Euphoric Sensex kicks-off new series in style; garners over 500 points

Extending their last session’s rally, stock markets in India displayed an awe-inspiring performance and bulls looked waiting for significant upside triggers to open fresh positions on first day of the new Futures and Options series. The frontline equity indices rallied vehemently by over two and half a percentage points and not only extended their gaining streak for the second successive session but also soared to highest levels in more than one and a half week. After the gap-up opening, the frontline gauges managed to capitalize on the momentum and there appeared not even an iota of profit booking in the session and the benchmarks managed to fervently gain strength to strength, to end tad below their important psychological 19,400 (Sensex) and 5,850 (Nifty) bastions.

Sentiments remained sanguine since start of the trade as supportive cues from US markets provided the much needed support to local markets initially. Rally in Asian counterparts too boosted investors’ confidence with Japanese Nikkei rallying over three and a half percent after the nation’s core consumer prices came flat in May compared with a year earlier, marking the first time they have stopped falling in seven months. Moreover, European markets opened higher, buoyed by news that euro-zone leaders had agreed on an 822 billion pound seven-year EU budget and had decided to spend 5 billion pound over two years to reverse youth unemployment across the region.

Back home, market participants remained in cheerful mood after Government, late last evening, approved a complex formula that would double the price of gas to $8.4 per unit from all domestic fields operated by government and private oil firms, a move which will result in rise in power tariff, urea cost and CNG prices. This will be the first revision in gas prices in 3 years. Sentiments also remained up-beat after power generation and fertiliser stocks gained on Finance Minister P Chidambaram’s assurance that the government would consider helping the power and fertiliser industries to cope with the doubling of domestic gas prices from April 1, 2014.

Sentiments also got support after Indian rupee appreciated and came substantially below the Rs 60 level against the dollar on the back of lower current account deficit (CAD). Rate sensitive sectors like Auto, Banking and Realty too edged higher on short covering and bargain hunting after the recent correction. Additionally, shares of tea stocks like, McLeod Russel, Assam Company, Jayshree Tea and Warren Tea edged higher on reports that tea prices in India surged at this week’s auction as higher temperature and lower rainfall in Assam raised concerns over production amid robust demand from local buyers for good quality leaf.

The NSE’s 50-share broadly followed index Nifty gained by over one hundred and fifty points to end above its psychological 5,800 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex zoomed by over five hundred and twenty points to finish over its psychological 19,350 mark.

Moreover, the broader markets too traded jubilantly and ended the session with a gain of about one and a half percent. The market breadth remained in favor of advances as there were 1,535 shares on the gaining side against 857 shares on the losing side while 120 shares remain unchanged.

Finally, the BSE Sensex jumped 519.86 points or 2.75% to settle at 19,395.81, while the CNX Nifty climbed by 159.85 points or 2.81% to end at 5,842.20.

The BSE Sensex touched a high and a low of 19,432.94 and 19,093.18, respectively. The BSE Mid cap index was up by 2.26% and Small cap index was up by 1.37%.

The top gainers on the Sensex were, Jindal Steel up by 7.89%, BHEL up 6.90%, Tata Power up 5.71%, Coal India up 5.58% and Sterlite Industries up by 5.23%, while Hindustan Unilever down by 0.67% was the only loser on the index. 

The top gainers on the BSE Sectoral space were, Metal up 4.70%, Power up 4.15%, Capital Goods up 4.03%, PSU up 3.52% and Oil & Gas up 3.37%, while there was no loser on the sectoral space.

Meanwhile, concerned over the prevailing economic downturn, the Reserve Bank of India (RBI) governor D Subbarao has said that slowdown in growth is the most worrisome factor and volatile capital flows have made the country vulnerable to face economic challenges. The RBI governor further stated that service and industry sector are growing below the trend and the perception of difficulties in doing business in India still persist, which is inhibiting investments in the country. Indian economic growth slowed down to decade low of 5 per cent in FY13. 

Referring to the current fiscal growth, the governor said that central bank is expects that economy’s growth will improve to 5.7 per cent in the current fiscal on the back of recent measures taken to ease the supply bottlenecks.  On the current account deficit (CAD), which had widened to a record high of 4.8 percent in the FY13, Subbarao said that short-term efforts are directed at financing the CAD and in the last quarter a massive improvement was seen in CAD, which contracted to 3.6 percent of GDP from 6.7 percent of GDP recorded in the third quarter of previous fiscal.

The RBI in its recently released report on the ‘Financial Stability’ noted that the macroeconomic risks to the economy have increased over the past six months, mainly on the dimensions of domestic growth, external sector and corporate sector performance. The report mentioned high CAD a key concern on the external front and a stress point for the economy as evident from the recent rupee depreciation on global cues. However, it noted that improvement in the quality of fiscal consolidation will be crucial for ensuring sustainable high growth and macroeconomic stability.

The CNX Nifty touched a high and low of 5,852.95 and 5,749.50 respectively. 

The top gainers on the Nifty were Jindal Steel up 7.40%, BHEL up 7.33%, Reliance Infra up 6.53%, BPCL up 6.32% and Tata Power up by 6.20%.

On the flip side, the top losers of the index were HCL Tech down 2.81%, Ranbaxy down 2.39% and Hindustan Unilever down by 0.54%.

The European markets were trading in red, France’s CAC 40 down by 0.67%, the United Kingdom’s FTSE 100 down by 0.08% and Germany’s DAX down by 0.20%.

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.