual rate of -2.1%. Japan’s Core Machinery Orders rose to 3.8%, from 2.9% in the preceding month. South Korean Unemployment Rate rose to a seasonally adjusted annual rate of 3.9%, from 3.7% in the preceding month. Philippines Industrial Production fell to a seasonally adjusted annual rate of -4.2%, from 7.4% in the preceding month.