Benchmarks continue jubilation on rate cut hopes

Buoyed by firm global cues, key domestic benchmarks showcased an enthusiastic performance on first day of F&O expiry week of April series. Frontline indices conquered their crucial 5,800 (Nifty) and 19,150 (Sensex) bastions, hitting their highest level in almost five weeks, supported by rally in rate-sensitive sectors such as banks, real-estate and auto amid hopes that the central bank would ease monetary policy more aggressively next month to boost growth into the Asia’s third-biggest economy. Back on street, after a cautious start, markets soon entered into green terrain with investors turning optimistic after data showed that foreign funds remained net buyers of Indian stocks on April 18, 2013. Foreign institutional investors (FIIs) bought shares worth a net Rs 940.07 crore on Thursday. Some profit booking was witnessed during the trade after the second part of the Budget session of Parliament began on a stormy note as members from various parties forced adjournment of Lok Sabha on various issues, including heckling of Mamata Banerjee, incidents of rapes and demand for separate Telangana. But, markets managed to trade above their crucial levels supported by buying in capital goods and metal counters.

The local gauges extended their gains in noon deals as European counters traded firmly after a positive start on Monday with Italian shares posting the biggest gains after the Italian parliament over the weekend re-elected Giorgio Napolitano as president, following weeks of political uncertainty. Some support also came in from rally in Asian markets after a meeting of global finance leaders lent support to Japan’s aggressive monetary policy. The G-20 leaders refrained from criticizing Japan for policies that recently sent the yen to multiyear lows, which was widely interpreted as the international community offering its support for Tokyo’s monetary stimulus.

Back home, continued buying in banking stocks helped benchmarks to end near intraday high. Scrips like, SBI, PNB, ICICI Bank, HDFC Bank Axis Bank and IDBI Bank edged higher as the Reserve Bank of India (RBI) is likely to cut interest rates next week for a third time this year, drawing comfort from a fall in inflation as it seeks to help lift the economy from its lowest growth in a decade. Rally in stocks from power sector too aided the sentiments as the government is likely to take a final decision on the blending of prices of imported coal and domestically-produced fuel or price pooling of coal. Additionally, FMCG counters garnered gain of over half a percent on reports of likely normal monsoon this year. On the flip side, shares of software stocks declined after Wipro’s issuing weak Q1 revenue outlook. company is expecting revenues from its IT services business to be in the range of $ 1.575-1.610 billion for the first quarter (April-June) of the current fiscal. Though, the company reported 16.73% increase in net profit to Rs 1,728.7 crore for the fourth quarter ended March 31, 2013 as against Rs 1,480.9 crore in the year-ago period.

The NSE’s 50-share broadly followed index Nifty gained over fifty points to end above its psychological 5,800 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex surged by over one hundred and fifty points, ending above its psychological 19,150 mark. Moreover, the broader markets too traded neck-to-neck with benchmarks and ended the session with a gain of over half a percent.

The market breadth remained in favor of advances as there were 1,390 shares on the gaining side against 1,004 shares on the losing side while 138 shares remained unchanged.

Finally, the BSE Sensex gained 153.37 points or 0.81% to settle at 19169.83, while the CNX Nifty rose by 51.30 points or 0.89% to end at 5,834.40.

The BSE Sensex touched a high and a low of 19204.90 and 18989.78, respectively. The BSE Mid cap index up by 1.44% and Small cap index was up by 0.90%.

The top gainers on the Sensex were, Coal India up by 4.33%, L&T up by 4.21%, HDFC Bank up by 3.85%, BHEL up by 3.04% and Tata Steel up by 2.27%, while Wipro down by 7.95%, Infosys down 2.22%, ONGC down 1.84%, TCS down 1.75% and Bajaj Auto down by 1.67% were the top losers on the index.

The top gainers on the BSE Sectoral space were Consumer Durables up 4.26%, Realty up 3.41%, Capital Goods up 3.33%, Bankex up 2.41% and Metal up 2.03%, while IT down 2.37% and TECk down 1.26% were the only losers on the sectoral space.

Meanwhile, Prime Minister's Economic Advisory Council (PMEAC) Chairman C Rangarajan has said that the decline in gold and crude oil prices will have favorable impact on the country’s macro-economic indicators especially for the high current account deficit (CAD) and the overall Balance of Payment (BoP) position.

Recently, the gold price fell to 21 month low to around Rs 26,000 per 10 grams in the domestic markets due to the major sell off in the global markets. It had touched an all-time high of Rs 32,975 per 10 grams on November 27, 2012. On the other hand, Brent crude oil futures have seen a 10 percent price slide to below $100 a barrel this month. The softening of crude oil and gold prices will help to improve the CAD, which was widened to historic high of 6.7 percent of GDP for the third quarter ended December 2012.

India is a largest importer of gold and crude oil and its imports represent around 40-45 percent of country's total imports. However, the government is putting all efforts to reduce the attractiveness of gold as an asset. In January, 2013 the import duty on gold was hiked to 6% from 4% to check the import and also linked gold exchange traded fund (ETF) schemes offered by mutual funds to gold deposit schemes of banks with a view to increase availability of physical gold in the market. 

The CNX Nifty touched a high and a low of 5,844.85 and 5,789.80 respectively. 

The top gainers on the Nifty were Reliance Infra up by 5.15%, Coal India up 4.59%, L&T up 4.24%, HDFC Bank up 4.12% and Indusind Bank up by 3.64%.

On the flip side, the top losers of the index were, Ultra Tech Cement down by 3.01%, Infosys down by 2.21%, HCL Tech down by 2.15%, ONGC down 2.00% and TCS down by 1.91%.

Most of the European markets were trading in green, France’s CAC 40 up by 0.75%, the United Kingdom’s FTSE 100 up by 0.67% and Germany’s DAX up by 0.72%.

Asian markets ended mostly higher on Monday, with Japan’s Nikkei closing with firm gains after a meeting of global finance leaders lent support to Japan’s aggressive monetary policy, which has driven the value of the yen down by more than 20% against the dollar since October. Shanghai Composite closed lower snapping earlier gains amid concerns about China’s economic growth trajectory. Hang Seng went home with green mark after swinging between modest gains and losses, with insurance providers coming under pressure, following the deadly earthquake that struck the Sichuan province.