Boisterous benchmarks stage a remarkable rally; surge over 1.5%

Indian benchmark equity indices staged a blockbuster performance on the last day of the week, by vehemently rallying by over one and half percent in the session and re-conquering their several psychological levels. Sentiments got a boost after a government report showed that India’s fiscal deficit stood at Rs 4.88 lakh crore during April-December or 87.9 percent of the full-year target, indicating an improvement in its finances. The deficit was 100.2 percent of the full-year target during the same period a year ago. The improvement is mainly on account of buoyancy in tax collections, which have kept revenue deficit in check. Local sentiments also got buttressed by strong rally in global markets as a rebound in commodity prices and Bank of Japan's bold move to adopt negative interest rates to stimulate the Japanese economy stoked global risk appetite for equities. Some support also came with the buzz that Reserve Bank of India (RBI) is likely to go for a final 25-bps repo rate at its policy review meet on February 2, 2016. Appreciation in Indian rupee too aided sentiments. Snapping its three-day losing streak, Indian rupee firmed up by 30 paise to 67.93 against the US dollar on fresh selling of the American currency by exporters.

On the global front, Asian markets ended higher on Friday after Bank of Japan adopted a bold move to introduce the negative interest rates at its policy review meet in order to stimulate the Japanese economy. The rebound in global crude oil prices on hopes that Russia and OPEC could come to some solution to tackle the problem of supply glut also lifted the sentiments across the globe. Furthermore, European markets too gained, with the London FTSE up 1.25%, the German DAX up 1.1% and the French CAC 40 up 1.23%.

Back home, after getting dismal start, Indian benchmarks gained momentum and entered into positive territory in early trade, tracking positive trade in other regional markets. Thereafter, the frontline indices started their northward journey and continued throughout the session as strong buying interest was seen across the metal and oil and gas sector on the back of rebound in commodity prices. Finally the NSE’s 50-share broadly followed index Nifty, amassed triple digit gains to settle above the crucial 7,500 support level, while Bombay Stock Exchange’s Sensitive Index-Sensex accumulated about four hundred points and closed above the psychological 24,800 mark. Moreover, the broader markets too participated in the rally and closed with gains of over a percent. On the BSE sectoral space, hefty buying was seen across the board, as not even a single sectoral index went home in the negative territory. Investors piled up hefty positions in Consumer Durables counter which rocketed by over three percent, while high beta sectors like - IT, Capital Goods and Auto too soared in the session. The market breadth remained in favour of advances, as there were 1565 shares on the gaining side against 1023 shares on the losing side while 195 shares remain unchanged.

Finally, the BSE Sensex surged 401.12 points or 1.64% to 24870.69, while the CNX Nifty ended up by 138.90 points or 1.87% to 7,563.55.

The BSE Sensex traded in a range of 24911.90 and 24340.06. There were 25 stocks advancing against 5 stocks declining on the index.

The broader indices made a positive closing; the BSE Mid cap index ended up by 2.02%, while Small cap index ended up by 1.07%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 3.26%, IT up by 2.43%, TECK up by 2.04%, Capital Goods up by 1.93% and Auto up by 1.91%, while there were no losers on the sectoral index.

The top gainers on the Sensex were Coal India up by 4.73%, Hero MotoCorp up by 4.67%, Sun Pharma Inds. up by 4.60%, Hindustan Unilever up by 3.29% and Dr. Reddys Lab up by 3.21%. On the flip side, SBI down by 2.91%, Tata Steel down by 1.71%, NTPC down by 1.32%, ICICI Bank down by 1.22% and Bharti Airtel down by 0.55% were the top losers.

Meanwhile, showing some improvement in the government finances, India’s fiscal deficit for the first nine months of the current financial year narrowed compared to the same period a year ago, on account of buoyancy in tax collections that kept the revenue deficit in check. According to the data released by the Controller General of Accounts, India’s fiscal deficit for April- December 2015-16 stood at Rs 4.88 lakh crore  or 88 percent of the budget estimate for the whole year, as against Rs 5.32 lakh crore or 100.2% YoY. Though, the numbers are slightly higher than the April-November figures which came in at Rs 4.83 lakh crore but are well within the comfort levels of the government and policy observers.

As per the data released, net tax revenue for the period April-December came in at Rs 6.22 lakh crore or 67.6 percent of the full year of the budget estimate of Rs 9.19 lakh crore. Total receipts from revenue and non-debt capital of the government during the first nine months read Rs 8.25 lakh crore. The government estimates Rs 12.21 lakh crore receipts at end-March 2016.

The data further highlighted that the total expenditure touched Rs 13.33 lakh crore or 64.3 per cent at the end of December of budget estimate for the current fiscal at Rs 17.77 lakh crore. The plan expenditure during this period was Rs 3.45 lakh core, 74.4 per cent of the full-year BE. During the same period last year, the government had managed to achieve 61.3 per cent of Plan expenditure estimate. Meanwhile, non-Plan expenditure during April-December of 2015-16 was Rs 9.68 lakh crore or 73.8 per cent, of the whole-year estimate.

Meanwhile, the revenue deficit during the first nine months period stood at Rs.3.22 lakh crore or 81.7%, of BE for 2015-16 compared to 106.2 per cent of the full-year target in the corresponding period a year ago. The fiscal deficit - gap between government’s expenditure and revenue for 2015-16 has been pegged at Rs 5.55 lakh crore or 3.9 per cent of the gross domestic product (GDP).

The CNX Nifty traded in a range of 7,575.65 and 7,402.80. There were 39 stocks advancing against 11 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 11.53%, Vedanta up by 6.69%, Sun Pharma up by 5.26%, Hero MotoCorp up by 4.98% and Coal India up by 4.44%. On the flip side, Bank of Baroda down by 4.19%, SBI down by 3.08%, Tata Steel down by 2.30%, ICICI Bank down by 1.80% and NTPC down by 1.66% were the top losers.

European markets were trading in green; France’s CAC surged 59.15 points or 1.37% to 4,381.31, UK’s FTSE 100 increased 72.47 points or 1.22% to 6,004.25 and Germany’s DAX was up by 120.36 points or 1.25% to 9,759.95.

Asian equity markets ended in green on Friday, after Wall Street stocks rebounded overnight, crude prices extended overnight gains and the safe-haven Japanese yen weakened in the wake of further Bank of Japan easing. Japanese shares ended higher after the Bank of Japan (BoJ) unexpectedly eased monetary policy further by introducing a negative interest rate policy. The BoJ said it was adopting an interest rate of minus 0.1 percent, adding that it would charge interest for excess reserves financial institutions park with the central bank. The BoJ also said it would cut interest rates further into negative territory if necessary.  China stocks rebounded as investors looked for bargains among severely beaten down shares, but the market is still on track to post its biggest monthly fall since the depths of the global financial crisis. Investors drew some relief after the People's Bank of China said it would increase the frequency of open market operations between January 29 and February 19 to keep the banking system flush with cash.