Post Session: Quick Review

Buoyed by firm global cues, Indian equity benchmarks ended Tuesday’s session in green terrain with frontline gauges recapturing their crucial 8,250 (Nifty) and 27,000 (Sensex) levels. After making a positive start, markets extended their northward journey after the Reserve Bank of India (RBI) kept key policy rates unchanged but maintained an ‘accommodative’ stance going forward. The RBI’s decision to keep key interest rate unchanged was largely in line with investor expectations and did not have much immediate positive impact. However, markets end off day’s high as participants book some of their profits in last leg of trade. Even though markets managed to garner gains of around a percent as traders took some encouragement with a private report stating that India jumped 13 positions and was placed second in retail potential in the 2016 Global Retail Development Index (GRDI). It also said that India has become the world’s fastest growing economy. That coupled with a large population base and the easing of FDI regulations in the sector has made it an even more attractive market.

Positive opening in European counters too aided sentiments. European shares advanced on Tuesday after Federal Reserve Chair Janet Yellen made no clear reference to the timing of any increase in US interest rates. Asian stocks hit a five-week high on Tuesday after US Federal Reserve Chair Janet Yellen gave a largely upbeat assessment on the US economic outlook, while the dollar declined on diminishing expectations of interest rate increases in coming months. Back home, appreciation in Indian rupee too aided sentiments. The rupee strengthened by 21 paise to 66.75 at the time of equity markets closing on sustained selling of dollar by banks and exporters, strong foreign fund inflows. Meanwhile, India Meteorological Department (IMD) stating that the Southwest monsoon is ‘very likely’ to hit Kerala on June 9 following favourable conditions. The weather office has forecast rain at a few places in South Tamil Nadu and over one or two places in the northern parts of the state for the next 48 hours.

On the sectoral front, mining and metal stocks remained on buyers’ radar amid a global rally in base metal prices after the US dollar fell to a three-week low against a basket of global currencies. Banking counters too ended in green, as Minister of State for Finance Jayant Sinha has said that the government will examine the capital requirements of various public sector banks (PSBs) for the current fiscal to meet credit growth and NPA provisioning. On the flip side, aviation stocks viz. SpiceJet, Jet Airways and InterGlobe Aviation edged lower as global crude oil prices rose on June 6, 2016.

The NSE’s 50-share broadly followed index -- Nifty -- rose by around seventy points to end above the psychological 8,250 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex -- surged by over two hundred and thirty points to finish above the psychological 27,000 mark. Broader markets too traded with traction and ended the session with a gain of around half a percent.

The market breadth remained in the favour off advances, as there were 1,484 shares on the gaining side against 1,130 shares on the losing side while 161 shares remain unchanged. (Provisional)

The BSE Sensex ended at 27009.67, up by 232.22 points or 0.87% after trading in a range of 26829.53 and 27082.63. There were 24 stocks advancing against 6 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.29%, while Small cap index up by 0.96%. (Provisional)

The top gaining sectoral indices on the BSE were Realty up by 1.70%, Bankex up by 1.63%, Consumer Durables up by 1.57%, FMCG up by 1.35% and Metal up by 1.30%, while Oil & Gas down by 0.14%, TECK down by 0.05%, IT down by 0.04% and Telecom down by 0.03% were the few losing indices on BSE. (Provisional)

The top gainers on the Sensex were SBI up by 5.50%, ICICI Bank up by 4.38%, Sun Pharma up by 1.94%, ITC up by 1.88% and Tata Steel up by 1.78%. On the flip side, Infosys down by 0.88%, HDFC down by 0.26%, Axis Bank down by 0.18%, Reliance Industries down by 0.15% and GAIL India down by 0.09% were the top losers. (Provisional)

Meanwhile, promising a transparent regulatory regime and greater ease of doing business, Union Oil Minister Dharmendra Pradhan kicked off the first road show for auctioning 46 discovered small oil and gas fields. He expressed confidence of getting good response for the blocks which are being sold with least conditionalities and added that the bid round aims to boost the oil and gas production and is in line with the government mission of reducing import dependence by 2022 by 10 per cent from the present 78 per cent which the country meets through imports.

Pradhan said that the government is offering for bidding 67 discovered small fields in 46 contract areas spread over nine sedimentary basins on land and in shallow and deep water areas. Of the 46 small fields, 26 are on land, 18 offshore in shallow water and two in deep water. While 28 discoveries are in the Mumbai offshore, another 14 are in the east coast's Krishna Godavari basin. The fields offered hold 625 million barrels of in-place of oil and gas reserves of oil or oil equivalent gas of in-place reserves worth Rs 70,000 crore. The present auctions, to be conducted on simpler contractual terms together with pricing and marketing freedom, will be the first licensing round in over five years.

These blocks were originally discovered by ONGC and Oil India some 40 years ago, but surrendered these fields as they could not develop them because of huge overhead cost and uneconomic size. However, Pradhan said that these national exploration companies will not get compensation from the bidders at all. Bidding will open on July 15 and will end on 31st October 2016. In two months investors will be selected and contracts will be signed by January.

Pradhan added that the current auction and recently announced Hydrocarbon Exploration and Licensing Policy (HELP), are both significant improvements over the previous New Exploration Licensing Policy (NELP) regime. NELP was based on production sharing contract (PSC) which meant revenue sharing with government after cost recovery by the contractor. In March 2012, the last exploration licensing round was concluded which was the ninth round of bidding under NELP where a total of 256 blocks were awarded. Further, the next round of roadshows will be held in Bengaluru and Guwahati, while international roadshows will be conducted in London, Houston, Calgary in Canada, Dubai, Singapore and Perth in Australia.

The CNX Nifty ended at 8266.45, up by 65.40 points or 0.80% after trading in a range of 8216.40 and 8294.95. There were 39 stocks advancing against 11 stocks declining on the index. (Provisional)

The top gainers on Nifty were SBI up by 5.66%, ICICI Bank up by 4.35%, Ultratech Cement up by 3.34%, Hindalco up by 2.48% and Ambuja Cement up by 2.34%. On the flip side, BPCL down by 1.81%, Indusind Bank down by 1.06%, Aurobindo Pharma down by 0.99%, Tata Power down by 0.94% and Eicher Motors down by 0.88% were the top losers. (Provisional)

European markets were trading in green; UK’s FTSE 100 increased 40.56 points or 0.65% to 6,313.96, France’s CAC surged 58.58 points or 1.32% to 4,481.96 and Germany’s DAX was up by 171.31 points or 1.69% to 10,292.39.

Asian equity markets ended higher on Tuesday, as dovish comments from Federal Reserve Chair Janet Yellen eased concerns about possible capital outflows from the region. In her first comments since Friday's awful US jobs report, Yellen said on Monday that recent signs of a slowdown in job creation bear close watching. While delivering a generally upbeat assessment of US economic conditions, she omitted her recent assessment that interest rate hikes were likely in the coming months. Chinese shares closed marginally higher ahead of the MSCI's decision on June 14. Investors were expecting that MSCI will decide next week to add some China ‘A’ shares to its emerging market index. Japanese shares rebounded from a four-week low as the dollar regained some ground against the yen.