Euphoric Sensex kicks-off new series in style; garners over 400 points

After three consecutive days of consolidation, stock markets in India displayed a maverick performance as market bulls desperately waited for significant upside triggers to open fresh positions on first day of the new Futures and Options series.

The frontline equity indices rallied vehemently by over two and half a percentage points and not only extended their gaining streak for the fourth successive session but also soared to highest levels in more than two-months. After the gap-up opening, the frontline gauges managed to capitalize on the momentum and kept garnering from strength to strength to reclaim the important psychological 17,400 (Sensex) and 5,250 (Nifty) bastions.

Sentiments remained sanguine since the start of trade as domestic markets rallied in tandem with their Asian peers after some heartening developments surfaced from the Euro-zone Summit. Concerns over the Euro-zone’s onerous debt trouble got allayed after reports indicated the leaders in Euro-zone decided to create a single supervisory body for euro zone banks and to allow them to be recapitalized directly by the currency area's rescue fund without adding to government debt.

Moreover, European Council chairman Herman Van Rompuy’s comments that nations that were meeting the terms with European Union budget policies would be able to access the bloc's temporary EFSF and permanent ESM rescue funds to support their government bonds on financial markets, fortified sentiments globally, prompting tentative recovery in investors’ appetite for riskier assets like equities.

Back home, market participants remained in cheerful mood hoping that the government would soften its stand on contentious taxation issues and bring in more clarity in the controversial General Anti Avoidance Rules (GAAR) provisions. Furthermore, market participants also drew some solace from supportive money market cues after Indian rupee, which has so far been the worst performing currency in Asia, appreciated to sub 56 levels against the US dollar.

The Capital Goods counter witnessed relentless buying in the session as it got buttressed by over three and half a percent and remained the top gainer in the BSE sectoral space. While the power sector stocks too shot up by over three and half a percent after reports highlighted that Central government will incentivize power distribution companies’ performance while they also opined that around 50% of discoms’ loan burden will be shouldered by states.

Though largely across the board buying was evident, investors were seen exerting some selling pressure on individual names like Cairn India on the back of sharp drop in international crude oil prices and also on BPCL due to overnight cut in petrol prices.

On the global front, markets largely across the Asian region showed a kneejerk rally on the week’s last trading session after the heartening developments surfaced from the European leaders’ Summit. The benchmark in Hong Kong spurted about two and half a percentage points and led the rally from the front while equity indices in China, Japan and South Korea rallied in the range of over 1-2%.

Besides, the European markets too got off to a jubilant opening and major equity indices there traded with colossal gains of around one to three percent. Market men resorted to across the board buying after Euro Zone leaders agreed measures to cut borrowing costs in Spain and Italy and eventually recapitalize the region's banks.

Back home, the NSE’s 50-share broadly followed index Nifty, rocketed by over two and half a percent to settle above the psychological 5,250 support level while Bombay Stock Exchange’s Sensitive Index - Sensex accumulated about four hundred forty points to finish above the crucial 17,400 mark. Moreover, the broader markets too settled on a positive note with notable gains of around one and half a percent but were outclassed by their larger peers.

The markets rose on good overall volumes of over Rs 1.27 lakh crore on the first day of a new F&O series while the turnover for NSE F&O segment remained on the lower side as compared to that on Thursday at over Rs 1.02 lakh crore. The market breadth remained dominantly in favor of advances as there were 1,864 shares on the gaining side against 988 shares on the losing side while 130 shares remained unchanged.

Finally, the BSE Sensex jumped 439.22 points or 2.59% to settle at 17,429.98, while the S&P CNX Nifty climbed by 129.75 points or 2.52% to close at 5,278.90.

The BSE Sensex touched a high and a low of 17,448.48 and 17,134.61 respectively. The BSE Mid cap index was up by 1.62% and Small cap index up by 1.31%.

Jindal Steel up 8.74%, Tata Power up 5.81%, ICICI Bank up 5.03%, BHEL up 4.93% and Sterlite Industries up 4.91% were the major gainers on the Sensex, while Coal India down 0.14% was only gainer on the index.

The top gainers on the BSE sectoral space were Capital Goods up 3.65%, Power up 3.55%, Bankex up 3.49%, Metal up 3.44% and Realty up 2.47%, while there was no loser on the BSE sectoral space. 

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. 

The S&P CNX Nifty touched a high and low 5,286.25 and 5,189.00 respectively.

The top gainers on the Nifty were Jindal Steel up 8.49%, Tata Power up 6.12%, Sterlite Industries up 5.33%, BHEL up 4.84% and Maruti Suzuki up 4.33%. On the flipside, Cairn India down 6.14%, BPCL down 1.22% and Coal India down 0.24% were the top losers on the index.

The European markets were trading in green, as France's CAC 40 up 2.76%, Germany's DAX up 2.29% and United Kingdom’s FTSE 100 up 1.25%.

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.