Post session - Quick review

Indian equity markets started new month’s F&O series on an awe-inspiring note, as local barometer gauges steadily went on amassing gigantic gains, without succumbing once to the selling pressure. Buoyed by the sanguine global leads, market men piled up fresh position on the last trading day of the session, where 30 scrip sensitive index, Sensex, ended past the 17400 psychological level. Similarly, widely followed share index, Nifty, too spiraling over two and half percentage points for the session, ended past the 5250 crucial level. Benchmarks for the week too collected gains of over 2.5%. Meanwhile, broader indices, for the session, went home with profit of over a percentage points.

Sentiments were fortified across the globe after European leaders hammered out a strategy aimed at stanching an escalating financial crisis among the 17 countries that use the euro. Soothing fears over growing credit strains in Italy and Spain, European leaders agreed that euro zone banks could be recapitalised without adding to government debt.

Closer home, Dalal Street cheered the reduction of petrol price. In a relief to inflation-battered common man, petrol price was on Thursday cut by Rs 2.46 per litre, the second reduction this month. Making the most out this development, were the stocks of Auto counters. Although all the 13 sectoral indices on BSE, ended in raptures, yet stocks from Capital Goods, Bankex and Power counters put forth commendable performance. Power sector shot up by close to three percent gains after reports highlighted that Central government would incentivize power distribution companies’ for their performance. The reports suggested that 50% of discoms’ load burden will be shouldered by states.

Domestic sentiments were also boosted by the new draft guidelines on the general anti-avoidance rules (GAAR) announced late night yesterday. According to the guidelines, the tax evasion rule will be invoked only in those cases where foreign investors have opted to take the benefit of tax avoidance treaties. The rules would not apply retrospectively and will be triggered only above a certain income threshold. The market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 1831:1015 while 136 scrips remained unchanged. (Provisional)

The BSE Sensex gained 410.70 points or 2.42% and settled at 17,401.46. The index touched a high and a low of 17,448.48 and 17,134.61 respectively. 29 stocks were seen advancing against 1 declining ones on the index. (Provisional)

The BSE Mid-cap index gained 1.61% while Small-cap index was down 1.33%. (Provisional)

On the BSE Sectoral front, Capital Goods up 3.64%, Power up 3.51%, Metal up 3.38%, Bankex up 3.01% and Realty up 2.37% were the top gainers while, there were no losers. (Provisional)

The top gainers on the Sensex were Jindal Steel up 9.08%, Tata Power up 6.32%, ICICI Bank up 5.60%, BHEL up 5.09% and Sterlite Industries up 5.01% while, Coal India down 0.59% was the sole loser in the index. (Provisional)

Meanwhile, the state owned oil marketing companies have slashed petrol price by 2.46 liters for the second time in a month, giving relief to the common man from the surging inflation. As a result, petrol prices in Delhi will cost Rs 67.78 per litre with effect from June 28 midnight as compared to Rs 70.24 a litre. This is the second reduction in rate following an Rs 2.02 cut in price per litre from June 3. The two price cut in petrol have wiped out more than half of the massive Rs 7.54 per litre increase in rates which was effected last month.

Even after the recent price cut there are still chances that there will be further cut of Rs 1 per litre as current revision was done at average International oil rate in the first fortnight of June, as global oil prices have fallen worldwide since June. Pursuant to which, in Mumbai, petrol price has been cut by Rs 3.10 to Rs 73.35 per litre, while in Kolkata it will cost Rs 72.74 a litre as compared to Rs 75.81 per litre currently. In Chennai it will be cut by Rs 3.07 per litre to Rs 72.74.

Earlier state-owned oil firms abandoned the practice of revising rates of petrol on 1st and 16th of every month and from now on will now do so on a random date, so as to prevent petrol pump dealers building positions. The current revision in price is done keeping in mind an average of $106.93 per barrel in international rate for gasoline, against which domestic petrol prices are benchmarked. Although Gasoline rates have fallen to about $97-98 a barrel, however rupee has devalued to Rs 57 against the US dollar from Rs 54.96 thus making imports costlier.

In response to the changes in petrol price, IOC had lost Rs 1,053 crore during the current fiscal as it is unable to raise petrol rates in line with the cost in the first two months of current fiscal. The three oil giants, which comprises of IOC, BPCL and HP, the total loss rises to Rs 2,323 crore on a commodity whose price was freed by the government in June 2010. Apart from this, the oil marketing companies are suffering high level of revenue losses on the three sensitive petroleum products, namely diesel, kerosene and cooking gas.

As a result of the last price revision in June last year, loss of revenue in diesel has gone up from Rs 6.13 per litre to Rs 10.20 per litre, for kerosene from Rs 24.16 per litre to Rs 30.53 per litre and for LPG from Rs 331.13 per cylinder to Rs 396.00 per cylinder. At this constant rate, it is estimated that revenue loss on sale of sensitive products during 2012-13 shall be around Rs 83,000 crore for IOC and Rs 151,000 crore for the entire industry.  Oil companies are continuously monitoring international oil prices and change in rupee-dollar exchange rates to assess their potential impact on selling prices in future. So price differential of crude and petrol shall also be under scanner in the coming days.

India VIX, a gauge for market’s short term expectation of volatility lost 7.46% at 19.08 from its previous close of 20.62 on Thursday. (Provisional)

The S&P CNX Nifty gained 128.25 points or 2.49% to settle at 5,277.40. The index touched high and low of 5,286.25 and 5,189.00 respectively. 47 stocks advanced against 3 declining ones on the index. (Provisional)

The top gainers on the Nifty were Jindal Steel up 8.83%, Tata Power up 6.32%, Sterlite Industries up 5.33%, BHEL up 4.93% and ICICI Bank up 4.40%.On the other hand, Cairn India down 6.09%, Coal India down 1.11% and BPCL down 1.02% were the only losers. (Provisional)

The European markets were trading in green, with France's CAC 40 up 2.52%, Germany's DAX up 2.13% and Britain’s FTSE 100 up 1.41%.

All the Asian markets ended in green today as investors rejoiced the agreement of European leaders that the regions primary bailout capital can be used to fund the sick banks. At overnight meeting in Brussels European leaders decided to fund the Euro zone countries that weren’t getting assistance till now with the intention of stabilizing the volatile market.

Nikkei jumped 1.5 percent on Friday’s close above the 9000 level for the first time in seven weeks after the European leader decided to bring the borrowing down in Spain and Italy. The Shanghai composite rose to 1.35 percent on transaction value of 55.96 billion Yuan, with sectors like insurance, food and beverage, securities and trust sectors attracted the most capital today. Hang Seng closed 2.19 percent after euro zone leaders agreed to help the crisis hit single currency. So was the Kospi composite which rose to 1.9 percent at the end of day’s trade.