Late hour turn-around help benchmarks to end near intraday high

It turned out to be a noteworthy session for the Indian equity markets as market bulls vehemently fought back, in the late trade, supported by Finance Minister P Chidambaram’s comment that there is no serious threat of a ratings downgrade. He also stated that there would be lot of action on the reforms front in the next 24 months, the timeline provided by the S&P. The frontline indices, after exhibiting choppy trade for most part of the day’s trade, finally showed enthusiasm to end the session near intraday highs, reclaiming the psychological 18,800 (Sensex) and 5,700 (Nifty) bastions. The gauges surged despite exports falling for the fifth consecutive month. September trade deficit rose to its widest in 11 months. The indices also got strength as Realty and power shares witnessed buying at lower levels after witnessing a sharp sell-off in the previous sessions.

The main support to the Indian bourses came from European counters, which provided the required confidence to the investors with all the European markets witnessing bounce back after opening lower following Spain’s downgrade. Though, Asian markets mostly fell after Spain, the fourth-largest euro economy, was slapped with a two-notch credit downgrade. S&P downgraded Spain’s debt late Wednesday from BBB+ to BBB-, the lowest investment grade level. S&P said the action was due to the country’s recession, high unemployment and social unrest, which limit the government’s options for reversing the country’s financial crisis.

Back home, the undertone in the Indian markets remained sanguine, as investors awaited for the next round of economic reforms from the UPA, while bracing for the latest batch of corporate results. All eyes will be on the earnings from IT titan Infosys and housing finance major HDFC on Oct 12. Investors will also keep an eye on the IIP data and CPI inflation, both of which will release on October 12. Strengthening rupee too aided the sentiments. The Indian rupee appreciated 26.50 paise to 52.78 against the US dollar at the time of equity market closing.

Some amount of support also came in after Cabinet Committee on Economic Affairs (CCEA) 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. All the fertilizer stocks like Rashtriya Chemical Fertilizers, National Fertilizers, Coromandel International and Gujarat State Fertilizers all edged higher. Buying in FMCG counters too aided the sentiments as stocks like, HUL, Dabur India and Marico edged higher on favourable outlook for Rabi or winter crop following wide-spread rains in August and September, with FMCG giant Hindustan Lever hitting record high. Meanwhile, Metal sector rose over one and a half percent as stocks like SAIL, Hindalco and Jindal Steel & Power surged after metal prices advanced on the London Metal Exchange on October, 10, 2012.

The NSE’s 50-share broadly followed index Nifty gained by over fifty five points to regain its psychological 5,700 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex rose by over one hundred and seventy points to finish above its psychological 18,800 mark. The broader markets also traded in-line with benchmarks and ended the session with a gain of about a percent. 

The overall volumes stood at over Rs 1.72 lakh crore, which remained on the higher side as compared to that on Wednesday. The market breadth remained in favor of advances as there were 1,653 shares on the gaining side against 1,183 shares on the losing side while 128 shares remain unchanged.

Finally, the BSE Sensex gained 173.65 points or 0.93% to settle at 18,804.75 while the S&P CNX Nifty rose by 55.90 points or 0.99% to end at 5,708.05.

The BSE Sensex touched a high and a low of 18,847.81 and 18,581.49, respectively. The BSE Mid-cap and Small-cap indices were up by 1.16% and 0.84%, respectively.

BHEL up 2.61%, L&T up 2.25%, Tata Motors up 2.22%, Tata Steel up 2.11% and Bharti Airtel up 2.06% were the major gainers on the Sensex. On the flip side, Cipla down 1.97%, Wipro down 0.61%, Maruti Suzuki down 0.59%, M&M down 0.18% and GAIL down 0.15% were the major losers on the index.

The top gainers on the BSE sectoral space were Realty up 4.61%, Capital Goods (CG) up 2.04%, Metal up 1.61%, Power up 1.41% and Bankex up 1.30%, while Health Care (HC) down 0.13% was the lone loser on the BSE sectoral space.

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.

The S&P CNX Nifty touched a high and a low of 5,721.10 and 5,636.95 respectively.

The top gainers on the Nifty were JP Associates up 3.72%, DLF up 3.71%, Bank of Baroda up 3.43%, PNB up 3.28% and Axis Bank up 2.91%.

The top losers on the index were Lupin down 2.90%, Cipla down 2.15%, Maruti down 0.61%, Ultra Tech down 0.53% and Ambuja Cement down 0.45%.

European markets were trading in green. France’s CAC 40 up 0.65%, Germany’s DAX up 0.79% and Britain’s FTSE 100 up by 0.60%.

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.