Euphoric Sensex kicks-off new series in style; Nifty conquers 5,700 mark

First day of a fresh futures and options series brought more cheer for the Indian stock markets as the benchmark indices not only climbed over a percent higher in the session but also hit their highest level in more than 14-1/2 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 18,750 (Sensex) and 5,700 (Nifty) bastions. The undertone remained upbeat on optimism that the government will carry on its reforms agenda forward in the coming days and weeks. Corporate confidence also improved on the back of slew of reforms announced by the government lately.

Sentiment also got support on government’s decision of no extra borrowing in the current year. The finance ministry asserted its commitment to containing fiscal deficit by sticking to its borrowing target and said that government will borrow Rs 2 lakh crore in the remaining period of the current fiscal to stick to the target of 5.1 per cent of the Gross Domestic Product. The appreciation in rupee too buoyed the sentiments, rupee rose to a near five-month high on Friday after the government stuck to its fiscal second half borrowing and said it will not borrow more via bonds in the current year. The rupee rose to a high of 52.55, a level not seen since May 1.

However, investors booked some amount of their profit after the release of core sector number, which failed to emerge as a positive trigger for equity markets as eight core industries grew at a slower pace of 2.1 percent in August, as against 3.8 percent in the same month last year due to negative growth in crude oil, natural gas, fertilizer and cement. Meanwhile, drug makers saw some selling pressure after the Group of Ministers (GoM) recommended revised pricing mechanism under New Pharma Pricing Policy, which suggests that the pricing cuts are worse than expected.

But, domestic bourses held their crucial levels as buying in auto space continued to provide strength, gaining by about two percent as companies from this sector will start unveiling vehicle sales data for September from October 1, 2012. Metal stocks too aided the sentiments as scrips like Sterlite Industries, Sesa Goa, Nalco, Hindalco, JSW Steel, Hindustan Zinc and Jindal Steel & Power all edged higher as LMEX, a gauge of six metals traded on the London Metal Exchange gained 1.01% September 27, 2012. Cement shares extended their recent rally triggered by hopes that construction activity will pick up as the southwest monsoon started withdrawing from some parts of the country.

Global cues too remained supportive as European counters traded in the green in early deals after Spain announced severe budget cuts meant to show international lenders and investors that the country is taking steps toward getting its debt under control. The Spanish government on Sept 27, unveiled a draft budget for 2013 that cuts overall spending by (euro) 40 billion ($51 billion). Moreover, most of the Asian equity indices snapped the day’s trade in the positive terrain as Spain’s economic reform plan eased worries about euro zone’s finances, while the strength in oil prices also lent support.

Back home, shares of Tata Group companies rose across the board following reports that US coffee chain Starbucks Corp. will open its first coffee shop in India in joint venture with Tata Coffee by the end of October 2012 and has named Avani Saglani Davda, a Tata Group executive, as chief executive of the joint venture. Meanwhile, the group’s holding company Tata Sons has invested Rs 220 crore in Infiniti on Sept 26, which will enable the company to buy out Woolworths Wholesale and expand the Croma business. TCS has also launched Firebird Plus, a new rapid implementation offering for Oracle Fusion Human Capital Management (HCM). Shares of Tata Motors, Tata Power, Tata Steel and TCS all edged higher by 1.50-4 percent.

The NSE’s 50-share broadly followed index Nifty, rose by over fifty points to conquer its psychological 5,700 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex surged by over one hundred and eighty points to finish above the psychological 18,750 mark. Moreover, the broader markets too traded with traction through the session and ended the session with a gain of about a percentage point. Moreover, the market breadth remained in favor of advances as there were 1,647 shares on the gaining side against 1,245 shares on the losing side while 151 shares remain unchanged.

The BSE Sensex gained 183.24 points or 0.99% to settle at 18,762.74, while the S&P CNX Nifty rose by 53.80 points or 0.95% to close at 5,703.30.

The BSE Sensex touched a high and a low of 18,869.94 and 18,698.51 respectively. The BSE Mid cap index was up by 1.14% and Small cap index gained 0.85%. 

Hindalco Industries up by 3.39%, Tata Motors up by 2.96%, Cipla up by 2.50%, Sun Pharma up by 2.44% and Tata Power up by 2.30% were top gainers on the Sensex, while Infosys down 0.58%, BHEL down 0.56%, SBI down 0.39%, Gail India down 0.22% and HDFC Bank down 0.14% were top losers on the index.

The major gainers on the BSE sectoral space were, Auto up 1.89%, Consumer Durable (CD) up 1.63%, FMCG up 1.42%, Metal up 1.38% and Power up 1.37%, while Realty down 0.37% was top loser on the BSE sectoral space.  

Meanwhile, confirming a slow-down in economy, growth in the eight core industries which occupies 37.9% of weightage in the overall Index of Industrial Production (IIP), slipped to 2.1% in August as against 3.8% in the same month last year, weighed down by contraction in natural gas, fertilizers and cement.

The cumulative expansion of these industries in April-August 2012, namely crude oil, petroleum refinery products, natural gas, fertilizers, coal, electricity, cement and finished steel, slowed to 2.8% from 5.5% during the corresponding period a year ago. However, May reading was marginally revised upwards to 4% from the previously reported 3.8% expansion.

Natural Gas and Fertilizer, which occupies 1.71% and 1.25% weightage in the index, have been the worst performing sectors showcasing production contracting by 13.5% and 2.1% in August, respectively compared to contraction of 5.3% and a growth of 4.3% respectively in June 2011. Meanwhile, cement, with a weight of 2.41%, registered a negative growth of 2.4% in August 2012 against its 8.4% growth in August 2011.

Crude oil production, with a weight of 5.22% too registered a negative growth of 0.6% in August compared to its growth of 1.6% in corresponding period of the last year. Additionally, steel production, with weight of 6.68% in the index, slowed down to 1.8% in the month under review as against its 7.9% growth in the similar month previous fiscal. Electricity generation (weight: 10.32%) growth too slowed down at 1.7% for the month under review as compared to its 9.4% growth in the same month last year.

On the flip side, coal production, with a weight of 4.38% in the index, registered a growth of 11% in August 2012 compared to contraction of 15.2% in the same month last year. Additionally, Petroleum refinery production (weight: 5.94%) growth accelerated by 8.4% as compared to figure of 3.8% in the same month last year.

The S&P CNX Nifty touched a high and low of 5,735.15 and 5,683.45 respectively.

 The top gainers on the Nifty were Hindalco up by 3.69%, PowerGrid up by 2.96%, Sun Pharma up by 2.96%, Tata Motors up by 2.79% and JP Associates up by 2.42%. On the flip side, Reliance Infra down by 1.50%, IDFC down 1.38%, DLF down 1.35%, HCL Tech down 1.28% and BHEL down by 0.60% were top losers.

The European markets were trading mixed, France's CAC 40 down by 0.54%, Germany's DAX down by 0.14% and United Kingdom’s FTSE 100 up by 0.12%.

Tracking global rally, Asian markets closed shutters with green mark on last trading day of the third quarter, barring Japanese market, which hit a two-week closing low on Friday amid worries about falling revenues for Japanese companies in China. Markets added gains as Eurozone debt worries were eased after Spain unveiled swingeing cuts in a budget that is expected to pave the way for a bailout. Hong Kong shares ended higher as hopes that Chinese authorities will take steps to boost the slowing economy and easing by global central banks fueled a rebound in stock markets.