Bourses gather marginal gains; October F&O series expires with 1% gain

The October series futures and options contract expiry day largely turned out to be a quiet session for the stock markets in India lacking the flavor of high volatility, which typically surfaces on an F&O contract expiry day. Nevertheless, the frontline indices witnessed consolidation through the day’s trade snapping the session with marginal gains. The key gauges tightly held on to the psychological 5,700 (Nifty) and 18,750 (Sensex) bastions and settled tad above those levels. Moreover, the gauges gained about a percentage point in the October F&O series as traders were keen to roll-over their position to fresh month F&O contract on cautious hopes that the Reserve Bank of India (RBI) will surprise markets by cutting interest rates at its policy review on October 30, 2012.

The bourses, however, traded cautiously in the morning session near their pre-close mark in absence of any positive trigger. But, slew of decent second quarter result strengthened investors’ confidence. Sterlirte Industries, on consolidated basis, posted a growth of 74.66 percent in its net profit after taxes, at Rs 1,742.69 crore for the Q2FY13 as compared to Rs 997.78 crore for the same quarter in the previous year. The sentiments also got some support after M&M registered over 22 percent jump in Q2 consolidated net profit while, Kotak Mahindra Bank reported 16% rise in Q2 consolidated net profit. Meanwhile, the market sentiment was boosted by provisional data showing that foreign institutional investors (FIIs) remained buyers of Indian stocks on October 23, 2012. FIIs bought shares worth a net Rs 252.40 crore, as per provisional data from the stock exchanges.

Domestic indices gained main strength from European counters, which traded firmly in the early deals ahead of growth number from Britain. Moreover, most of the Asian equity indices ended the session in the green as signs of recovery in China and the United States eased fears of deteriorating global growth, though generally weak corporate earnings continued to make investors wary. Chinese flash manufacturing data for October showed a material rise from 47.9 to 49.1. The report showed improvements in new orders and export orders while inventories fell.

Back home, the gauges also got some support after most of the PSU companies went home with good gains after Prime Minister Manmohan Singh in its meeting with the top 25 PSU heads, urged them to invest and grow, and set the pace for India’s growth in the process. Gains in public sector oil marketing companies too boosted the traders’ confidence. Stocks of BPCL, HPCL and IOC all edged higher as US crude oil futures slipped to fresh three-month low on October 24, 2012.

The NSE’s 50-share broadly followed index Nifty, rose by about fourteen points to settle above the psychological 5,700 support level while Bombay Stock Exchange’s Sensitive Index - Sensex moved up by about fifty points to finish above the psychological 18,750 mark. However, the broader markets traded cautiously through the day’s trade and settled on a mixed note. Moreover, the market breadth remained in favor of declines as there were 1,288 shares on the gaining side against 1,556 shares on the losing side while 138 shares remain unchanged.

On the F&O front, Nifty and Sensex, for October series, registered gains of 1% each, as against the massive 6% profit in September series. Moreover, the broader markets CNX Mid Cap index garnered gains of over 1.3% while BSE Small cap index, outperforming lager peers by a fat margin, ended with gains of over 3%.

From the expiry perspective, market wide rollover of 59.45% was observed, which was lower than the three month average of 63.06% while Nifty rollovers were at 52.15%, lower than three month average of 53.28%. Sectorally, capital goods, power and telecom space witnessed high rollover of positions while infrastructure, oil & gas and media stocks observed relatively low rolls into the November series. Among individual stocks, Ranbaxy (44%), Lupin (45%) and Ambuja Cement (45%) witnessed low rolls while stocks like Maruti (71%), BHEL (67%) and Cipla (67%) observed better rollover into November series.

Finally, the BSE Sensex gained 48.61 points or 0.26% to settle at 18,758.63, while the S&P CNX Nifty rose by 13.90 points or 0.24% to end at 5,705.30.

The BSE Sensex touched a high and a low of 18,789.92 and 18,699.07, respectively. The BSE Mid-cap index was up by 0.15% and Small-cap index was down by 0.17%.

Mahindra & Mahindra up 3.59%, Hero MotoCorp up 2.36%, HDFC up 2.06%, Sterlite up 1.98% and Gail India up 1.55% were the major gainers on the Sensex. On the flip side, Dr Reddys Lab down 2.03%, SBI down 1.49%, Tata Motors down 1.27%, Tata Steel down 1.26% and Hindustan Unilever down 1.16% were the major losers on the index.

The top gainers on the BSE sectoral space were Auto up 0.58%. Capital Goods (CG) up 0.35%, Bankex up 0.35%, Oil & Gas up 0.16% and FMCG up 0.09%. While Realty down 1.35%, Health Care (HC) down 0.36%, TECk down 0.21%, Metal down 0.20% and PSU down 0.17% were top losers on the BSE sectoral space.

Meanwhile, in a hope to get rid of a threatening ratings downgrade and boost fiscal credibility, finance ministry is expected to pencil in fiscal deficit at 5.3 per cent for this year, which is seen improving at 3 per cent by 2016-17, in its soon-to-be-unveiled fiscal reforms blueprint.

Finance ministry officials are functioning overtime to safeguard that a widely anticipated fiscal slippage this year is minimal and not much beyond the budgeted 5.1 per cent that they contend could go a prolonged approach in satisfying international ratings agencies that have threatened a hillside of India’s emperor rating to junk status.

Meanwhile, Finance Minister P Chidambaram, who has betrothed a 'credible and feasible path of fiscal correction', has been personally fine-tuning the proposed fiscal framework for the next five years that will be presented in the forthcoming winter session of Parliament.

Further, having shot a diesel price hike bullet which is expected to reduce ballooning subsidies burden, the finance ministry is now focusing on a three-pronged strategy comprising massive expenditure cuts, aggressive disinvestment, and large receipts from the sale of telecom spectrum to achieve the fiscal numbers.

The S&P CNX Nifty touched a high and a low of 5,718.75 and 5,685.70 respectively.

The top gainers on the Nifty were M&M up 4.03%, IDFC up 2.51%, Hero MotoCorp up 2.07%, HDFC up 2.07% and GAIL up 1.68%.

The top losers on the index were Dr Reddy down 2.47%, Ranbaxy down 1.83%, PNB down 1.66%, SBI down 1.66% and Reliance Infra down 1.43%.

European markets were trading in green. France’s CAC 40 up 0.49%, Germany’s DAX up 0.53% and Britain’s FTSE 100 up by 0.26%.

Asian shares ended mostly higher on Thursday after US Federal Reserve stated that it will keep its loose monetary policy in place until America's economy comes back on track. Even signs of recovery in China and the United States eased some investor’s worries. Hong Kong market closed higher on the back of huge inflows of cash which have pushed the local dollar to the high end of its trading band against the greenback. Meanwhile, Japan Nikkei went home with green mark as Japanese automakers advanced and yen dropped to its lowest level versus the U.S. dollar in four months as investors speculated that the Bank of Japan will expand monetary stimulus next week.