Post Session: Quick Review

Indian markets extended the gaining streak for the fourth day despite volatility, the local benchmarks that made a strong start, tailing the global rally after the US Federal Reserve raised interest rates for the first time in almost a decade and Fed Chair Janet Yellen emphasizing that further tightening would be slow, turned choppy and slipped to its lows in the very first hour of trade amid uncertainty over the GST with the main opposition Congress cold shouldering parliamentary affairs minister M Venkaiah Naidu's call to meet afresh for talks on the GST bill, the government appeared reconciled to miss the April 1 deadline to roll out the ambitious tax reforms and may make fresh attempts to pass the GST bill in the second half of the budget session early next year. However, after moving in a tight range till noon, markets suddenly gained pace and started moving higher, taking some encouragement with  Fitch Ratings’ statement that India is better placed than many of its peers after the US Federal Reserve raised its key interest rates. The rating agency said though, India is not immune to potential general emerging market jitters related to the Fed lift-off, but it is better placed than many of its peers for a number of reasons. Firstly India's external balances have significantly improved since mid-2013; secondly, India is less dependent than several of its peers on commodity exports. Chief Economic Adviser Arvind Subramanian too said that the rate hike by the US Federal Reserve is in line with global expectations and its impact on India will be “very minimal” due to our strong macroeconomic conditions.

The global markets mostly welcomed the Fed move and after US rally overnight the Asian markets followed, seeing the interest rates hike for the first time in almost a decade as an endorsement of better US economic growth, withstanding a higher cost of borrowing, even amid lackluster inflation. The European markets to made a strong start on Fed’s assurances that any further moves will be gradual. Also, UK retail sales rose more than forecast, up by 1.7 percent from October.

Back home, markets surged in second half posting smart gains and nearing their two weeks high on continued buying by retail investors, tracking a firming trend at other markets. Though there was buying across the board but some blue-chips which witnessed short covering at lower levels contributed greatly to the rally. While, the Sensex notched triple-digit gains, Nifty slightly missed the fate, closing just below 7850 mark. Though, all the sectoral indices snapped the session in green but there was some buzz in the steel companies from the very beginning after Ministry of steel published draft order on its website prohibiting production, sales and trading without Bureau of Indian standards (BIS) approval. Tata Steel gained 5%, JSW Steel gained over 3%, SAIL surged by over 6% and Vedanta was up by around 4%. IT sector that was looking in somber mood in the beginning after the United States Congress raised the outsourcing fee imposed on highly qualified Indian IT professionals to $4,000 from $2,000, too surged towards the end. The fees will be increased for applicants that employ 50 or more employees in the United States if more than 50 percent of the applicant's employees are non immigrants.

The BSE Sensex ended at 25781.50, up by 287.13 points or 1.13% after trading in a range of 25448.32 and 25831.31. There were 26 stocks in green against 4 stocks in red on the index. (Provisional)

The broader indices too ended with good gains; the BSE Mid cap index was up by 1.54%, while Small cap index up by 1.76%. (Provisional)

All the sectoral indices gained on the BSE, Metal up by 2.49%, Realty up by 1.41%, Auto up by 1.41%, Power up by 1.34%, IT up by 1.09% were the top gainers. (Provisional)

The top gainers on the Sensex were Tata Steel up by 4.86%, Vedanta up by 3.75%, Hindalco up by 3.63%, Reliance Industries up by 3.49% and Bajaj Auto up by 3.20%. On the flip side, ONGC down by 0.73%, GAIL India down by 0.51%, Axis Bank down by 0.41% and Lupin down by 0.35% were the top losers. (Provisional)

Meanwhile, considering the high demand of coal in the country than the current level of production and supply, the Cabinet Committee on Economic Affairs (CCEA) has given its approval for allotment of coal blocks to central and state public sector undertakings (PSUs) for the sale of the fossil fuel mainly to medium, small and cottage, under the provisions of the Coal Mines (Special Provisions) Act, 2015. This has ended the 41-year-old monopoly of the central government over mining and sale of coal.

This move is expected to improve domestic production of coal in order to meet growing demand of the economy, potentially cutting down imports. The move is likely to benefit the mineral-rich states to earn surplus revenue, which were until now earning royalty from private companies mining coal for captive use. Currently, states are allotted coal blocks but with specified end-use such as power production, steel and iron production etc.

The coal bearing States shall be getting additional revenue from such coal mines equal to the amount of royalty on the quantity of coal produced on a monthly basis during the lease period/life of the mine as well as one time upfront payment which is 10 percent of the intrinsic value of coal in the mine in three installments in the first year of allotment. It is expected that the incremental coal produced from such coal mines would cater to the unmet demand of the coal in the country, especially of medium, small and micro industries and bridge the gap between demand and supply considerably.

In the last fiscal year 2014-15, the domestic production of coal was 612.4 million tonnes (Provisional) ,as against a total consumption of 825.6 million tonnes (provisional).The gap between consumption and domestic supply is met through imports. Due to sustained efforts for increase in domestic production, import of coal that was showing positive growth since 2011-12, registered a negative growth of 12.2 percent during April-November 2015. However, the gap between the demand and the supply continues to be, large.

The CNX Nifty ended at 7844.65, up by 93.75 points or 1.21% after trading in a range of 7737.55 and 7852.90. There were 42 stocks on gainers side against 8 stocks on losers side on the index. (Provisional)

The top gainers on Nifty were Tata Steel up by 4.99%, Tata Power up by 4.19%, Hindalco up by 3.88%, Vedanta up by 3.81% and Reliance Industries up by 3.52%. On the flip side, Bosch down by 2.10%, Idea Cellular down by 1.07%, Cairn India down by 0.80%, ONGC down by 0.68% and GAIL India down by 0.64% were the top losers. (Provisional)

European markets were trading with solid gains, UK’s FTSE 100 was up by 86.55 points or 1.43% to 6,147.74, France’s CAC added 115.83 points or 2.5% to 4,740.50 and Germany’s DAX surged by 311.79 points or 2.98% to 10,781.05.

Asian equity markets closed in green on Thursday, taking cues from a positive finish in Wall Street overnight after the Federal Reserve raised its target federal funds rate to a range of 0.25 to 0.5 percent. The rationale behind the move, the first since 2006, - Labor market has considerably improved this year and the central bank is confident of inflation rising over the medium term towards its 2 percent objective. China stocks ended higher as risk appetite improved after the Federal Reserve raised rates, as expected, removing a major source of uncertainty about the US central bank's policy.