Post Session: Quick Review

Extending last session’s euphoria, stock markets in India displayed an overwhelming performance as market bulls seemed desperately waiting for significant upside triggers to open fresh positions on first day of the new Futures and Options (F&O) series.

After the gap-up opening, the frontline gauges kept garnering strength and logged triple digit gains, thereby reclaiming the long-last 19,300 (Sensex) and 5800 (Nifty) psychological levels respectively. Meanwhile, broader indices too witnessing traction went home with gains of close to over a percent. For the week, while frontline indices were up about 3%, CNX Midcap Index and BSE Smallcap index were down by 0.30% and 1.60% respectively.

Markets got a shot in the arm with gas price hike announcement, which mainly saw Oil & Gas pivotal rallying over 2%. What surprisingly, even got the secular up-move of the bourses was the rally of fertilizers and Power companies stocks, which found solace in FM’s assurance that the companies related, will not be impacted from the recent move of price hike. The stocks remained on investors’ radar after FM hinted lowering gas price for fertilizers, power sectors. Meanwhile, in a big move, government approved the near doubling of natural gas prices to $8.4 from April 1 next year, a move which will result in the rise of power tariff, CNG, urea costs paid by consumers.

Besides, positive domestic factors, mostly sanguine global leads also led to a spectacular rally at Dalal Street. Asian shares rose for a third day on Friday led by a solid rally in Tokyo’s Nikkei, which is on track to end the first half of the year up a 31%. The improved sentiment in Asian bourses followed Wall Street’s rally as two more US Federal Reserve officials sought to reassure markets that any tightening of its stimulus drive was still a distant prospect.

However, European shares, which were trading mixed after strong start, got the Indian equity markets down from their day’s high, as traders there digested news of an unexpected drop in German unemployment and rising Italian bond yields. German unemployment registered a surprising fall in June when the labour market in Europe's biggest economy proved robust, official data showed on Thursday.

Closer home, Rupee’s appreciation from the perilous 60/$ mark also gave markets a reason to rejoice.  Additionally, massive buying across Capital Goods, Metal and Power counters also fortified strength at D-street. On the flip side, shares from Consumer Durables, Information Technology space remained in a bit subdued mood. Information Technology ended quite dejected, largely hurt by the development of approval of an immigration reform bill by the US Senate. Nevertheless, the market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 1533: 859, while 120 scrips remained unchanged. (Provisional)

The BSE Sensex gained 474.73 points or 2.51% to settle at 19350.68.The index touched a high and a low of 19432.94 and 19093.18 respectively.

The BSE Mid cap and Small cap indices ended higher by 2.42% and 1.45% respectively. (Provisional)  On the BSE Sectoral front, Metal up by 4.64%, Power up by 4.57%, Capital Goods up by 4.23%, PSU up by 3.60% and Auto up by 3.18% were the top gainers, while there were the no losers in the space. (Provisional)

Out of the 30 stocks on the Sensex, 29 stocks settled higher. The chief gainers were BHEL up by 7.24%, Jindal Steel up by 7.17%, Sterlite Industries up by 6.18%, Tata Power up by 5.90% and Gail India up by 5.59%, while Hindustan Unilever down by 0.59% was the sole loser in the index. (Provisional)

Meanwhile, in order to address concerns of the foreign retailers, the government has assured them that it will review the stringent investment conditions imposed on foreign investment in the multi-brand retail sector. The government almost nine months ago had allowed foreign investment up to 51% in multi-brand retail, but imposed many conditions on such investment, which created confusion among the foreign retailers regarding multi-brand guidelines.    

To solve issues in foreign direct investment (FDI) norms, the government held a meeting with retail industry on June 27, which was attended by both foreign and domestic retail companies, including Walmart, Tesco, Metro, Carrefour, Bharti, Aditya Birla Group, Tatas, Reliance and Pantaloon among others.

Commerce and Industry Minister Anand Sharma said that early and appropriate view will be taken on all areas of concern. He further stated that the objective of the policy is to encourage job creation, investments and benefit to the farmers and consumers and the government has sufficient space to address these concerns to bring more clarity in the FDI guidelines, adding that the commerce and industry ministry is planning to issue revised guidelines with greater clarity on issues.

Retailers sought clarifications on sourcing issue in which foreign retailer must source 30 per cent of the items that it sells in India from small industries. They also asked for a relaxation in the rules for investment in the back-end infrastructure as the current policy says that 50 per cent of first tranche of the mandatory minimum $100 million FDI must go in the back-end infrastructure and not in buying land and building.

India VIX, a gauge for markets short term expectation of volatility lost 4.77% at 17.95 from its previous close of 18.85 on Thursday. (Provisional)

The CNX Nifty gained 146.45 points or 2.58% to settle at 5,828.80. The index touched high and low of 5,852.95 and 5,749.50 respectively.

Out of the 50 stocks on the Nifty, 47 ended in the in the green, while 3 in red. The major gainers were Jindal Steel up 7.40%, BHEL up by 7.33%, Reliance Infrastructure up by 6.53%, BPCL up by 6.32% and Tata Power up by 6.20%. The losers were HCL Tech down by 2.81%, Ranbaxy down by 2.39% and Hindustan Unilever down by 0.54%.(Provisional)

Most of the European markets were trading in red with, France’s CAC 40 down by 0.60% and Germany’s DAX down by 0.08% while the United Kingdom’s FTSE 100 up by 0.02%.

Asian markets ended on a firm note following an enthusiastic lead from Wall Street, where Fed quantitative easing (QE) fears eased further. Japan’s Nikkei closed higher after touching a three-week high on the back of higher-than-expected industrial output growth in May. Shanghai market too ended in positive territory after choppy trade, supported by comments from the head of the People's Bank of China that it would adjust liquidity to ensure stability as financial markets suffer a credit squeeze.