Post session - Quick review

It turned out to be dream-run for Indian equity markets on the last trading session of the week, as strong momentum of the bourses was not even once tempered with. US Federal Reserve launched QE3 combined with domestic government's first major action to reduce fiscal deficit- the diesel price hike, provided shot of adrenaline to local equity markets, which rallying for eighth consecutive session, puffed up gains of over two percent to pierce through the 18,400 level (Sensex) and 5500 (Nifty) crucial mark- highest since February 21, respectively. Meanwhile, rolling for the entire week, local equity markets added gains of over magnificent 4% (Nifty) and over 3.50% (Sensex). Meanwhile, the broader indices earned gains in lesser magnitude, as both Midcap and Smallcap index could managed to only add gains of over 0.75% and 0.40% respectively.

Nothing could sour investor’s mood in today’s trading session, which giving thumbs up to globally rally, showed that the rally in Indian equity markets was here to stay, even as sluggish WPI data, confirmed the case of world’s most aggressive central bank’s two years old anti-inflationary stance during its next mid-quarterly policy review on September 17, 2012. Adding to the hardships of policy makers, the wholesale price index (WPI), India's main inflation gauge, shockingly rose at 7.55% for the month of August, as compared to 6.87% (Provisional) for the previous month and 9.78% during the corresponding month of the previous year.

However, select set of investors also added positions ahead of RBI’s Monday meet on the hopes that hike in diesel price hike, would be followed with cut in policy rates, seen widely as measure to revive the growth of Indian economy, which languished to three year’s low in June quarter.

On the global front, global stocks bounced higher on Friday after investors got just what they wanted - big moves by the Federal Reserve to help the US economy out of its funk, as Fed on Thursday said that it would buy $40 billion of mortgage securities a month until the economy improves. It also pledged to extend super-low interest rates into 2015.

Closer home, stocks from Realty, Bankex and Metal counters emerged as the shining stars on the BSE sectoral front, while stocks from Healthcare and FMCG counters emerged as the curmudgeon. Moreover, Aviation stocks flew higher for third consecutive session on hopes that the government will finally allow foreign direct investment in the sector at the Cabinet Committee on Economic Affairs (CCEA) meet today. Soaring higher ahead of the meet, were stocks of Jet Airways, Spicejet, kingfisher Airline, which rallied in the range of 4-8%. Additionally, Stocks related to retail and cable TV services provider also rallied quite smartly on hopes of green signal to hike in FDI cap. Hathway Cable and Dish TV were up 2-4%, while Retail stocks like Brandhouse Retails, Provogue (India), Pantaloon Retail and Koutons Retail India surged 5-10%. The market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 1495:1428 while 133 scrips remained unchanged. (Provisional)

The BSE Sensex gained 419.30 points or 2.33% and settled at 18,440.46. The index touched a high and a low of 18,498.54 and 18,284.75 respectively. 24 stocks were seen advancing while 6 stocks were declining on the index (Provisional)

The BSE Mid-cap index was up 0.82% while Small-cap index was up 0.43%. (Provisional)

On the BSE Sectoral front, Realty was up 4.75%, Bankex was up 4.06%, Metal up 3.92%, Capital Goods up 3.43% and Auto up by 2.76% were the top gainers, while Health Care down by 1.32% and FMCG down 0.61% were the top losers in the space.

The top gainers on the Sensex were Jindal Steel up 7.66%, Hindalco Industries up 7.36%, SBI up by 5.47%, RIL up 5.07% and L&T up 4.89% while, NTPC down by 2.05%, Dr. Reddy’s Lab down by 1.81%, ITC down by 0.82%, ONGC down by 0.76% and Cipla down by 0.32% were the top losers in the index. (Provisional)

After much deliberation the government has finally decided to bite the bullet of much contentious issue of fuel price hike and have increased diesel prices, however it left kerosene and petrol prices untouched but decided to limit the number of subsidised gas cylinders to six per household per year. The cabinet committee on Political Affairs (CCPA) increased diesel prices by Rs 5 per litre from Friday, the hike is the first in 15 months and translates as a 14 percent rise, including taxes.  The committee also decided to limit the number of subsidised cooking gas cylinders per household to six per year, any LPG cylinders bought over this ceiling will be at market rates and the unsubsidised market rate will add up to around Rs 750 per cylinder.

Diesel, domestic LPG and PDS kerosene rates have not been changed since June 2011. The decision might pinch the common people but it is likely to help avert a sovereign credit downgrade and has raised expectations of more reforms to reverse an investment slump in the country. Ratings agencies Standard & Poor's and Fitch have earlier cautioned that a widening deficit have put India on the brink of losing the investment grade status.

Reserve bank of India too has been repeatedly saying that government should take initiatives to plug the hole in its finance to prevent country’s fiscal deficit going above a target of 5.1 percent of gross domestic product. The latest decision has raised hopes that government is finally moving on the reforms and economy front.

India VIX, a gauge for markets short term expectation of volatility lost 1.85% at 15.38 from its previous close of 15.67 on Thursday. (Provisional)

The S&P CNX Nifty gained 132.05 points or 2.43% to settle at 5,567.40. The index touched high and low of 5,586.65 and 5,526.95 respectively. 40 stocks advanced against 10 declining ones on the index. (Provisional)

The top gainers on the Nifty were Jindal Steel was up 7.79%, Hindalco Industries up 7.44%, DLF up 7.43%, JP Associates up 6.72% and Axis Bank was up 6.49%. On the other hand, Ranbaxy Lab down 2.07%, NTPC down by 1.87%, Dr. Reddy’s Lab down by 1.83%, Power Grid down 1.36% and BPCL down 1.33% were the top losers. (Provisional)

The European markets were trading in green with, France’s CAC 40 up 1.92%, Germany’s DAX up 1.49% and the United Kingdom’s FTSE 100 up 1.52%.

Asian stock markets went home with huge gains on Friday on the back of much awaited launch of third quantitative easing by the Federal Reserve yesterday with keeping the funds rate at 0.0%-0.25% at least till mid-2015. Kospi Composite hits a five month high in the session, while Hong Kong's Hang Seng Index ended firm after touching highest level since early May. Japan's Nikkei closed strong, gaining a foothold above 9,000 on bold plans for stimulus from the U.S. Federal Reserve.