Post Session: Quick Review

The Indian markets bounced back in style, recovering almost all what they had lost in last session, tracking gains in other global markets and banking on spate of policy reform announcements of the government last day. The Cabinet Committee on Economic Affairs (CCEA) has approved a 10 per cent stake sale in Coal India, an initial public offering at Cochin Shipyard and a five-year interest subsidy scheme to boost sagging exports. CCEA also empowered the National Highways Authority of India (NHAI) to revive 34 stalled projects. Traders were also encouraged by Chief Economic Adviser Arvind Subramanian’s statement that inflation is completely under control and it is well within the target of the Reserve Bank.

The global markets remained in jubilant mood and after a rally in the US markets overnight with the Fed's recent meeting providing some clarity on the prospects of a December rate hike, the Asian markets too surged and most of the indices in the region posted gains of over a percent, as the commodities bounced back and Fed stressed that the pace of any rate increases will be slow. Meanwhile, the Bank of Japan left its monetary stimulus unchanged despite the nation slipping back into recession. The European markets too made a strong start, as the oil rallied from the lowest level in more than two months.   

Back home, the markets that have been witnessing selling pressure for last some time and were in the oversold region, got the triggers with the governments’ reform measures for going up significantly higher for the day. It was a one way rally with markets hardly witnessing any profit taking and closing near the highs of the day, posting their biggest single-day gain in nearly seven weeks. The gains were broad-based today with all the sectoral indices surging on the BSE led by the IT pack after Infosys rebounded around 3 per cent today coming off its losses in last few sessions. Tech Mahindra, HCL Tech, TCS, and Wipro were among the other major gainers among the frontline IT stocks. Traders also got some support with the smart recovery in the rupee which bounced back on selling of the American unit by exporters and banks, the weakness in the dollar against other currencies too supported the rupee. Exports oriented companies, especially the textile stocks surged with the government announcing 3 per cent interest subsidy scheme for exporters. On the same time the sugar stocks suffered profit taking after moving higher for last couple of days. Shree Renuka Sugars was down by 10%, Bajaj Hindusthan was down by around 7%, Dhampur Sugars lost 5% and EID Parry was down by around 4%.

The BSE Sensex ended at 25846.41, up by 363.89 points or 1.43% after trading in a range of 25603.10 and 25884.52. There were 26 stocks on gainers side against 4 stocks on decliners side on the index. (Provisional)

The broader indices too posted good gains; the BSE Mid cap index was up by 1.29%, while Small cap index gained 1.33%. (Provisional)

The top gaining sectoral indices on the BSE were Consumer Durables up by 2.24%, IT up by 1.90%, TECK up by 1.84%, Oil & Gas up by 1.81%, Bankex up by 1.47%. (Provisional)

The top gainers on the Sensex were Bajaj Auto up by 3.17%, GAIL India up by 3.15%, HDFC up by 2.75%, Infosys up by 2.68% and Vedanta up by 2.63%. On the flip side, Dr. Reddys Lab down by 2.30%, Sun Pharma Inds. down by 1.45%, Coal India down by 0.48% and Axis Bank down by 0.13% were the top losers. (Provisional)

Meanwhile, the Union Cabinet chaired by the Prime Minister Narendra Modi has given its approval for a uniform marketing margin for supply of domestic gas to urea and LPG producers. The decision is likely to improve transparency and provide an element of certainty for future investments in gas infrastructure sector. From now on the marketing margin will be charged in rupees per thousand cubic meters with a view to insulate the consumer from currency volatality.

The new rate would be ‘fixed on non-discretionary basis” by the Petroleum and Natural Gas Regulatory Board (PNGRB) who recommended a range of Rs 150-200 per thousand cubic meters of gas ($0.115 per million British thermal unit) as a marketing margin for domestic gas being supplied to fertiliser and LPG plants. Further escalations up to the Wholesale Price Index would be decided by the Ministry for Petroleum and Natural Gas.

Marketing margin is a charge levied by gas marketing companies on its consumers over and above the cost or basic price of gas for taking on the additional risk and cost associated with marketing gas. Currently, different transporters are charging different margins for supply of natural gas. Marketing margins charged by producers and sellers of gas range from 11 cents to 20 cents per mmBtu.

Earlier in December 2013, the Oil Ministry has given freedom to gas retailers including Reliance Industries (RIL) and GAIL (India) , to fix the marketing margin they want to charge on sale of natural gas to consumers other than urea manufacturing units and LPG plants.

At present, RIL charges $0.135 per million British thermal unit (about Rs 225 per thousand cubic meters) as marketing margin on its eastern offshore KG-D6 gas. This is over an above the current gas selling price of $4.24 per mmBtu. While RIL charges marketing margin in US dollars, the same is charged in rupee -Rs 200 per thousand cubic meters by state-owned Oil and Natural Gas Corp and GAIL India Ltd. From now onwards the marketing margin will be charged in rupees per thousand cubic meters with a view to insulate the consumer from currency volatility.

The CNX Nifty ended at 7844.75, up by 112.95 points or 1.46% after trading in a range of 7765.45 and 7854.90. There were 43 stocks advancing against 7 stocks declining on the index. (Provisional)

The top gainers on Nifty were Tech Mahindra up by 3.48%, GAIL India up by 3.43%, HCL Tech. up by 3.32%, Bajaj Auto up by 3.29% and Zee Entertainment up by 3.27%. On the flip side, Dr. Reddys Lab down by 1.99%, Sun Pharma Inds. down by 1.40%, Idea Cellular down by 1.11%, Coal India down by 0.46% and Bank Of Baroda down by 0.21% were the top losers. (Provisional)

European markets were trading with good gains, France’s CAC gained 40.76 points or 0.83% to 4,947.48, UK’s FTSE 100 increased 71.54 points or 1.14% to 6,350.51 and Germany’s DAX was higher by166.13 points or 1.52% to 11,126.08.

The Asian markets closed higher on Thursday, after minutes from the Federal Reserve showed growing confidence in the US economy, ramping up the chances of a December interest rate hike. The Bank of Japan maintained its current pace of monetary stimulus, clinging to hopes that an economic recovery is in sight despite soft domestic capital expenditure and challenging global business conditions. The central bank also kept intact its assessment that while exports and output were feeling the pain from weak emerging market demand, Japan’s economy has continued to recover moderately. As widely expected, the BOJ reiterated its pledge to increase base money, or cash and deposits at the central bank, at an annual pace of 80 trillion yen ($650 billion) through purchases of government bonds and risky assets. Japan’s trade balance rose to a seasonally adjusted -0.20T compared to -0.31T in the preceding month whose figure was revised up from -0.36T. Japan’s All Industries Activity Index fell to a seasonally adjusted -0.2% compared to -0.1% in the preceding month whose figure was revised up from -0.2%.

Indonesia’s total outstanding foreign debts grew at a slower pace through the third quarter, with both the government and the private sector reluctant to take on more overseas loans amid a weakening economy. As of the end of September, total outstanding foreign debts in Indonesia stood at $302.4 trillion, up by 2.7 percent from the same period last year. That compares to 6.2 percent year-on-year growth at the end of June, when foreign debt stood at $304.5 trillion.