Benchmarks once again makes a gap-up opening on Tuesday

With a gap-up opening Indian equity markets have extended their last session’s sharp rally and are now trading with gains of about a quarter a percent, on the back of firm global cues. Traders were getting support with statement of finance minister Arun Jaitley that India is going through a 'revolutions of raising aspirations' and a growth of 6% to 8% was no longer enough. Some support also came on reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 649.90 crore yesterday, as per provisional data released by the stock exchanges. Further, the Indian rupee strengthened by 4 paise to 65.25 against the dollar in early trade on account of sustained selling of the US currency by exporters and banks, also added to the positive milieu. However, there was some cautiousness too in the markets ahead of Nikkei India Services PMI data for September 2015, which is scheduled to release later in the day. The seasonally adjusted Nikkei Services Business Activity index rose to 51.8 in August 2015, from 50.8 in July 2015.

In the scrip specific development, J Kumar Infraprojects and ITD Cementation India surged by up to 16 per cent on the BSE in early morning trade on reports that these companies have emerged L1 bidders for Mumbai Metro rail blocks.

On the global front, the US markets ended higher as rising oil prices boosted energy stocks and investors bet the Federal Reserve would not raise interest rates this year. The Asian markets were trading in green following the overnight rally on Wall Street and in European markets.

Closer home all the sectoral indices, barring Bankex were trading in fine fettle led by Consumer Durables, Healthcare, Realty and Metal. The market breadth on BSE was positive in the ratio of 1206: 473 while 66 scrips remained unchanged. 

The BSE Sensex is currently trading at 26888.50, up by 102.95 points or 0.38% after trading in a range of 26856.20 and 27010.27. There were 23 stocks advancing against 7 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.36%, while Small cap index gained 0.77%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.67%, Healthcare up by 1.58%, Realty up by 1.25%, Metal up by 1.19% and Oil & Gas up by 1.03%, while Bankex down by 0.07% was the only losing index on BSE.

The top gainers on the Sensex were Dr. Reddys Lab up by 2.68%, Coal India up by 2.63%, Tata Motors up by 2.62%, GAIL India up by 2.08% and Sun Pharma Inds. up by 1.76%. On the flip side, BHEL down by 1.37%, HDFC down by 0.88%, HDFC Bank down by 0.78%, Bajaj Auto down by 0.33% and Maruti Suzuki down by 0.28% were the top losers.

Meanwhile, after S&P, another global rating agency Moody’s in its credit outlook has said that the 18% reduction in gas price for the six month period starting October 1 was credit-negative for producers such as Oil and Natural Gas Corporation (ONGC) and Oil India, since it would lower their revenue and cash flow. It added that the sharp cut in natural gas prices notified by the Indian government will not only impact state-run companies but will also discourage new exploration investments and fuel imports.

Moody's said that India relies on natural gas imports to meet its energy needs. Imports accounted for 36% of the total natural gas consumption in India for fiscal 2015 and 39% for the five months between April 1 and August 30, 2015. It added that imports will continue to increase as low international gas prices stimulate demand for natural gas and low domestic prices discourage further investments by upstream players to explore and develop new gas reserves.

The rating agency in its report has said that gas price reduction will have its greatest effect, in absolute terms, on ONGC, and at present sale volumes, it expect ONGC's revenue to decline by about $300 million (approximately Rs 2,000) for the six months between October 1 and March 31. OIL revenues, it said, would decline by about $33 million (approximately Rs 220 crore) for the same period.

India sets natural gas prices by taking a volume-weighted annual average of the rate prevailing in the US, Britain, Canada and Russia. Prices are calculated on the trailing 12 month data with a lag of one quarter. Accordingly, the price came down to $3.82 per mBtu (million British thermal unit) from $4.66 on a gross calorific value basis for the six month period starting October 1. Moody’s has said that with benchmark prices still low, the government-mandated domestic natural gas price is likely to remain muted over the next 12-18 months. It has further stated that its assumption for Henry Hub natural gas prices for 2016 is $3 per mBtu and $3.25 per mBtu for 2017.The CNX Nifty is currently trading at 8149.90, up by 30.60 points or 0.38% after trading in a range of 8129.45 and 8180.95. There were 34 stocks advancing against 16 stocks declining on the index.

The top gainers on Nifty were Bosch up by 2.97%, Tata Motors up by 2.68%, Dr. Reddys Lab up by 2.63%, Lupin up by 2.08% and Idea Cellular up by 2.08%. On the flip side, BHEL down by 1.49%, Bank Of Baroda down by 1.21%, HDFC Bank down by 0.89%, Zee Entertainment down by 0.78% and Bajaj Auto down by 0.62% were the top losers.

Asian markets were trading in green, KOSPI Index increased 10.57 points or 0.53% to 1,988.82, FTSE Bursa Malaysia KLCI increased 12.83 points or 0.78% to 1,660.42, Straits Times increased 27.42 points or 0.96% to 2,878.67, Hang Seng increased 54.74 points or 0.25% to 21,909.24, Taiwan Weighted increased 63.15 points or 0.76% to 8,415.51, Jakarta Composite increased 98.08 points or 2.26% to 4,441.79 and Nikkei 225 increased 169.46 points or 0.94% to 18,174.95.