Late short covering bolsters Indian benchmarks; Nifty ends above 7100 mark

A session after displaying a distressing performance, Indian benchmark indices managed to pull through a scintillating performance by vivaciously rallying around a percent on Wednesday, thanks to the hefty short covering in the beaten down blue chip counters. Sentiments got some support with the report that the government is likely to meet its fiscal deficit target of 3.9 per cent of the GDP for the current financial year, largely on account of the latest round of excise duty hikes on oil products and marginal compression in expenditure. Furthermore, market participants also got some light with the report that International development banks from South Korea, Japan and Germany have shown interest in funding multibillion-dollar industrial corridors coming up across the country. These belts with special manufacturing clusters and smart cities are expected to spur economic growth.  Some support also came with Union Commerce and Industry Minister Nirmala Sitharaman’s statement that the FDI inflows in the country are improving day by day and more and more investments are coming from sectors other than IT and ITeS. However, investor remained cautious with exporters body FIEO’s observation after exports fell for the 14th month in a row, that the country may end up with outbound shipments of $260 billion in 2015-16, sharply lower than the $ 310.5 billion mark achieved in the previous fiscal. Market participants also remained concerned with report that foreign portfolio investors (FPIs) selling shares worth a net Rs 964.19 crore on February 16, 2016. Besides, the Indian rupee depreciated to near record lows against the American dollar, forcing the RBI to intervene to stem further falls, also weighing on the sentiment. The rupee dropped to as low as 68.67 to the dollar, not far from a record low of 68.85 hit in August 2013 when India was hit with its worst financial turmoil in the recent times.

On the global front, Asian stocks declined, after rebounding more than 5% over the previous two days, as energy shares sank and a stronger yen weighed on Japanese shares. Asian markets have rallied this week after sinking to a 3 1/2-year low on Friday amid concern about the growth outlook for the world’s largest economies and the rout in oil. Meanwhile, shares were higher in Europe as oil prices stabilized and strong earnings reports from French bank Credit Agricole and Germany's Schneider Electric helped boost sentiment.

Back home, after the subdued opening, the key gauges plunged to lowest point in the day on sharp across the board sell-off. Thereafter started the recovery to the bourses, which kept moving higher slowly but steadily. Second half of the session saw the key gauges capitalize on the momentum further and spurt to session’s highest levels in dying moments. However, a mild profit booking in dying moments made the markets shut shops off the intraday highs. Eventually the NSE’s 50-share broadly followed index Nifty, climbed close to a percent and settled above the crucial 7,100 support level, while Bombay Stock Exchange’s Sensitive Index Sensex amassed over one hundred and fifty points and closed above the psychological 23,300 mark. Moreover, the broader markets too went home with notable gains in the session despite underperforming their larger peers. On the BSE sectoral space, the Oil & Gas index soared by close to one and half percent being the top gainer, followed by the rate sensitive Automobile and Capital Goods counters.  On the flipside, the Consumer Durables and Bankex sectors languished at the bottom of the table with losses of 2.34% and 0.23% respectively, being the only laggards in the space. The market breadth remained pessimistic as there were 1112 shares on the gaining side against 1439 shares on the losing side while 145 shares remained unchanged.

Finally, the BSE Sensex surged by 189.90 points or 0.82% to 23381.87, while the CNX Nifty rose 60.20 points or 0.85% to 7,108.45. 

The BSE Sensex touched a high and a low 23434.91 and 22920.84, respectively. The broader indices made a positive closing; the BSE Mid cap index ended up by 0.47%, while Small cap index gained 0.35%

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.40%, Auto up by 1.03%, Capital Goods up by 0.97%, IT up by 0.88% and TECK up by 0.87%, while Consumer Durables down by 2.34% and Bankex down by 0.23% were the losing indices on BSE.

The top gainers on the Sensex were Adani Ports &Special up by 5.84%, Dr. Reddys Lab up by 3.52%, Sun Pharma Inds. up by 3.29%, Tata Motors up by 3.02% and Tata Steel up by 2.65%. On the flip side, ICICI Bank down by 3.10%, Coal India down by 1.71%, Lupin down by 1.40%, Cipla down by 0.83% and Axis Bank down by 0.49% were the top losers.

Meanwhile, Union Commerce and Industry Minister Nirmala Sitharaman has said that the Foreign Direct investment (FDI) inflows in the country are improving day by day. She further highlighted that more investments are coming from sectors other than IT and ITeS enabled services which may include a lot of things such as courier services; it could be getting into services that are partly related to logistics and retailing and so on.

The Minister further stated that the Construction and infrastructure are the second highest sectors which are receiving FDIs. Furthermore, Chemical industry is also receiving - other than fertilizers, they are also receiving a lot. She said that largely individual, trust and other corporate entities are coming in.

In the fiscal year 2014-15 India received FDI worth nearly $29.6 billion. There is 38 per cent rise in inflows, compared to 16 per cent dip globally. This shows that the Indian economy is instilling confidence in the minds of investors.  Additionally Sitharaman asserted that the US-India Business Council has assessed that in the next five years US Business Houses will be interested in investing anywhere between 40 to 45 billion US dollars in India in various sectors of activity.

The CNX Nifty touched a high and low 7,123.70 and 6,960.65 respectively. 

The top gainers on Nifty were Bank of Baroda up by 6.99%, Adani Ports & Special up by 5.86%, Dr. Reddys Lab up by 4.32%, Vedanta up by 4.13% and BPCL up by 4.13%. On the flip side, ICICI Bank down by 2.29%, Yes Bank down by 1.89%, Coal India down by 1.65%, Lupin down by 1.23% and UltraTech Cement down by 0.80% were the top losers.

European markets were trading in green; France’s CAC surged 58.23 points or 1.42% to 4,168.89, UK’s FTSE 100 increased 70.21 points or 1.2% to 5,932.38 and Germany’s DAX was up by 120.36 points or 1.32% to 9,255.47.

Asian markets ended mostly lower on Wednesday after two sessions of solid gains, while oil prices swung higher as the market reconsidered the chances of a meaningful deal to restrict supply later in the year. Japanese stocks fell in choppy trade as the yen broke from its fragile weakening trend against the US dollar after a rebound in crude oil prices fizzled and revived demand for the safe-haven Japanese currency. Chinese shares hit a fresh three-week high, as demand for infrastructure shares helped the market maintain a rebound fuelled by economic stimulus hopes after media reports suggested that the National Development and Reform Commission plans to offer 400 billion yuan ($61 billion) this quarter to fund local government's infrastructure projects.