Benchmarks extend winning streak for second straight session

Tuesday’s session turned out to be a fabulous day of trade for the Indian equity markets, where bulls maintained momentum for second consecutive session, garnering a gain of around half a percent. Hectic buying activity which took place during second half of trade mainly drove the markets higher, with frontline gauges ending near their crucial 25,900 (Sensex) and 7,850 (Nifty) mark. After a gap-up opening, marketmen booked all their initial gains at higher levels amid report that India’s merchandise exports dipped for the 11th month in a row and stood at $21.35 billion, down by 17.33 percent, due to weak global demands. However, the data showed trade deficit narrowed to $9.8 billion in October compared with $10.5 billion in the previous month.

Sentiments took U-turn in second half of trade, as market-participants opted to take positions in beaten down but fundamentally strong stocks. Traders got some encouragement with Finance Minister Arun Jaitley’s statement that the government would make all efforts to persuade the opposition for the passage of Constitution amendment bill for implementation of GST in the winter session. The Goods and Services Tax (GST), which will subsume more than a dozen state levies to create a single market, is to be implemented from April 1, 2016.

Firm opening in European counter too aided sentiments. CAC, DAX and FTSE were trading with a gain of around two percent in early deals, as Eurozone inflation turned positive in October, thanks to a slower pace of decline in energy prices. All the Asian markets, barring Shanghai Composite, ended higher on Tuesday with most of them garnering gains in excess of a percent ahead of the US inflation data release.

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. On the currency front, the rupee advanced by 5 paise to 65.95 against the dollar at the time of equity markets closing on sustained selling of the American currency by exporters and banks.

On the sectoral front, stocks related to Oil and Gas counter kept buzzing after the government issued a new draft hydrocarbon policy under which blocks will be awarded on the basis of a simpler revenue-sharing model versus the earlier profit-sharing model. Shares of tea companies remained in limelight on expectation that tea prices will surge amid likely drop in production. Sugar stocks too remained on buyers’ radar after some reports stated that the government is planning to offer a subsidy of Rs 1,200 crore to farmers. On the flip side, software counter remained under pressure due to rupee appreciation and as IT major Infosys warned about weak margins in the December quarter.

The NSE’s 50-share broadly followed index Nifty rose by thirty points and ended near the psychological 7,850 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged by over hundred points to finish near the psychological 25,900 mark. Broader markets too traded with traction throughout the trade and ended the session with a gain of around half a percentage point. The market breadth remained in favour of advances, as there were 1,400 shares on the gaining side against 1,288 shares on the losing side while 171 shares remained unchanged.

Finally, the BSE Sensex surged by 104.37 points or 0.41% to 25864.47, while the CNX Nifty gained 30.95 points or 0.40% to 7837.55. 

The BSE Sensex touched a high and a low 25948.20 and 25732.79, respectively. The BSE Mid cap index was up by 0.31%, while Small cap index was up by 0.47%.   

The top gaining sectoral indices on the BSE were FMCG up by 2.17%, Metal up by 1.03%, Healthcare up by 0.79%, Auto up by 0.55% and Power up by 0.34%, while Consumer Durables down by 0.40%, IT down by 0.33%, Realty down by 0.27%, Bankex down by 0.26% and TECK down by 0.20% were the losing indices on BSE.

The top gainers on the Sensex were GAIL India up by 4.04%, ITC up by 2.91%, Vedanta up by 2.68%, Hindalco up by 2.15% and Tata Steel up by 2.05%. On the flip side, Infosys down by 1.77%, Dr. Reddys Lab down by 1.73%, Axis Bank down by 1.32%, Bajaj Auto down by 1.19% and Hero MotoCorp down by 1.00% were the top losers.

Meanwhile, the government has tweaked the provisions of the procurement policy, according to which now the Central government ministries and public sector undertakings (PSUs) would be required to procure “at least” 20 per cent of their annual value of goods or services from micro and small enterprises (MSEs). The change has been made in the provision 6 of the Policy wherein the phrase 'up to' has been substituted with 'at least'. With the new norms SMEs are now eligible to supply “at least” 20 per cent of the requirement at the lowest quoted price in a bidding.

According to the earlier provision 6 of the Policy it is mentioned that in tender, participating Micro and Small Enterprises quoting price within price band of L1+15 percent shall also be allowed to supply a portion of requirement by bringing down their price to L1 price in a situation where L1 price from someone other than a Micro and Small Enterprise and such Micro and Small Enterprise shall be allowed to supply “up to” 20 per cent of total tender value.

The revised Provision 6 of the Policy should be read as in tender, participating Micro and Small Enterprises quoting price within price band of L1+15 percent shall also be allowed to supply a portion of requirement by bringing down their price to L1 price in a situation where L1 price from someone other than a Micro and Small Enterprise and such Micro and Small Enterprise shall be allowed to supply “at least” 20 per cent of total tendered value.

Government of India had introduced a Public Procurement Policy for Micro and Small Enterprises (MSEs) Order, 2012 which is notified under MSMED Act 2006.  Under the Policy every Central Government Ministries, Departments and Public Sector Undertakings shall procure minimum of 20 per cent of their total annual value of goods or services from Micro and Small Enterprises.

The CNX Nifty touched a high and low 7860.45 and 7793.00 respectively.

The top gainers on Nifty were GAIL India up by 4.02%, Cairn India up by 3.57%, ITC up by 3.03%, Vedanta up by 2.74% and Ambuja Cement up by 2.63%. On the flip side, BPCL down by 2.34%, Infosys down by 2.00%, Dr. Reddys Lab down by 1.97%, Bank of Baroda down by 1.93% and Grasim Industries down by 1.75% were the top losers.

European Markets were trading mostly in the green; France’s CAC was up by 2.10%, Germany’s DAX was up by 1.69% and UK’s FTSE was up by 1.80%.

The Asian markets closed mostly higher on Tuesday, after a solid rebound for Wall Street and oil prices pushed markets higher, helping them recoup gains suffered in the aftermath of last week’s attacks in Paris. Japanese Prime Minister Shinzo Abe said that the Bank of Japan is unlikely to offer any further monetary easing this year to avoid unwelcome yen falls that would hurt low-income households.  Japan’s economy slipping into a technical recession for the second time since Prime Minister Shinzo Abe came to office has led to question the efficacy of his aggressive blend of economic policies dubbed ‘Abenomics’. Indonesian Vice President Jusuf Kalla stated that the central bank, which is about to begin its monthly policy meeting, should cut its benchmark interest rate. The poll conducted showed that Bank Indonesia will hold its rate at 7.50 percent, where it has been since February, in the wake of rising expectations of a rate hike in the United States next month. Indonesian Finance Minister Bambang Brodjonegoro stated that China had agreed to increase a bilateral currency swap agreement with the country to $20 billion from $15 billion. Sales of private homes by developers in Singapore fell 30 percent in October from a year earlier. The Urban Redevelopment Authority showed developers sold 546 units last month, compared with 785 units in October 2014. The figure compares with 341 units sold in September of this year.