Boisterous benchmarks stage a remarkable rally; Nifty ends above 7700 mark

Indian equity indices showcased yet another euphoric performance and went on to outclass indices around the world by vivaciously rallying by over a percentage points in the session and settling above the psychological 7,700 (Nifty) and 25,200 (Sensex) levels. Friday’s optimism got spilled over into the new week, helping the frontline indices in extending the winning momentum for second successive session on Monday as hopes increased that Reserve Bank of India (RBI) could cut rates by as much as 50 basis points next month after the government slashed the country’s retail savings rate last week. Sentiments got some support from a report, indicating growth prospects remain positive for the Indian economy, with the government strongly accelerating its reform announcements.  According to the report, the real estate Bill, the new Hydrocarbon Exploration Licensing Policy, the Bill to amend the Companies Act and the proposed introduction of the bankruptcy code bear testimony that the government is well focused on reviving the investment climate and improving ease of doing business scenario in India. Appreciation in Indian rupee too aided sentiments. Indian rupee recovered from its early lows by surging 7 paise to 66.43 against the US dollar at the time of equity markets closing at the Interbank Foreign Exchange. Some support also came with the report that foreign portfolio investors (FPIs) bought shares worth a net Rs 1712.62 crore on March 18, 2015.

Meanwhile, banking shares mainly public sector banks (PSB) rallied after the government announced a steep cut in interest rates on small savings schemes, while shares of cement companies continued to trade higher for a third straight session on expectation of strong show in the current quarter as volume growth picked up, mainly from the infrastructure sector. Jewellery stocks also rose after jewellers called off their 18-day old strike demanding rollback of proposed excise duty on non-silver jewellery. Further, Pharma stocks like Sun Pharm, Aurobindo Pharma, Cipla and Jubilant Life Sciences gained momentum on the report that India's bulk drug exports are likely to grow at an average rate of 12-14% till 2018-19 on the back of increasing shipments to countries including the US and Europe.

On the global front, Asian markets ended mixed as a retreat in oil prices made investors cautious, but losses were tempered by hopes that China may soon cut interest rates again as pressure on the yuan eased. Besides, fears about the outlook for global growth were also instrumental in the US. Federal Reserve's move last week indicating a slower path for future rate increases. Meanwhile, stock markets in Europe recovered early losses to trade positive as rise in banking shares overshadowed the losses in energy and mining shares.

Back home, the benchmark got off to a soft start as the indices showed signs of consolidation in early trade, tracking weak trade in Asian markets. But the frontline indices gradually started gathering steam and surged by over half a percent by late morning trades. The bourses further capitalized on the momentum and spurted in afternoon trades on the back of broad based bottom fishing in undervalued stocks. Eventually the NSE’s 50-share broadly followed index Nifty, got buttressed by over a percent to settle above the crucial 7,700 support level, while Bombay Stock Exchange’s sensitive index-Sensex accumulated over three hundred points and closed near the psychological 25,300 mark. Moreover, the broader markets too participated in the rally and closed with gains of over a percent. On the BSE sectoral space, buying was evident across the board and investors piled up hefty positions in the high beta Capital Goods counter which rocketed by over two percent while the Consumer Durables, Realty, Banking and FMCG pockets too gained from strength to strength and climbed by over one and half percent each. Although there were no sectoral laggards, individual names like Asian Paint, Lupin and BHEL got some beating. The market breadth remained optimistic as there were 1499 shares on the gaining side against 1163 shares on the losing side while 188 shares remained unchanged.

Finally, the BSE Sensex gained 332.63 points or 1.33% to 25285.37, while the CNX Nifty rose 99.90 points or 1.31% to 7,704.25.

The BSE Sensex touched a high and a low 25327.45 and 24988.27, respectively. The broader indices made a positive closing; the BSE Mid cap index ended up by 1.40%, while Small cap index gained 1.36%

The top gaining sectoral indices on the BSE were Capital Goods up by 2.01%, Consumer Durables up by 1.80%, Realty up by 1.78% and Bankex up by 1.70%, FMCG up by 1.65%, while there were no losers on BSE sectoral front.

