Benchmarks stage splendid performance; Nifty ends above 8,850 mark

Indian benchmark indices showcased a scintillating performance on Thursday, by rallying around a percent point amid strong global cues. Sentiments remained up-beat since start as key bourses opened with a huge gap on the up-side and traded in tight band throughout the session as the Federal Reserve opted to hold its key short-term interest rate steady. Investors across the Asian region welcomed the news as a rate hike would have pulled money out of emerging markets. On the domestic front, sentiments got boost with the report that country’s current account deficit (CAD) narrowed to $ 0.3 billion, or 0.1 percent of GDP, in the first quarter of 2016-17, significantly lower than $ 6.1 billion or 1.2 percent of GDP in Q1 of 2015-16 on account of lower trade gap. Some support also came with a private report stating that rural demand is likely to turn up in the coming months largely driven by better rains, and Kharif farm income, which is expected to jump 12.3 percent this year. Another private report indicated that India's foodgrain production is estimated to rise by 9 per cent to an all-time high of 135.03 million tonnes in the kharif season (summer sown) of 2016-17 on record output of rice and pulses. 

Investors also took note of the report that regulator SEBI is considering allowing some categories of Foreign Portfolio Investors (FPIs) to directly trade in Indian markets, starting with debt segment. The move aims at making it easier for overseas investors to invest in India. Meanwhile, Logistics stocks edged higher on reports that Commerce Ministry is working on a proposal to enhance the logistics competitiveness of exporters and is discussing it with the railways as well as port authorities. Railway stocks remained on buyers’ radar for second consecutive day, after the Cabinet approved merging Railway Budget with the general Budget and doing away with distinction of plan and non-plan expenditure.  On the other hand, Information Technology (IT) counters declined after Fed officials cut their 2016 growth forecast for the US economy to 1.8 percent, from a 2.0 percent projection in June, and lowered their long-term view on the growth rate to 1.8 percent from 2 percent.

On the global front, Asian markets ended mostly higher on Thursday, boosted by the US Federal Reserve’s decision to stick to the status quo, as well as rising commodity prices. Federal Reserve kept its benchmark interest rate unchanged for the sixth straight meeting, saying it needs to see more signs of strength in the US economy. The Fed also said risks to the economy have diminished since its last meeting in July. Meanwhile, the European counterparts are trading in the positive territory with strong gains as DAX being the top gainer in the space. Also, the screen trading for US index futures indicated that the Dow could open in the positive terrain at the opening. Loose monetary policies in the US, Europe and Asia have helped power gains in stocks across the globe.

Back home, the local benchmarks got off to a positive start in the morning trade as investors were largely influenced by the supportive leads from Asian markets. The key indices soon capitalized on the momentum and touched intraday highs in early morning session, but the indices failed to hold onto the highs and receded to intraday lows in noon trades on the back of profit booking in frontline counters. However, late short covering in blue-chip stocks and supportive leads from European markets ensured that local bourses do not shut shops way below the intraday highs. Finally the NSE’s 50-share broadly followed index Nifty, got buttressed by over a percent to settle above the crucial 8,850 support level, while Bombay Stock Exchange’s sensitive Index-Sensex accumulated over two hundred and fifty points and closed above the psychological 28,750 mark. Moreover, the broader markets too participated in the rally and closed with gains of over a percent.

The market breadth remained in the favour of declines, as there were 1695 shares on the gaining side against 1044 shares on the losing side while 234 shares remain unchanged.

Finally, the BSE Sensex surged by 265.71 points or 0.93% to 28773.13, while the CNX Nifty gained 90.30 points or 1.03% to 8,867.45. 

The BSE Sensex touched a high and a low 28871.92 and 28693.07, respectively. There were 23 stocks advancing against 7 stocks declining on the index. The broader indices ended in green; the BSE Mid cap index rose 1.39%, while Small cap index was up by 1%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.51%, Bankex up by 1.49%, Auto up by 1.44%, PSU up by 1.37% and Capital Goods up by 1.37%, while IT down by 0.36% and TECK down by 0.12% were the few losing indices on BSE.

The top gainers on the Sensex were SBI up by 2.39%, Hero MotoCorp up by 2.27%, ICICI Bank up by 2.19%, Adani Ports &Special up by 2.06% and Asian Paints up by 1.97%. On the flip side, TCS down by 1.49%, Lupin down by 1.17%, Axis Bank down by 1.01%, Coal India down by 0.77% and Dr. Reddys Lab down by 0.45% were the top losers.

Meanwhile, India’s current account deficit (CAD), difference between the value of all imports and the value of all exports, has improved significantly in the quarter ended June 2016-17 to decades low. India’s current account deficit had narrowed to $ 0.3 billion or 0.1 per cent of GDP in the June quarter, significantly lower than $ 6.1 billion or 1.2 per cent of GDP in Q1 of 2015-16. The contraction in the CAD was primarily on account of a lower trade deficit $ 23.8 billion than in Q1 of last year $ 34.2 billion and $ 24.8 billion in the preceding quarter, supported by slump in commodity prices.

As per the data released by Reserve Bank of India (RBI), India’s trade deficit narrowed to $ 23.8 billion in 2016-17 from $34.2 billion in 2015-16. The Balance of Payments (BoP) remained in surplus but shrank 40% to $ 6.9 billion from $ 11.4 billion in the same period a year ago due to decline in foreign direct investments. The remittances declined, FDI has moderated and capital inflows were not that strong, however in second quarter the inflows have been strong.

In the year 2016-17, net services receipts declined to $ 15.77 billion from $ 17.75 billion a year ago due to a fall in net earnings on account of travel, financial services and other business services.  Net FDI inflows during the 2016-17 stood at $ 4.1 billion from $10.0 billion in Q1 of 2015-16. On the other hand, portfolio investment, recorded a net inflow of $ 2.1 billion in Q1 of 2016-17 as against a marginal $ 50 million net outflow in the year-ago period and an outflow of $ 1.5 billion in the preceding quarter, primarily reflecting net inflow in the equity component.

The CNX Nifty traded in a range of 8,893.35 and 8,837.80. There were 39 stocks advancing against 12 decliners on the index.

The top gainers on Nifty were Aurobindo Pharma up by 5.98%, Hindalco up by 3.51%, Bank of Baroda up by 3.13%, Indusind Bank up by 2.87% and SBI up by 2.71%. On the flip side, Tech Mahindra down by 1.44%, Axis Bank down by 1.40%, Lupin down by 1.27%, TCS down by 1.22% and Coal India down by 1.18% were the top losers.

The European markets were trading in green; UK’s FTSE 100 increased 76.72 points or 1.12% to 6,911.49, Germany’s DAX increased 196.3 points or 1.88% to 10,632.79 and France’s CAC increased 80.18 points or 1.82% to 4,489.73.

The Asian markets ended mostly higher on Thursday, as oil prices extended overnight gains and the Fed's cautious tone about future rate hike suggested that a rate increase is unlikely at the Fed's next meeting in November, concluding six days before the presidential election. Fed Chair Janet Yellen offered an upbeat assessment of the economic outlook, but noted that a cautious approach in paring back monetary policy support is appropriate given that short-term interest rates are still near zero. Chinese shares ended higher, led by property developers, after Sunac China Holdings said its subsidiary would buy a 17 percent stake in smaller rival Jinke Property. Japanese markets were closed for the Autumnal Equinox holiday.