Markets stage splendid performance on firm global cues; Nifty recaptures 8,100 mark

Boisterous benchmarks showcased an enthusiastic performance on Monday, by rallying over two percentage point amid strong global cues. Sentiments remained up-beat since start as key bourses opened with a huge gap on the upside 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 stocks. Frontline indices not only ended the session near intraday high levels but also recaptured their crucial 8,100 (Nifty) and 26,750 (Sensex) bastions as investors took to hefty across the board buying.

Sentiments remained up-beat with the World Bank forecast that backed by the prospects of faster implementation of reforms and a favourable terms-of-trade shock, India is expected to weather global volatility with real GDP growth projected to increase to 7.5 per cent despite a weak export recovery. Meanwhile, the government said that though revenue collection will fall short by Rs 50,000 crore but expressed confidence that economic growth will exceed 7.5 per cent, with fiscal deficit remaining within the budgeted target. Some support also came with reports that the government may extend export incentives such as cheap credit to even large players in sectors like pharmaceuticals, chemicals and electronics. Meanwhile, industry body Assocham has approached the government for incentives like a cut in excise duty, teaser loans for housing and interest subvention for exporters, saying that sectors like real estate, power, steel, gems and jewellery are in a real crisis. It has added that RBI, banks, states and the Centre should move fast to rescue the troubled power distribution companies.

Markets extended gains with European counters making superb opening with CAC, DAX and FTSE were trading with a gain of over two percent helped by gains in Asian and US equity markets overnight, while energy stocks could also be lifted by firmer oil prices. Asian markets rallied after prospects of a near-term interest rate hike by the Federal Reserve ebbed in the wake of Friday's weaker-than-expected U.S. employment data.

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 too supported the sentiments. The rupee appreciated by 24 paise to trade at 65.27 against the US dollar at the time of equity markets closing at the Interbank Foreign Exchange on increased selling of American currency by exporters.

Buying in steel stocks also aided sentiments on expectations that China will take steps to accelerate growth. Shares of companies related to oil exploration and production space too remained on buyers’ radar as crude oil prices extended previous trading session’s gains. Sugar stocks also remained in limelight on reports that the government is working on a new subsidy scheme to be implemented in the current 2015-16 season, which started this month, to boost export of surplus sugar and help mills clear dues of over Rs 12,000 crore to farmers.

The NSE’s 50-share broadly followed index Nifty gained around one hundred and seventy points to end above its psychological 8,100 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex zoomed by over five hundred and sixty points to end above its crucial 26,750 mark. The broader markets too traded jubilantly throughout the session and ended the session with a gain of over one and a half percentage points. The market breadth remained in favour of advances, as there were 2,001 shares on the gaining side against 792 shares on the losing side while 99 shares remain unchanged.

Finally, the BSE Sensex surged by 564.60 points or 2.15% to 26785.55, while the CNX Nifty soared by 168.40 points or 2.12% to 8119.30.

The BSE Sensex touched a high and a low 26822.42 and 26375.31, respectively. The BSE Mid cap index was up by 1.79%, while Small cap index was up by 1.62%.

The top gaining sectoral indices on the BSE were Capital Goods up by 3.28%, Bankex up by 2.80%, Metal up by 2.49%, Power up by 2.31% and PSU up by 2.12%, while there were no losers on the sectoral index.

The top gainers on the Sensex were Tata Motors up by 6.13%, Tata Steel up by 5.82%, ICICI Bank up by 4.90%, Hindalco up by 4.74% and HDFC up by 4.73%. On the flip side, Maruti Suzuki down by 3.59%, Lupin down by 1.14%, Dr. Reddys Lab down by 1.13% and Hindustan Unilever down by 0.55% were the top losers.

Meanwhile, economic Affairs Secretary Shaktikanta Das has said that the government is looking to simplify foreign direct investment (FDI) policy with an aim to remove some of the conditions that investors need to fulfill while investing in the country as it looks to further ease procedures to attract more investment, including domestic, at a time when the RBI has cut rates too. The government will not just look at increasing FDI limits in sectors but also put more sectors on the automatic route, among other measures.

Das said that Foreign Investment Promotion Board (FIPB) will now meet twice a month to speed up approvals, signaling the clear intent of the government in order to push ahead the reforms on a wide range of issues. Das further said that the Sectoral caps need to be revised and the process of approval should be automatic unless there are security concerns or in sensitive sectors.

Das said that the FIPB presently meets an average of once every month while the entire approval process take more than three months even for investments of a few crores of rupees. Besides, the current policy has sectors in which no investment is allowed while others are open to levels such as 26 per cent, 49 per cent, 74 per cent and 100 per cent, depending on how sensitive they are. The policy document, which is more than 120 pages long, has a number of conditions for every sector.

The CNX Nifty touched a high and low 8128.90 and 8005.10 respectively.

The top gainers on Nifty were Tata Steel up by 6.24%, Tata Motors up by 5.79%, ICICI Bank up by 5.79%, Bosch up by 5.05% and HDFC up by 5.01%. On the flip side, Maruti Suzuki down by 3.46%, Dr. Reddys Lab down by 1.26%, Lupin down by 1.16%, Hindustan Unilever down by 0.80% and Wipro down by 0.03% were the top losers.

European Markets were trading in the green; France’s CAC was up by 3.17%, Germany’s DAX was up by 2.24% and UK's FTSE was up by 2.15%.

The Asian equity markets ended in green on Monday, following a disappointing US jobs report that has chipped away at the prospect of an interest rate hike from the Federal Reserve by the end of the year. China Stock exchange was closed on account of ‘National Day’ holiday. The World Bank cut its 2015 and 2016 growth forecasts for developing East Asia and Pacific, and added that the outlook was clouded by the risk of a sharp slowdown in China and possible spillovers from expected increases in US interest rates. The Washington-based lender now expects the developing East Asia and Pacific (EAP) region, which includes China, to grow 6.5% in 2015 and 6.4% in 2016, down from 6.8% growth in 2014. The bank raised concern that the outlook for household incomes and business profits in Indonesia and Malaysia was clouded by weakness in global commodity markets. The World Bank stated that stress may arise whenever individual firms and sectors suffer from a significant concentration of liabilities, adding that such risks are a special concern in Indonesia, Malaysia, Thailand and Vietnam.

Japanese wage growth slowed in August and summer bonuses fell from last year, a discouraging sign for private consumption that should keep policymakers under pressure to offer more stimulus as fears of a recession grow. The Labour ministry stated that Japanese wage growth slowed in August, a discouraging sign for private consumption that should keep policymakers under pressure to offer more stimulus as fears of a recession grow. Japan’s Average Cash Earnings fell to a seasonally adjusted 0.5%, from 0.9% in the preceding quarter whose figure was revised up from 0.6%. Hong Kong Retail Sales fell to a seasonally adjusted annual rate of -5.4%, from -2.8% in the preceding month.