Bulls retaliate back on D-Street buoyed by jubilant global cues

Buoyed by jubilant global cues, Indian key benchmarks vivaciously rallied well over a percent on Monday. The frontline indices surged on large volumes as investors’ appetite for riskier asset classes like equities got a boost, after stronger than expected US payroll data and some positive cues from Euro-zone. After fall in previous two sessions, euphoric investors resorted to hefty across the board bottom fishing, taking the frontline gauges beyond the psychological 17,400 (Sensex) and 5,280 (Nifty) levels. Moreover, continued buying in index heavyweight Reliance Industries (RIL) too supported the markets to keep their bull run throughout the day. Meanwhile, the stock of RIL edged higher by over five and a half percent on the buzz that the company has agreed to share the KG-D6 accounts with the national auditor under the terms of the production sharing contract (PSC), ahead of a crucial meeting of the block’s management committee.

The sentiments were also supported by telecom stocks like Idea Cellular, Bharti Airtel, Reliance Communication and MTNL in early trade, which edged higher as after fixing the minimum price at Rs 14,000 crore for 5 units of GSM airwaves in the 1800 MHz, the panel of ministers on spectrum, headed by finance minister P Chidambaram, will meet today to consider a revised timeline for the spectrum auctions, as the government may not be able to meet the deadline for completing the sale process by this month-end.

Though some profit booking around the psychological 17,400 (Sensex) and 5,350 (Nifty) levels in mid noon trades brought the key indices lower, however the gauges recovered soon after European markets turned green after opening in negative terrain as investors grew cautious over the prospects of a bailout for Spain, with its 10-year bond yields holding close to 7% danger levels. Meanwhile, the statement from European Central Bank officials that bank could intervene and buy the bonds of struggling euro-zone countries without unanimous approval, also raised hopes that a bond buying program is still a possibility. Moreover, the sentiments also got boost after Asian equity indices ended the session in the green amid positive signs from Europe improved sentiment, lifting Hong Kong’s Hang Seng Index to near a three-month high.

Back home, better than expected Q1 numbers from SKS Microfinance, Cadila Healthcare, SAIL and Wockhardt aided the sentiments. The euphoria also came from pharma stocks, which extended their recent uptrend, with Sun Pharmaceuticals Industries and Wockhardt hitting record highs. Divi’s Laboratories hit record high on strong Q1 results. Glenmark Pharmaceuticals hit 52-week high after the company said its US unit has received final abbreviated new drug approval from the US Food and Drug Administration for Montelukast Sodium Tablets in 10 milligram strength.

On the BSE sectoral space, oil and gas sector remained the major gainer, gaining over three percent led by Reliance Industries on report that benchmark Singapore gross refining margins (GRM) have strengthened from the 2nd week of July 2012 to average at $8 a barrel from $6.7 a barrel in the quarter ended June 2012. Moreover, Metal space too edged higher by about a percent as LMEX, a gauge of six metals traded on the London Metal Exchange gained 1.64% on August 3, 2012.

The NSE’s 50-share broadly followed index Nifty, zoomed by over sixty points and settled well above its psychological 5,200 support level moreover, Bombay Stock Exchange’s Sensitive Index -Sensex- soared over two hundred points and settled comfortably over psychological 17,400 mark. Moreover, broader markets too exhibited a great run throughout the day and ended with half a percent gain. The market breadth was remained in the favour of advances, as there were 1,676 shares on the gaining side against 1,162 shares on the losing side while 121 shares remained unchanged.

The BSE Sensex surged 215.03 points or 1.25% to settle at 17,412.96, while the S&P CNX Nifty soared by 66.85 points or 1.28% to close at 5,282.55.

The BSE Sensex touched a high and a low of 17,451.53 and 17,313.05 respectively. However, the BSE Mid cap and Small cap index ended up by 0.53% and 0.79% respectively.

Reliance up by 5.71%, Tata Motors up by 3.51%, Gail India up by 2.49%, HDFC Bank up by 1.95% and Tata Steel up by 1.85% were top gainers on the Sensex, while Dr Reddys Lab down by 0.86%, TCS down by 0.69%, Wipro down by 0.59%, ITC down by 0.54%, NTPC down by 0.54% were top losers on the index.

The major gainers on the BSE sectoral space were, Oil & Gas up by 3.03%, Auto up by 1.70%, Bankex up by 1.38% and Capital Goods up 1.37%, while FMCG down by 0.37%, IT down by 0.12% and TECk down by 0.09% were major losers on the BSE sectoral space. 

Meanwhile, in an attempt to boost investors’ confidence, Minister of Commerce & Industry of India, has decided to seek cabinet’s approval on new norms for the revival of special economic zones (SEZs). Several developers had surrendered their projects, after the levying of Minimum Alternative Tax (MAT) and Dividend Distribution Tax (DDT) on SEZs in 2010-11.

The SEZs had experienced a drastic slowdown after the levying of taxes. While, profit-linked benefits were the main attractions of the SEZ scheme. The government is planning incentives for developers who want to set up SEZs in remote and undeveloped areas and also to consider loosen up minimum land area requirement for different categories of SEZ, besides extending the benefits of export schemes to SEZ units in order to attract more investments in the sector.

Exports from SEZs were at Rs 3.65 lakh crore in 2011-12. With investment of Rs 2.02 lakh crore, these zones provided employment to over 8.45 lakh. The overseas shipments from the 153 operational tax-free havens have come down to 12 per cent in the country's total exports from about 30 per cent in the previous years.

The S&P CNX Nifty touched a high and low of 5,293.20 and 5,260.85 respectively.

The top gainers on the Nifty were Reliance up by 5.51%, Tata Motors up by 3.67%, JP Associates up by 3.07%, GAIL up by 2.74%, Kotak Bank up by 2.36%. On the flip side, BPCL down by 3.02%, Wipro down by 0.94%, Dr Reddy down by 0.92%, TCS down by 0.88%, ITC down by 0.62% were the major losers.

The European markets were trading in green, France's CAC 40 was up 0.55%, Germany's DAX was up 0.50% and United Kingdom’s FTSE 100 was up 0.21%.

Supported by strong employment data from the U.S., Asian markets rose sharply on Monday amid positive signs from Europe improved sentiment, lifting Hong Kong's Hang Seng Index to near a three-month high. The statement from European Central Bank officials that bank could intervene and buy the bonds of struggling euro-zone countries without unanimous approval, also raised hopes that a bond buying program is still a possibility. However, investors still looking from more positive triggers ahead of China’s economic data for July, with inflation figures out on Thursday and its trade balance to be released on Friday.