Boisterous benchmarks stage a remarkable rally; Nifty ends above 7850 mark

A session after displaying a distressing performance, Indian benchmark indices managed to pull through a scintillating performance by vivaciously rallying over a percentage points on Wednesday, on the back of widespread gains in blue-chips. Sentiments remained up-beat on report that the current account deficit (CAD) narrowed to 1.6 percent of GDP at $ 8.2 billion in the second quarter ended September, compared to $10.9 billion or 2.2 per cent of GDP reported in the same period last year, mainly due to lower trade deficit. Appreciation in Indian rupee too aided sentiments. Extending its gains for the seventh day in a row, the rupee strengthened by 9 paise to 66.24 against the US dollar in early trade on continued selling of the American currency by exporters and banks amid fresh foreign funds inflows. However, some gains were capped on the report that the Business sentiment in the country eased for the second consecutive month in December as weak demand weighed on companies. The MNI India Business Sentiment Indicator, a gauge of current sentiment among BSE-listed companies, fell slightly to 60.7 in December from 60.9 in November. Furthermore, industry body PHD Chamber said the process of initiating policy reforms has slowed down in the last few months, which will have a ‘long term’ impact on the economy.  The trading volumes were low in today’s session as traders turned cautious in a truncated week with stock exchanges closed on Friday on account of Christmas Day. Also, the Winter Session of Parliament ended today on a disappointing note with the Goods and Service Tax (GST) Constitutional Amendment Bill as well as the Bankruptcy Bill failing to clear vote.

On the global front, Asian market ended mostly in green as investors’ cheered strong US data and a pause in the greenback's rally. Overnight, the Dow Jones Industrial Average jumped nearly 200 points after the final estimate for US third quarter gross domestic product was revised down to 2 per cent from a previous 2.1 per cent, but that still beat expectations for a 1.9 per cent reading. Further, European shares followed their Asian and US peers and ended higher on Wednesday as a rebound in crude oil prices gathered strength, encouraging investor optimism about broader financial markets.

Back home, the benchmark got off to a positive start in the morning trade as investors were largely influenced by the supportive leads from Asian markets. The frontline indices soon gathered momentum and traded with over half percent gains through the morning session of trade. Sentiments got some support with the report that foreign portfolio investors (FPIs) bought shares worth a net Rs 168.73 crore on December 22, 2015.  Second half of the session saw the key gauges capitalize on the momentum further and spurt to session’s highest levels. However, a mild profit booking in dying moments of trade ensured that the key indices shut shops off the intraday highs. Eventually the NSE’s 50-share broadly followed index Nifty, climbed by over a percent and settled above the crucial 7,850 support level while Bombay Stock Exchange’s Sensitive Index Sensex amassed two hundred and fifty points and closed below the psychological 25,800 mark. On the BSE sectoral space, Oil and gas shares showed a stellar performance as global crude oil stabilized after they hit 11-year lows early this week. Some support also came with report that India's fuel consumption rose 6.4% in November to 14.8 million tonnes from 13.9 million tonnes recorded in the same month of previous year.  Besides, recovery in the commodity prices has lifted the metal pack higher. Shares like Hindalco, Tata Steel and Vedanta shot up between 2%-4%.  Further, IT majors who had weakened in the previous session on account of sharp hike in US visa fees, recovered some of their losses in today's session. On the other hand, select auto shares witnessed selling pressure with M&M, Force Motors and Hero Motocorp down between 0.2-0.5 percent. Among individual stocks, Sun Pharma extended gains and has jumped over 3 percent in today’s session after the reports that the US FDA has directed the company to systematically improve the oversight of manufacturing quality to ensure sustainable quality assurance. Also Capital Goods major L&T has soared after its construction division, L&T Construction, won orders worth Rs 1178 crore across various businesses in December 2015. 

The market breadth remained in favor of Advances, as there were 1526 shares on the gaining side against 1145 shares on the losing side, while 247 shares remained unchanged.

Finally, the BSE Sensex surged by 259.65 points or 1.01% to 25850.30, while the CNX Nifty gained 79.85 points or 1.03% to 7,865.95.

The BSE Sensex touched a high and a low 25875.27 and 25689.70, respectively. The broader indices ended in green, with the BSE Mid cap index ending up by 0.39%, while Small cap index ending higher by 0.41%.

The top gaining sectoral indices on the BSE were Metal up by 1.87%, Oil & Gas up by 1.47%, Power up by 1.30%, Realty up by 1.22%, Capital Goods up by 1.13%, while Consumer Durables down by 0.27% were the sole losing indices on BSE.

The top gainers on the Sensex were GAIL India up by 5.82%, BHEL up by 3.58%, Sun Pharma Inds. up by 3.52%, Bharti Airtel up by 2.72% and Tata Steel up by 2.53%. On the flip side, Mahindra & Mahindra down by 0.45%, Hero MotoCorp down by 0.25%, Adani Ports &Special down by 0.21%, Asian Paints down by 0.18% and Bajaj Auto down by 0.05% were the top losers.

Meanwhile, giving some respite to the government, the current account deficit (CAD) narrowed to 1.6 percent of GDP at $ 8.2 billion in the second quarter ended September, compared to $10.9 billion  or 2.2 percent of GDP reported in the same period last year, mainly due to lower trade deficit. However, the CAD was higher than the first quarter’s $6.2 billion or 1.2 percent of GDP, due to a drop in export of goods. Earnings from export of goods dropped to $67 billion in Q2FY16 from $68 billion in Q1FY16.

During the first 6 months of the current fiscal, the CAD narrowed to 1.4 percent of GDP at $71.6 billion from 1.8 percent $74.7 billion in the same period a year ago on contraction in the trade deficit and a marginal improvement in net invisibles. However, RBI in the second quarterly balance of payments data release has said that after a sharp pick up in the first quarter, net foreign direct investment (FDI) moderated in second quarter of 2015-16.

RBI further said that although net services receipts moderated marginally on a y-o-y basis largely due to fall in export receipts in transport, insurance and pension services, there has been some improvement over the preceding quarter. Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to $16.5 billion, a marginal decline from their level in the preceding as well as the corresponding quarter.

The overall balance of payments (BoP) position for the second quarter - which includes trade as well as capital flows - turned marginally negative as there was a drawdown of $900 million from the foreign exchange reserves following sales by foreign institutional investors. The BoP for the first six months continued to remain positive with total accretion of $10.6 billion to forex reserves, which was lower than $18 billion in the first half of FY15.

The CNX Nifty touched a high and low 7,871.45 and 7,826.10 respectively.  

The top gainers on Nifty were GAIL India up by 6.09%, Hindalco up by 5.78%, Vedanta up by 3.95%, BHEL up by 3.89% and Sun Pharma up by 3.80%. On the flip side, Mahindra & Mahindra down by 0.59%, Asian Paints down by 0.48%, Adani Ports down by 0.47%, BPCL down by 0.40% and Bajaj Auto down by 0.33% were the top losers.

European Markets were trading in green; France’s CAC was up by 1.52%, Germany’s DAX was up by 1.56% and UK’s FTSE was up by 1.42%.

Asian equity markets ended mostly in green on Wednesday, with buying supported by Wall Street rally as positive reading on US growth and consumer spending buoyed optimism about the recovery in the world's largest economy. Hong Kong stocks ended higher, aided by strength on Wall Street, and a sharp rebound in energy shares after oil prices bounced off 11-year lows. Overall gains, however, were limited by a lack of investor participation in a holiday-shortened week. Chinese shares reversed early gains to end lower as investors sold shares to subscribe to upcoming IPOs. The Japanese market was closed in observance of the Emperor's Birthday.