The top gainers on the Sensex were Hindustan Unilever up by 4.05%, SBI up by 2.93%, Sun Pharma Inds. up by 2.42%, Larsen & Toubro up by 2.38% and Tata Motors up by 2.36%. On the flip side, Asian Paints down by 1.75%, Lupin down by 1.51%, BHEL down by 1.24%, Hero MotoCorp down by 1.06% and GAIL India down by 0.58% were the top losers.

Meanwhile, government in the third phase of reverse e-auction for stranded gas-based plants (SGPs), have announced revival of 9 gas-based power plants with total installed capacity of 5,942 MW, which successfully bid electricity at Rs 4.70 per unit for six months beginning April 1. Earlier the phase III of the auctions were deferred to March 20 after the plants had said no to subsidy on the original date of the auctions on March 15. For the first and second phases auctions were held in May and September respectively last year.

In the auction process concluded on March 20, nine plants emerged as preferred bidders and were allocated 7.62 million standard cubic meter per day (mscmd) e-bid RLNG (reliquefied natural gas). These plants would generate 6.79 billion units of which will be supplied at or below Rs 4.70 per unit to the purchaser discoms during the period from April 1, 2016 to September 30, 2016.

The government has further detailed that the reverse-auction resulted in aggressive negative bidding with the lowest bid at Rs 0.03 per unit. As a result there is estimated savings of Rs18.29 crore to the government's Power System Development Fund. A total of 10 mscmd of RLNG will be imported to run SGPs and domestic gas plants (DGPs) between April 1 to September 30, while 8.9 mscmd of gas will be imported for SGPs, 1.1 mscmd will be allocated to DGPs. In Phase III, the highest allocation was for Ratnagiri Gas and Power. The plant will generate 2.087 billion units between April 1 and September 30 using 2.13 million standard cubic metres a day of R-LNG. Lanco Group’s Kondapalli plant in Andhra Pradesh was allotted 1.55 million standard cubic metres a day of the imported natural gas for generating 1.408 billion units. GMR Energy’s two plants and one plant of GVK Industries were among the other major allottees of the imported natural gas.

Last year, the government had introduced a mechanism under which stranded gas-based power plants were allowed to fire up their plants using R-LNG. Tax breaks were offered for transport of the fuel and a subsidy from the PSDF was given directly to the electricity distribution utilities to keep the cost of power low. The government is offering Rs 1,400 crore subsidy for SGPs and Rs 200 crore to the DGPs for buying imported gas to run their plants. It had, in March last year, allowed gas imports by way of e-auctions for 31 gas-based power units, with a capacity of 14,000 MW, lying idle for lack of feed stock.

The CNX Nifty touched a high and low 7,713.55 and 7,617.70 respectively. 

The top gainers on Nifty were Ambuja Cement up by 4.46%, Ultratech Cement up by 3.82%, Hindustan Unilever up by 3.69%, Bosch up by 3.07% and SBI up by 2.90%. On the flip side, Asian Paints down by 1.79%, BHEL down by 1.28%, Lupin down by 1.24%, Hero MotoCorp down by 1.11% and Tech Mahindra down by 0.48% were the top losers.

European markets were trading in green; France’s CAC increased 17.6 points or 0.39% to 4,480.11, UK’s FTSE 100 gained 23.01 points or 0.37% to 6,212.65 and Germany’s DAX was up by 131.81 points or 1.32% to 10,082.61.

Asian equity markets ended mixed on Monday as a retreat in oil prices prompted investors to lock in some profits after three consecutive weeks of gains. Many market watchers are predicting a quiet week ahead in the absence of major economic data from the US and China, and with many markets off for Good Friday. However, Chinese shares rallied to extend gains for a seventh day after authorities signaled a loosening stance toward margin trading and cut borrowing costs for brokerages. Market in Japan was closed for a holiday.