Benchmarks extend winning streak for fifth straight session

Extending their winning streak for fifth day in a row, Indian equity benchmarks ended the session with a gain of over half a percent. Domestic gauges, after a firm start, gave up their entire gains in noon deals as sentiments weakened after the seasonally adjusted Nikkei Business Activity Index slowed to 51.3 in September from 51.8 in August, but remained above the 50-mark for the third straight month which separates contraction from expansion. Choppiness also crept in after the government has said that the total revenue collection will fall short by Rs 50,000 crore (5-7 per cent) in the current financial year mainly because of subdued growth in direct taxes.

Hectic buying activity which took place during last leg of trade mainly drove the markets higher, with frontline gauges ending at intraday high levels, recapturing their crucial 26,900 (Sensex) and 8,150 (Nifty) bastions. Sentiments turned upbeat after outlining the roadmap of the BJP-led government for the coming months, Finance Minister Arun Jaitley said that the Goods and Services Tax (GST) will be a “top priority” and he hopes to take the Bankruptcy Code to Parliament in the Winter session. Prime Minister Narendra Modi too in a speech to Indian and German businesses said that government hopes to roll out a new GST in 2016. Some support also came with Finance Minister’s statement that India has now reached a situation where it is no longer satisfied with a 6 to 8 percent growth rate and most Indians believe that “my normal is eight plus (growth rate), probably closer to nine per cent” and higher.

On the global front, European counters have made a weak start after German factory orders unexpectedly fell in August in a sign that Europe’s largest economy is vulnerable to weaker growth in China and other emerging markets. However, All the Asian markets ended in green with Japan’s Nikkei extending the rebound from eight-month low hit a week ago, helped by speculation that the Bank of Japan might adopt stimulus to support the flagging economy.

Back home, some support came with reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 649.90 crore on Monday, as per provisional data released by the stock exchanges. Meanwhile, sugar stocks remained on buyer’s radar after reports that the government is working on a new subsidy scheme to be implemented in the current 2015-16 season, to boost export of surplus sugar and help mills clear dues of over Rs 12,000 crore to farmers. However, cement stocks remained pressure after Credai went to fair trade regulator Competition Commission of India (CCI) against the Cement Manufacturers’ Association (CMA) alleging price manipulation. It said that cement prices jumped 20-40 per cent in major cities across the country in the past two months.

The NSE’s 50-share broadly followed index Nifty rose by over thirty points and ended above the psychological 8,150 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged by around one hundred and fifty points to finish above the psychological 26,900 mark. Broader markets too traded with traction throughout the trade and ended the session with a gain of around a half a percent. The market breadth remained in favor of advances, as there were 1,589 shares on the gaining side against 1,151 shares on the losing side while 114 shares remain unchanged.

Finally, the BSE Sensex surged by 147.33 points or 0.55% to 26932.88, while the CNX Nifty gained 33.60 points or 0.41% to 8152.90.

The BSE Sensex touched a high and a low 27010.27 and 26751.25, respectively. The BSE Mid cap index was up by 0.31%, while Small cap index was up by 0.69%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 4.30%, FMCG up by 2.41%, Metal up by 2.14%, Oil & Gas up by 1.92% and PSU up by 1.11%, while IT down by 1.18%, TECK down by 0.82% and Bankex down by 0.23% were the losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 5.81%, ITC up by 4.21%, Coal India up by 4.02%, Cipla up by 3.36% and GAIL India up by 3.17%. On the flip side, BHEL down by 2.82%, Infosys down by 2.17%, Maruti Suzuki down by 1.32%, NTPC down by 1.30% and Axis Bank down by 1.05% were the top losers.

Meanwhile, Prime Minister Narendra Modi has expressed India’s concerns to German Chancellor Angela Merkel about banning of over 700 drugs two months back and has urged Chancellor to use her influence in EU to remove the barriers for resumption of Free Trade Agreement (FTA) talks with the 28-member bloc.

Foreign Secretary S Jaishankar said 'we would go forward with negotiations' though there was an issue of India’s pharmaceutical exports getting affected. He further said 'It was our hope that this matter would be looked at fairly and sensibly and hopefully would not be an impediment to the FTA'.

Earlier in August India had deferred scheduled talks on the proposed pact later this month which was to resume after a gap of two years after the EU imposed a ban on around 700 generic drugs which were clinically tested by India's GVK Biosciences on the ground of inaccuracy in data.

The FTA talks are stuck on the issues relating to intellectual property rights (IPR), data security for IT services and tariff in the automobile sector. The last talks on FTA were held in May 2013. The EU has been maintaining that it was ready to show flexibility on all major issues that have stalled the talks as the FTA will be a 'win-win deal' for both the sides. Besides, EU was also looking at various sectors such as insurance, banking and retail for economic engagement with India. Meanwhile, India is asking to grant data secure nation status by European Union.

The CNX Nifty touched a high and low 8180.95 and 8096.50 respectively.

The top gainers on Nifty were Tata Motors up by 5.74%, ITC up by 4.13%, Cipla up by 3.81%, Coal India up by 3.71% and GAIL India up by 3.65%. On the flip side, BHEL down by 3.16%, Infosys down by 2.09%, Ultratech Cement down by 1.70%, ACC down by 1.58% and NTPC down by 1.57% were the top losers.

European Markets were trading mostly in the green; France’s CAC was up by 0.31% and Germany’s DAX was up by 0.33%, while UK's FTSE was down by 0.22%.

The Asian equity markets ended mostly in green on Tuesday, extending gains into a second session following another US rally. China Stock exchange was closed on account of ‘National Day’ holiday. The International Monetary Fund stated that China has the capacity to manage its economic slowdown but needs to communicate policy more effectively and guard against potential spillovers. The Fund added that China needed to expand market forces to return to sustainable growth and to implement effective governance. The Fund calculates that every percentage point slowdown in China’s growth translates into a 0.3 percent decline for other Asian countries, although it noted that the impact of China’s slowdown had likely been exacerbated by declines in its financial markets in recent months. Indonesia’s banks need to consider the likely risk of a further depreciation in the rupiah before deciding whether to lower their lending rates, the country’s central bank governor stated, after the cabinet secretariat said President Joko Widodo would seek to encourage reductions in interest rates. Bank Indonesia Governor Agus Martowardojo told that lower annual inflation in September provided room for banks to reduce lending rates, but they have to also consider expectations of (rupiah) depreciation, which would make it quite risky to adjust the level of their rate. 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%.