Benchmarks stage smart recovery; Sensex regains 25,800 mark

Indian equity benchmarks staged a smart recovery in second half of trade and ended the session with a gain of over half a percent on Wednesday, supported by short-covering in beaten down but fundamentally strong stocks. Earlier, markets made a gap down start, tracking a global sell-off on weak Chinese factory data. Sentiments came under pressure after the Asian Development Bank (ADB) lowered its growth projections for India for 2015-16 to 7.4 per cent, from the 7.8 per cent earlier, citing weak monsoon, poor external demand and inability of the government to push reforms. Lack of confidence among market participants about prospects of a rate cut by the RBI at its policy meet next week has also dampened sentiment.

However, the markets bounced back in second half with investors using the dips to accumulate quality stocks. Sentiment got some support with Finance Minister Arun Jaitley’s statement that we have learnt to live in the era of turmoils and the government is focussing on strengthening the country's real economy and harnessing its true growth potential of 8-9 per cent. Meanwhile, External Affairs Minister Sushma Swaraj, asserting that India offers immense opportunities, has sought investments from the US industry in both public and private sectors in the country for a “win-win” outcome.

Markets gained pace after European counters have made a firm opening with CAC, DAX and FTSE were trading with a gain of around a percent in early deals. However, Asian markets declined on Wednesday as fears of an entrenched global economic slowdown gripped investors, underlined by a weak factory survey from China, while the greenback firmed as investors fled to relatively safe-haven assets.

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 with a gain of over half a percent with Sensex and Nifty recapturing their crucial 7,800(Nifty) and 25,800 (Sensex) levels. Moreover, the rupee trimmed some of its early losses and was down 7 paise at 65.94 to the US dollar at the time of equity markets closing.

Buying in rate sensitive counters viz. auto, banking and realty too aided the sentiment on hopes of a rate cut as the easing consumer price inflation data along with favourable macroeconomic numbers and advancement in monsoons has created enough room for a rate cut by the Reserve Bank of India (RBI) in the forthcoming monetary policy. Metal shares, which slumped in the morning trades after weak factory data from China, gained ground in the late trades on buying interest at attractive valuations

The NSE’s 50-share broadly followed index Nifty rose by over thirty points to end near its psychological 7,850 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged over one hundred and seventy points to finish above around the psychological 28,800 mark. Broader markets too traded with traction and ended the session with a gin of around half a percentage point. The market breadth remained in favour of advances, as there were 1,531 shares on the gaining side against 1,141 shares on the losing side while 106 shares remain unchanged.

Finally, the BSE Sensex surged by 171.15  points or 0.67% to 25822.99, while the CNX Nifty gained 33.95  points or 0.43% to 7845.95.

The BSE Sensex touched a high and a low 25934.02 and 25386.48, respectively. The BSE Mid cap index was up by 0.47%, while Small cap index was up by 0.71%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.70%, Bankex up by 1.46%, Realty up by 1.06%, Oil & Gas up by 1.00% and Healthcare up by 0.70%, while Power down by 0.31% and TECK down by 0.03% were the losing indices on BSE.

The top gainers on the Sensex were Lupin up by 2.83%, Vedanta up by 2.71%, HDFC Bank up by 2.17%, Mahindra & Mahindra up by 2.10% and ITC up by 1.71%. On the flip side, Tata Motors down by 1.73%, Bharti Airtel down by 1.49%, BHEL down by 1.24%, GAIL India down by 0.86% and Bajaj Auto down by 0.79% were the top losers.

Meanwhile, finance Minister Arun Jaitley has expressed his confidence that India would sail through global turmoils without much adverse impact. Jaitley said that 'I am one of those who believe that we have learnt to live in the era of turmoils. Whether it was Greece crisis, or China devaluation or speculations about rate hike by the US Fed. Every day, something or the other impacts the market. As policy planners, we cannot really hedge our bets (on these factors)'. He added that impact on the market does create an optical impression of some kind of a turmoil,' and the policy makers should not be perturbed by such transient factors.

Jaitley in the second leg of his four-day visit to Singapore and Hong Kong, said that India is one of the fastest growing economies in the world and certainly it can't be amid any disappointment or disillusion. He added that the world has become an uncertain place because traditionally strong economies are facing their own challenges and everyone will have to live up to a situation where many unpredictable things can happen.

Though, he admitted that there would certainly have been an impact if the US central bank had raised the rates. He further stated that markets will keep moving up and down. Even if change had taken place in the Fed rate, the market would have been impacted for some period of time and then would have stabilised.

Talking about the government measures he said that there have been a series of reforms. The government has become far more decisive. There is a lot of economic activity that is happening and even in the midst of the global economic slowdown, our figures are much better. There is a lot of excitement that the investment people now have. The FDI inflows have significantly improved and investors are looking at different sectors in India, including infrastructure, smart cities, manufacturing sectors and services. Public investments have gone up significantly by about 39% and FDI this year has improved by 49% from the previous year.

The CNX Nifty touched a high and low 7882.90 and 7723.25 respectively.

The top gainers on Nifty were Cairn India up by 5.01%, Vedanta up by 3.25%, Lupin up by 3.07%, Kotak Mahindra Bank up by 3.00% and BPCL up by 2.60%. On the flip side, NMDC down by 4.01%, Bosch down by 3.27%, Power Grid down by 1.91%, Tata Motors down by 1.77% and Idea Cellular down by 1.71% were the top losers.

European Markets were trading in the green; France’s CAC was up by 0.97%, UK's FTSE was up by 1.32% and Germany’s DAX was up by 0.92%. 

The Asian markets closed in red on Wednesday, as weak Chinese manufacturing data increase fears about waning global growth. Japan stock exchange was closed on account of ‘Autumn Equinox’ holiday. A preliminary measure of Chinese factory output in September was the lowest since the financial crisis, adding to a parade of weak data that is increasingly eroding hopes that China’s slowdown would stabilize in the second half. The preliminary Caixin China Manufacturing Purchasing Managers’ Index, a gauge of nationwide manufacturing activity, fell to 47.0 in September, compared with a final reading of 47.3 in August. The reading was the lowest since March 2009, when China was grappling with the global financial crisis. China has announced a flurry of infrastructure plans in recent months, browbeaten local officials to spend their full budgets and tried to ease funding constraints for highway, rail and other projects. The infrastructure sub-index of fixed-asset investment data in August grew 19.9% year-over-year in August compared with 16.4% in July. Chinese President Xi Jinping pledged not to push the value of the yuan currency lower just to strengthen Chinese exports.

Indonesia’s House of Representatives’ Commission XI, which oversees the nation’s finance and banking sectors, has agreed to revise down its economic growth and rupiah target for next year, conceding to weaker prospects of global growth. The Commission cut growth target to 5.3% from the initial aim of 5.5% in the 2016 state budget draft, on the back of the unwelcoming global economy, slower demands for export and low commodity prices. Taiwanese Industrial Production fell to a seasonally adjusted annual rate of -5.46%, from -2.99% in the preceding month.