Post session - Quick review

It was a spectacular session of performance for Indian frontline equity indices, which continuing winning streak to fourth consecutive session, took a quantum leap on Thursday by vehemently rallying close to a percentage points. The block buster performance staged by the markets, that were powered by hopes of second wave of reforms, took the benchmark 30 share index, Sensex, past psychological 19,000 mark, level last seen on July 15, 2011 and 50 share index, Nifty, momentarily breaching the 5800 level, its highest since April 28, 2011. However, profit-booking that emerged in the dying hours of trade mainly got the markets from their intra-day’s high, with Nifty concluding sub 5800 psychological level.

Nevertheless, investors’ scramble to buy stocks across the board on hopes of more reform measures from the government, on account of Cabinet meeting to deliberate on key reforms including raising the cap for FDI in insurance and pension, Companies Bill, FCRA Bill, Amendments to Competition Act 2002, Pension Fund Regulatory and Development Authority Bill, among other things, mainly provided the markets with a shot of adrenaline. Further, blissful global leads also provided reason’s for investor’s to go overboard on risky equities. Moreover, reports that underscored HSBC India services PMI jumping to 7-month high in September, also added fuel to the fire. However, the day clearly belonged to frontline equity indices, as degree of underperformance was shown by broader indices, which managed to negotiate gains of over quarter percent. On the global front, after jaunty close of Asian pacific shares, European counterparts too were trading merry on account of better than expected economic data from the United States, which allayed fears over global growth. U.S. data on Wednesday showed employment and service sector activity picking up last month, countering some of the gloom coming from Europe and China, and encouraging hopes that Friday's nonfarm payrolls report may surprise on the upside.

Closer home, in the steady session of performance, investors bee-lined for the stocks belonging to Realty, Consumer Durable and Bankex counters, which clearly topped the buying list on BSE sectoral chart. However, degree of weakness was witnessed in the stocks belonging to defensive Healthcare, Information Technology and Auto counter. Appreciation of  Rupee, to a five and half month high level, mainly led to gloom of IT stocks, as these firms derive lion share of revenue in American currency. Meanwhile, downfall of HC was not surprising, as defensive’s just perform contrary to the market trend. Thus, the market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 1658:1283 while 133 scrips remained unchanged. (Provisional)

The BSE Sensex gained 195.69 points or 1.04% and settled at 19,065.38. The index touched a high and a low of 19,107.04 and 18,939.75 respectively. 19 stocks were seen advancing while 11 stocks were declining on the index (Provisional)

The BSE Mid-cap index was up by 0.41% while Small-cap index was up 0.37%. (Provisional)

On the BSE Sectoral front, Realty was up by 5.10%, Consumer Durables was up 2.52%, Bankex was up 1.96%, Capital Goods was up 01.95% and Power up 1.60% were the top gainers, while Health Care down by 1.06%, Auto down by 0.24% and IT down by 0.12% were the only losers in the space.

The top gainers on the Sensex were BHEL was up 6.99%, ICICI Bank up 3.06%, SBI up by 2.27%, Dr. Reddy’s Lab up 2.24% and ITC up 2.02%, while, Cipla down by 4.36%, M&M down by 1.24%, Hero MotoCorp down by 1.19%, Bajaj Auto down by 1.12% and Coal India down by 0.85% were the top losers in the index. (Provisional)

Meanwhile, service sector activity in India expanded at the fastest pace in seven months in September, driven by firm demand and ‘resilience’ of the sector. The service sector, which makes up nearly 60 percent of India's economic output, extended its growth momentum for the eleven consecutive month.  According to the seasonally adjusted HSBC Business Activity Index, the service sector activity soared to 55.00 in September, as against 54.3 in the previous month. A figure above 50 signals increase in production while, a number below 50 indicates contraction. Furthermore, production in the manufacturing sector expanded solidly, with growth accelerating from August.

Meanwhile, new orders at private sector companies in India expanded at a sharp rate, the fastest in seven months.  Additionally, job creation was recorded in the Indian private sector during September, marking a seven-month sequence of expanding workforces. Furthermore, services and manufacturing firms both signaled increasing payroll numbers, with the rate of growth faster at manufacturers. However, with services companies reporting a depletion of backlogs but manufacturers signaling a solid accumulation, the volume of outstanding business in the Indian private sector increased only slightly. Basically, persistent power cuts continued to affect backlogs of work in the manufacturing sector.

Extending the current inflationary period to 40 months, the composite data posted a further increase in output cost, but the rate of increase of service providers was at a slower pace than manufacturers. Meanwhile, even input cost inflation persisted in the Indian private sector in August. Manufacturers registered the fastest increase in input prices since June, and linked persistent inflation to rising raw material and diesel prices.

However, the HSBC PMI survey further underscored inflation pressures to have firmed again on the back of rising costs. Thus, with inflation risks still lingering, the world’s most aggressive central bank RBI has little room to manoeuvre, although further progress on fiscal consolidation and structural reforms may eventually pave the way for some easing.  Additionally, although services companies remained optimistic regarding the short-term business outlook, the degree of positive sentiment in September was at a six-month low.

The government recently has taken a number of reform initiatives such as opening the multi-brand retail and aviation sectors to FDI, hiking diesel prices and capping the number of subsidised LPG cylinders. In another round of big-ticket reforms, the Union Cabinet is likely to approve the proposal for raising the FDI cap in the insurance sector to 49 percent and opening up the pension sector to foreign investment.

India VIX, a gauge for markets short term expectation of volatility lost 0.36% at 16.44 from its previous close of 16.50 on Wednesday. (Provisional)

The S&P CNX Nifty gained 60.60 points or 1.06% to settle at 5,791.85. The index touched high and low of 5,807.25 and 5,751.35 respectively. 31 stocks advanced against 18 declining ones while 1 stock remained unchanged on the index. (Provisional)

The top gainers on the Nifty were BHEL was up 7.16%, DLF up 6.03%, JP Associates up 3.71%, BPCL up 3.45% and ICICI Bank was up 3.11%. On the other hand, Cipla down 4.47%, Lupin down by 3.20%, Ranbaxy Lab down by 1.20%, Hero MotoCorp down by 1.17% and M&M down 1.14% were the top losers. (Provisional)

The European markets were trading in red with, France’s CAC 40 down 0.14%, Germany’s DAX down 0.28% and the United Kingdom’s FTSE 100 down 0.23%.

Asian shares ended mostly higher after a choppy session on Thursday, on positive reports that U.S. service companies grew last month at the fastest pace in six months. Investors remained cautious about slow global growth ahead of European Central Bank policy meeting. Japanese export shares soared on the back of possibility of a healing economy in the U.S., which is a key market for Japanese goods including high-end vehicles.

Chinese markets are closed this week for public holidays.