Benchmarks stage an enthusiastic performance; Nifty regains 7,900 mark

Indian equity benchmarks staged an enthusiastic performance on August F&O expiry day, by rallying over two percentage points 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. Sentiments remained up-beat on 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. Short-covering by market participants owing to expiry of August month F&O contracts, too aided the sentiments.

Traders also remained encouraged after 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. Appreciation in Indian rupee too supported the sentiments. The partially convertible rupee was trading at 65.99 per dollar at the time of equity market closing against the Wednesday’s close of 66.13 on the Interbank Foreign Exchange.

Buying got intensified after European markets made a strong start with CAC, DAX and FTSE all were trading with a gain of over two percent in early deals, buoyed by gains in Asian and US markets after a leading US central bank official said the prospect of a September rate hike seemed “less compelling” than before. All the Asian markets ended in green led by over 5% rise in Chinese markets after the central bank injected $23.4 billion into financial system.

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 surpassing its crucial 26,200 bastion, while Nifty ended near its crucial 7,950 mark. Buying in infrastructure stocks too aided the sentiments 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 remained on buyers’ radar after Prime Minister called for evolving a consensus among the various stakeholders before the government takes a final view on the 5/20 rule.

The NSE’s 50-share broadly followed index Nifty rose by around one hundred and sixty points and ended above the psychological 7,900 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex rose by over five hundred and ten points to finish above the psychological 26,200 mark. Broader markets too traded with traction and ended the session with a gain of around two and a half percentage points. The market breadth remained in favour of advances, as there were 2,000 shares on the gaining side against 678 shares on the losing side while 97 shares remain unchanged.

Finally, the BSE Sensex surged by 516.53 points or 2.01 % to 26231.19, while the CNX Nifty gained 157.10 points or 2.02 % to 7948.95.

The BSE Sensex touched a high and a low 26302.77 and 25943.75, respectively. The BSE Mid cap index was up by 2.49%, while Small cap index was up by 2.56%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 5.11%, Realty up by 4.02%, Healthcare up by 2.93, Oil & Gas up by 2.83% and Infrastructure up by 2.57%, while they were no losers on the sectoral index.

The top gainers on the Sensex were HDFC up by 8.41%, Vedanta up by 6.55%, Tata Steel up by 4.80%, Lupin up by 4.79% and Cipla up by 3.95%. On the flip side, BHEL down by 3.54%, Bajaj Auto down by 2.44%, Tata Motors down by 0.62%, NTPC down by 0.50% and Hero MotoCorp down by 0.47% were the top losers.

Meanwhile, the Cabinet Committee on Economic Affairs (CCEA), headed by Prime Minister Narendra Modi has given its approval for the payment of the differential royalty to Arunachal Pradesh, Assam and Gujarat in respect of 28 discovered fields, which were awarded by the government to different companies during the years 1994-95, 2001 and 2004. Differential royalty refers to the difference between the rates of royalty as per provisions contained in respective Production Sharing Contracts (PSCs) and the notified rate of royalty on crude oil production.

The expected expenditure for the year 2015-16 has been estimated at Rs 56 crore comprising of Rs 30 crore for Arunachal Pradesh and Rs 26 crore for Gujarat. Though, Assam has been included in the scheme, it would not get any benefit this fiscal as there is no producing oil field in the state. The calculation has been arrived by assuming average crude oil price of $50 per barrel and foreign exchange rate of Rs 60 to a dollar.

Presently, the differential in royalty is paid to the states by the Oil Industry Development Board (OIDB) based on the Oilfields (Regulation & Development) Act, 1948 and Petroleum & Natural Gas Rules, 1959. OIDB also needs funds because investments for the strategic crude oil reserves have depleted its cash to Rs.8, 000 crore. OIDB funds are supposed to be utilized for financing development activities of the sector. In order to ensure proper utilization of OIDB fund from the year 2015-16 onwards the payment shall be through budgetary allocation instead of through OIDB fund.

The CNX Nifty touched a high and low 7963.60 and 7862.30 respectively.

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 3.27%, Bajaj Auto down by 2.36%, TCS down by 0.38%, Wipro down by 0.26% and Hero MotoCorp down by 0.24% were the top losers.

European Markets were trading in the green; France’s CAC was up by 3.02%, Germany’s DAX was up by 3.09% and UK's FTSE was up by 2.29%.

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%.