Indian benchmarks stage a remarkable rally; Nifty regains 8100 mark

A session after capitulating to late sell-off, Indian equity benchmarks managed to pull through a dazzling performance by surging over one and half a percentage points on Friday, thanks to the hefty short covering in the beaten down but fundamentally strong stocks. Sentiments remained up-beat from the start of the session, tracking Indian rupee, which recovered from its 39-month closing low by gaining 37 paise to 68.36 on Friday on fresh selling of the US currency by banks and exporters, while low roll-overs at the expiry of monthly derivatives on Thursday spurred more buying in cash markets. Stocks suffered their worst setback in 15 months in the November future and option (F&O) series that concluded on Thursday. The Nifty lost 7.5% or 650 points to close at 7,965.60, while the Sensex fell 7.4% or 2,056 points to close at 25,860. Meanwhile, investors got come confidence with Finance Minister Arun Jaitley’s statement that the government’s demonetisation move is going to have a positive impact on the economy, including GDP. Jaitley said there will be a positive impact because a lot of money that operates in the shadowy economy will now become part of the banking structure and banks will have a lot more money to support the economy. IT stocks accounted for around half of the benchmarks’ gain as Infosys and Tata Consultancy Services extended upmove on the rupee’s weakness. A weak rupee boosts revenue of IT firms as the sector derives a lion's share of revenue from exports. Most steel stocks also gained traction after the government imposed anti-dumping duties on hot-rolled flat sheets and plates of alloy or non-alloy steel to curb cheaper imports into the country.

On the global front, Asian markets ended mostly higher on Friday as the Thanksgiving break in the United States pegged the dollar's relentless surge that had sucked capital out of most emerging markets. Japanese shares ended higher after the dollar jumped further against the yen, boosting prospects for better corporate earnings, while Chinese shares ended higher as investors continued to scoop up blue-chips on signs that the economy is on steadier footing. Meanwhile, European markets edged lower as oil prices declined in fairly quiet trade, with US markets set to open for just a half day.

Back home, the local benchmark got off to a positive start in the morning trade as investors were largely influenced by the supportive leads from Asian markets. The frontline indices soon gathered momentum and traded with around a percent gains through the morning session of trade. Second half of the session saw the indices capitalize on the momentum further and surge to session’s highest levels in dying hour. However, a mild profit booking in dying moments of trade ensured that the key indices shut shops off the intraday highs. Eventually the NSE’s 50-share broadly followed index Nifty, convalesced by close to two percent to settle above the crucial 8,100 support level, while Bombay Stock Exchange’s Sensitive Index, Sensex accumulated over four hundred points and closed above the psychological 26,250 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 evident across the board as not even a single sectoral index went home in the negative territory. Investors piled up hefty positions in IT counter which rocketed by over four percent while the badly butchered Consumer Durables index too showed smart recovery and jumped by over one and half percent. The market breadth remained optimistic as there were 2036 shares on the gaining side against 594 shares on the losing side while 164 shares remained unchanged.

Finally, the BSE Sensex rallied 456.17 points or 1.76% to 26316.34, while the CNX Nifty rose 148.80 points or 1.87% to 8,114.30.

The BSE Sensex touched a high and a low of 26343.95 and 25874.45, respectively and there were 27 stocks on gainers side against 3 stocks on the losers side on the index. The broader indices made a positive closing; the BSE Mid cap index ended higher 1.30%, while Small cap index was up by 2%.

The top gaining sectoral indices on the BSE were IT up by 4.69%, TECK up by 3.79%, Consumer Durables up by 1.74%, Power up by 1.67% and Metal up by 1.48%, while there were no losers on the BSE sectoral front.

The top gainers on the Sensex were TCS up by 5.23%, Infosys up by 4.78%, Sun Pharma up by 4.18%, GAIL India up by 3.48% and Lupin up by 3.36%. On the flip side, Bajaj Auto down by 0.54%, SBI down by 0.29% and Bharti Airtel down by 0.22% were the top losers.

Meanwhile, in order to protect domestic manufacturers from cheap imports, the government has imposed safeguard duty on import of hot rolled flat sheets and plates (excluding hot rolled flat products in coil form) of alloy or non-alloy steel with effect from November 23, 2016 till May 22, 2019. The Revenue Department said that the effective duty rate would be calculated after deducting the value of the goods and the anti-dumping duty payable when the import price is below $504 per tonne.

As per the government notification, a 10 percent ad valorem minus anti-dumping duty payable will be imposed on imports up to November 22, 2017 and this will be lowered to 8 percent between November 23, 2017 and November 22, 2018. It added that a 6 percent ad valorem minus anti-dumping duty payable will be imposed when imported during the period from November 23, 2018 to May 22, 2019 (both days inclusive) at an import price below $504 per tonne on CIF basis.

The Director General (Safeguard), in his final findings on August 2, 2016, had concluded that increased imports of subject goods into India has caused and threatened to cause serious injury to the domestic producers of subject goods, thereby necessitating the imposition of safeguard duty on imports of the subject goods into India. Recently, government had imposed anti-dumping duty on imports of steel wire rods from China for six months.

The CNX Nifty traded in a range of 8,122.25 and 7,976.75. There were 42 stocks in green against 9  stocks in red on the index.

The top gainers on Nifty were Tech Mahindra up by 5.83%, TCS up by 5.09%, Infosys up by 4.77%, Sun Pharma up by 4.39% and HCL Tech up by 4.10%. On the flip side, Bharti Infratel down by 1.22%, ACC down by 1.22%, Bajaj Auto down by 0.79%, Eicher Motors down by 0.52% and Bharti Airtel down by 0.38% were the top losers.

The European markets were trading in green; UK’s FTSE 100 increased 0.97 points or 0.01% to 6,830.17, Germany’s DAX increased 4.93 points or 0.05% to 10,694.19 and France’s CAC increased 3.35 points or 0.07% to 4,545.91.

Asian equity markets ended in green on Friday, despite a lack of direction from US markets that were shut on Thursday for the Thanksgiving holiday. While oil prices treaded water in Asian trade ahead of next week's OPEC meeting, the Yuan traded slightly firmer after having touched an eight-year low versus the dollar the previous day on expectations of higher US interest rates going forward. Japanese shares ended higher after the dollar jumped further against the yen, boosting prospects for better corporate earnings. Further, Chinese shares ended higher as investors continued to scoop up blue-chips on signs that the economy is on steadier footing.