Benchmarks snap three days losing streak; Nifty regains 7,800 mark

Snapping three days losing streak, Indian equity benchmarks staged an enthusiastic performance on Thursday, by rallying over a percentage point 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 with the statement of International Monetary Fund (IMF) that near-term growth prospects remain favourable in India but some macroeconomic imbalances still exist. Markets drew some comfort with chief economic adviser at the finance ministry Arvind Subramanian’s comments that the Indian economy is still expected to grow around 8 percent in the fiscal year to March 2016, after economic growth slowed to 7 percent in the quarter to June.

Some support also came after India's services industry grew for a second month in August, the Nikkei/Markit Services Purchasing Managers' Index rose to 51.8 in August from July's 50.8. Traders also got some support with CBDT circular asking its fields officers to keep in abeyance pending MAT assessments and not to recover any outstanding demand. Earlier the government accepted the recommendations of an expert committee formed to study MAT to exempt foreign funds from tax on profits earned before April 1, 2015. Meanwhile, weak GDP data, cooling inflation along with mixed PMI data has created room for RBI rate cut which has further lifted the trading sentiments.

Buying got intensified after European counters have made a positive start and rallied over a percent in early deals. Meanwhile, Sweden’s central bank kept its benchmark interest rate unchanged at a record low amid signs the unprecedented monetary stimulus is helping steer the country out of a deflationary trap. Asian markets ended in green as a two-day holiday in China gave investors respite from the market that's been at the centre of recent global volatility.

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 Nifty and Sensex recapturing their crucial 7,800 and 25,750 levels respectively. Buying in auto sector too aided sentiments post August sales numbers. Capital goods shares which had weakened post weak core sector growth also witnessed value buying at lower levels.

The NSE’s 50-share broadly followed index Nifty rose by over hundred points to end above the psychological 7,800 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex rose by over three hundred and ten points to finish above the psychological 25,750 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 1,719 shares on the gaining side against 969 shares on the losing side while 133 shares remain unchanged.

Finally, the BSE Sensex surged by 311.22 points or 1.22% to 25764.78, while the CNX Nifty soared by 106.00 points or 1.37% to 7823.00.

The BSE Sensex touched a high and a low 25835.41 and 25555.77, respectively. The BSE Mid cap index was up by 1.18%, while Small cap index was up by 1.15%.

The top gaining sectoral indices on the BSE were Realty up by 4.55%, Metal up by 2.43%, Capital Goods up by 1.98%, Bankex up by 1.93% and Power up by 1.81%, while there were no losers on the sectoral index.

The top gainers on the Sensex were Tata Steel up by 4.55%, Vedanta up by 4.42%, Axis Bank up by 4.19%, HDFC up by 4.10% and Hindalco up by 3.42%. On the flip side, Lupin down by 0.58%, Hero MotoCorp down by 0.57% and Sun Pharma down by 0.56% were the top losers.

Meanwhile, minister of state for Finance Jayant Sinha has estimated that over $300-600 billion illicit fund moves out from developing countries including India to developed countries through money laundering and other ways. He said 'Illicit financial flows means the money that actually is black money, and it is then sent over to tax havens. And in India, a lot of it is happening through trade based money laundering, over-invoicing or under-invoicing and a variety of other ways and then money is leaving the country simply through hawala channels'.

Sinha further added that there is a lot of capital that is going out of the developing world and into the developed world because of transfer pricing. Through transfer pricing mechanism multinationals move profits to low tax countries and tax havens, thus reducing their tax liability. Illicit financial flows are estimated to be much higher than those going out by transfer pricing and capital gains. The government has taken number of steps, including enactment of the black money law, to deal with unaccounted overseas assets.

Referring to the current financial condition caused by yuan devaluation, Sinha reportedly said that India has a big opportunity to shine as the world is facing more turbulence and slower demand. With the ease of doing business India has a chance to be a very attractive investment destination and be able to attract funds both from domestic and international investors.

The CNX Nifty touched a high and low 7845.60 and 7754.05 respectively.

The top gainers on Nifty were Cairn India up by 5.78%, Tata Steel up by 4.58%, HDFC up by 4.35%, Axis Bank up by 4.15% and Ultra cement up by 4.12%. On the flip side, Idea Cellular down by 3.01%, BPCL down by 1.07%, Bosch down by 0.95%, Lupin down by 0.77% and Hero MotoCorp down by 0.68% were the top losers.

European Markets were trading in the green; France’s CAC was up by 1.30%, Germany’s DAX was up by 1.60% and UK's FTSE was up by 1.48%.

The Asian markets closed in green on Thursday while Shanghai Stock Exchange was closed on account of ‘Victory Day’ holiday and Hong Kong Stock Exchange was closed on account of Anniversary day of the victory of war against Japanese. International Monetary Fund (IMF) chief Christine Lagarde stated that Asian economies were doing pretty well despite the volatility created by China’s slowdown and unease on global financial markets. Lagarde added that now the situation is changing yet again, and everyone is feeling the impact of China’s rebalancing and moving to a revised business model. To tackle the bumpy road ahead, she suggested policymakers consider reining in excessive credit growth, adopt tighter fiscal policies, use the exchange rate as a shock absorber, maintain adequate foreign exchange reserves and bolster regulatory oversight of the financial sector. Activity in Singapore factories, including the key electronics sector, shrank for a second straight month in August, indicating sluggish global economic growth hurt the trade-dependent economy. The Singapore Institute of Purchasing & Materials Management’s Purchasing Managers’ Index (PMI) fell to 49.3 from July’s 49.7. South Korean GDP rose to a seasonally adjusted 0.3% compared to the preceding month.