Post session - Quick review

It was a strong session of performance for Indian equity markets, which saw benchmark equity indices recuperating substantial lost ground post opening of European markets to finish near the high point of the day. The day turned out to be extra-ordinary as benchmarks showcased astonish reversal of trend after some support emerged at lower levels. However, what turns out to important is the positive close of Dalal Street, a day ahead of the crucial IIP and Q2 numbers. In topsy-turvy session of trade, benchmark 30 share index, Sensex, puffed over 200 points, to conclude above the psychological 18,800 level. Similarly, the widely followed index, Nifty, too added close to a percent to end above the crucial 5700 mark. Meanwhile, broader indices too gathered steam by the close of trade.

The up move of Indian equity markets was all thanks to positive European counterparts, which after three session’s of downturn, finally showcased some audacity. Meanwhile, most of the Asian pacific markets ended down in dumps after global credit rating agency Standard & Poor's on Wednesday cut Spain's credit rating by two notches to just one level above speculative or junk grade with a negative outlook, citing mounting risks to the country's public finances.

Closer home, upbeat mood of Dalal Street could also attributed to Cabinet approval to modified direct cash subsidy for urea, a move that would ensure transfer of direct cash subsidy to the farmer for procuring urea, the most popular fertilizer.  Further, investor’s also scooped up equities after finance minister P Chidambaram, promising more reforms initiatives in the next two years, said that there was no serious threat of downgrade of the country's credit rating by Standard and Poor's. Much of the strength came in from the stocks belonging to Realty, Capital Goods and Metal counters.  Additionally, Fertilizer stocks, namely Rashtriya Chemicals & Fertilizers (RCF), Chambal Fertilisers and Chemicals, extended gains after the government raised the price of the most used nitrogenous fertiliser urea by Rs 50 per tonne on Thursday. Furthermore, Realty counter too bounced back on bargain buying. Moreover, shares of power generation distribution companies, edged higher on renewed buying after the Power Ministry early this week said that the government has notified a scheme for Financial Restructuring of State Owned Distribution Companies (Discoms). On the flip side, only FMCG counter, emerged to be a sole loser among 13 sectoral indices on BSE. The market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 1645:1188 while 128 scrips remained unchanged. (Provisional)

The BSE Sensex gained 207.06 points or 1.11% and settled at 18,838.16. The index touched a high and a low of 18,840.63 and 18,581.49 respectively. 26 stocks were seen advancing while 4 stocks were declining on the index (Provisional)

The BSE Mid-cap index was up by 1.26% while Small-cap index was up 0.87%. (Provisional)

On the BSE Sectoral front, Realty up by 4.53%, Capital Goods up by 2.17%, Metal up by 1.71%, Bankex up by 1.54% and Power up 1.54% were the top gainers, while Health Care down by 0.02% was the sole loser in the space.

The top gainers on the Sensex were BHEL was up 2.59%, L&T up 2.42%, Tata Motors up by 2.39%, SBI up by 2.37% and Tata Steel up 2.30%, while, Cipla down by 2.18%, Maruti Suzuki down by 0.74%, Wipro down by 0.71% and M&M down by 0.16% were the only losers in the index. (Provisional)

Meanwhile, Cabinet Committee on Economic Affairs (CCEA) on Thursday agreed to hike the prices of urea-based fertilizers by Rs 50 per tonne, thereby reducing government’s fertilizer subsidy bill, estimated to touch Rs 65,000 crore this fiscal year. With this hike, urea-based fertilizers will now cost Rs 5,360 per tonne, way cheaper than potash and phosphate fertilizers, which cost Rs 24,000 per tonne. Earlier, urea was priced at 5,310 rupees per tonne.

Further, the Cabinet has also approved modified direct cash subsidy for urea, a move that would ensure transfer of direct cash subsidy to the farmer for procuring urea. Thus with this, the payment of fertilizer subsidy to companies will be based on the receipt of fertilizers and the acknowledgement of receipts of fertilisers by the retailers (last point of sale of fertilizers).

However, the government plans to go about the process in a phased manner. In the first phase, the government will track sales of urea up to the dealer level. This exercise will be made compulsory from November 1, 2012.

Further, the Cabinet has directed the ministry to commence a pilot project in the second phase in 10 districts of the country and begin tracking the sale of urea right down to the farmer. This will be tracked through ICT enabled tools, and identification of the farmers will be done through the Kisan Credit Card, Aadhaar No, Bank Account No. etc. After making sure that there is no provision of any direct cash subsidy at this stage, transfer of direct cash subsidy will become a reality only in the third and the final stage of the roll-out.  However, the cabinet has yet not given time-frame for the completion of this pilot project.

India VIX, a gauge for markets short term expectation of volatility lost 2.02% at 16.49 from its previous close of 16.83 on Wednesday. (Provisional)

The S&P CNX Nifty gained 66.10 points or 1.17% to settle at 5,718.25. The index touched high and low of 5,721.10 and 5,636.95 respectively. 41 stocks advanced against 9 declining ones on the index. (Provisional)

The top gainers on the Nifty were JP Associates was up 3.72%, DLF up 3.71%, Bank of Baroda up 3.43%, PNB up 3.28% and Axis Bank was up 2.91%. On the other hand, Lupin down 2.90%, Cipla down by 2.15%, Maruti Suzuki down by 0.61%, Ultratech Cement down by 0.53% and Ambuja Cement down by 0.45% were the top losers. (Provisional)

The European markets were trading in green with, France’s CAC 40 up 0.51%, Germany’s DAX up 0.66% and the United Kingdom’s FTSE 100 up 0.39%.

Most Asian markets closed lower on Thursday as Standard & Poor's downgraded Spain's credit rating which overshadowed an upbeat assessment of the US economy by the Federal Reserve. However, Hong Kong markets went home with green mark as a large state-owned shareholder purchased shares in the country’s top four banks. Japan's Nikkei hits two months low on Thursday on increased worries that upcoming corporate earnings will be weak after the U.S. results season got off to a slow start. South Korea’s Kospi ended lower amid alternate bouts of buying and selling, after the Bank of Korea cut its policy interest rate by a quarter-point. Seoul shares extended earlier losses for a fourth consecutive session, weighed down by concerns about China's slowing growth.