Post Session: Quick Review

Markets swinging on the global tunes tasted a smart relief rally on Thursday, snapping the August F&O series on a firm note. The gap-up start kept on strengthening and markets ended near the highest point of the day. The rally in global markets restored some appetite for riskier assets and traders were seen indulging in hefty short covering and value buying. Traders drew encouragement with a report of India Ratings that the government can spend an additional Rs 37,200 crore more this fiscal year in infra investments or bank recapitalisation and still not miss the 3.9 percent fiscal deficit target, attributing the surplus to the higher indirect tax collections which till July rose a healthy 39 percent and a massive decline in crude prices. 

The jubilant global cues gave the lead to the local markets, while the US markets surged overnight the Asian stocks too climbed, tracking the biggest gain in US equities since 2011. However, the Chinese markets once again showed extreme volatility and after the initial gains plunged during the day, to bounce back with a bang making it its biggest percentage gains in last two months after the central bank injected $23.4 billion into financial system. The monetary authority auctioned 150 billion yuan of seven-day reverse-repurchase agreements. The European markets too made a good start mirroring gains in commodities and Chinese equities.

Back home, sharp upmove was seen in the final hour of trade, with Nifty hitting the crucial 7950 and Sensex 26200 mark after the announced of the name of 98 cities which will compete for the second stage of the smart cities challenge. Minister of Urban Development Venkaiah Naidu announced the list where government plans to spend over Rs 3 lakh crore over the next 5-6 years to recast urban cities. Of the 98 smart cities, 24 are business and industry centres, 18 are cultural and tourist centres & 3 are education and health care hub. Government would be releasing Rs 2 crore for each of the 98 proposed smart cities. Traders also got some support with the recovery in the rupee, which snapping its losses from the previous session, appreciated against US dollar due to a decrease in greenback demand from importers and as selling pressure from foreign institutional investors abated.

Infra remained one of the top gainers of the day after Centre allowed road developers to completely exit BOT (build-operate-transfer) projects two years after completion and invest the funds in incomplete highway projects, power plants or retire debt. The aviation stocks too made sharp upmoves after Prime Minister called for evolving a consensus among the various stakeholders before the government takes a final view on the 5/20 rule. Though, the August series proved a dismal one with both the major indices witnessing cuts of over 5%, while midcap index too lost over 3%, the most affected was the small cap index which lost over 6%. From sectoral front, barring pharma none of the indices were able to make any gain in the August series. 

The BSE Sensex ended at 26231.19, up by 516.53 points or 2.01% after trading in a range of 25943.75 and 26302.77. There were 22 stocks on gainers side against 8 stocks on decliners side on the index. (Provisional)

The broader indices outperformed the benchmarks; the BSE Mid cap index was up by 2.49%, while Small cap index gained 2.56%. (Provisional)

The top gaining sectoral indices on the BSE were Consumer Durables up by 5.11%, Realty up by 4.02%, Oil & Gas up by 2.83%, INFRA up by 2.57%, Metal up by 2.55%. (Provisional)

The top gainers on the Sensex were HDFC up by 8.14%, Vedanta up by 6.95%, Tata Steel up by 5.61%, Lupin up by 4.75% and Cipla up by 3.92%. On the flip side, BHEL down by 3.60%, Bajaj Auto down by 1.74%, GAIL India down by 0.44%, Hero MotoCorp down by 0.33% and Hindalco down by 0.25% were the top losers. (Provisional)

Back home, giving another push to infrastructure development, the Centre has allowed road developers to completely exit BOT (build-operate-transfer) projects two years after completion and invest the funds in incomplete highway projects, power plants or retire debt. The decision is an extension to the government’s decision three months ago of easing exit norms for completed projects.

The Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Narendra Modi cleared the amendment to the earlier clause which allowed for exit from a build operate transfer (BOT) projects two years after the completion of construction. The objective of the decision is to expedite award and implementation of highway projects by making additional funds available for investment.

CCEA has further stated that the facility will be provided to developers of National Highway Authority of India (NHAI) projects, any other highway development work or power sector programs to retire their debt to financial institutions. It pointed-out that most developers in the infrastructure sector are carrying highly leveraged balance sheets at their holding companies level, as they have been simultaneously supporting various infrastructure special purpose vehicles (SPVs) which are under severe stress.

Earlier, in May the government had allowed this facility to pre-2009 projects through a comprehensive exit policy framework that allowed developers to divest 100 per cent equity two years after completion of construction, now the government has said that the exit facility will be available for all BOT projects, “irrespective of the year of award”.

The CNX Nifty ended at 7960.25, up by 168.40 points or 2.16% after trading in a range of 7862.30 and 7963.60. There were 41 stocks in green against 9 stocks in red on the index. (Provisional)

The top gainers on Nifty were HDFC up by 8.66%, Cairn India up by 7.48%, Vedanta up by 7.01%, NMDC up by 6.50% and Ambuja Cement up by 6.41%. On the flip side, BHEL down by 3.39%, Bajaj Auto down by 2.36%, GAIL India down by 0.53%, Wipro down by 0.48% and TCS down by 0.38% were the top losers. (Provisional)

European markets made a strong start, France’s CAC increased by 132.08 points or 2.93% to 4,633.13, UK’s FTSE 100 gained 137.73 points or 2.3% to 6,116.93 and Germany’s DAX surged by 308.13 points or 3.08% to 10,305.56.

The Asian markets closed in green on Thursday with China’s Shanghai Composite index rising for the first time in six sessions. Japan’s government lowered its assessment of consumer spending and exports in August, a worrying sign that the economy is seeing just a tepid recovery from a contraction in the April-June quarter. The government stood by its assessment that Japan’s economy is on track to recover but acknowledged the pace of improvement is patchy as worries stemming from the bursting of China’s stock-market bubble roil global financial markets. Indonesia will announce a policy package to help prop up the rupiah that includes tax holidays for investors. Bank Indonesia was spotted directly selling dollars to lift the rupiah. The unusual move indicated strong determination of the authority to support the second-worst performing Asian currency so far this year by showing its presence in the market.  Philippines GDP rose to a seasonally adjusted annual rate of 5.6%, from 5.0% in the preceding month whose figure was revised down from 5.2%. Singaporean Industrial Production fell to an annual rate of -6.1%, from -4.0% in the preceding month whose figure was revised up from -4.4%.