Benchmarks witness awe-inspiring performance buoyed by firm global cues

Buoyed by firm global cues, stock markets in India displayed an awe-inspiring performance on Thursday. The frontline equity indices rallied vehemently by around two percentage points and not only extended their gaining streak for the second successive session but also soared to highest levels in more than a month. After the gap-up opening, the frontline gauges went on to capitalize on the momentum and there appeared not even an iota of profit booking in the session. Benchmarks managed to fervently gain strength to strength, to end above their important psychological 19,650 (Sensex) and 5,900 (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. Mood remained up-beat after Federal Reserve Chairman Ben Bernanke declared that US stimulus measures would continue. Rally in Asian counterparts too boosted investors’ confidence with majority of the indices in the region surging by over two percent. Moreover, European markets too traded firm in the early deals, after Federal Reserve indicated that it was in no rush to end its stimulus program.

Back home, market participants remained in cheerful mood on report that the foreign institutional investors (FII) bought shares worth Rs 75.46 crore while domestic institutional investors were net buyers worth Rs 28.78 crore on July 10, 2013. Buying in metal counter too supported the up-move as stocks like Hindalco Industries, Sesa Goa, Sterlite Industries, NMDC, Tata Steel, JSW Steel and Hindustan Zinc all edged higher as global commodity prices jumped after US Federal Reserve Chairman Ben Bernanke’s comments. Meanwhile, banking shares gained on expectations of mark-to-market gains following a decline in bond yields. A rise in bond prices, which move inversely to yields, boosts the value of bond holdings of banks. 

Software and Technology counters too rallied ahead of Q1 results of Infosys, the bellwether stock of the IT index, this Friday that will kick-start the first quarter earnings season. Additionally, stocks of Jewellery exporters like, Rajesh Exports and Shree Ganesh Jewellery too remained on buyers’ radar on report that government is considering incentives for gold jewellery exporters hit by restrictions imposed on import of the metal to contain current account deficit.

The NSE’s 50-share broadly followed index Nifty gained by about one hundred and twenty points to end above its psychological 5,900 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex zoomed by over three hundred and eighty points to finish over its psychological 19,650 mark.

Moreover, the broader markets too traded jubilantly and ended the session with a gain of about half a percent. The market breadth remained in favour of advances as there were 1,366 shares on the gaining side against 964 shares on the losing side while 149 shares remain unchanged.

Finally, the BSE Sensex surged 381.94 points or 1.98% to settle at 19676.06, while the CNX Nifty climbed by 118.40 points or 2.04% to end at 5,935.10.

The BSE Sensex touched a high and a low of 19723.51 and 19468.46, respectively. The BSE Mid cap index was up by 0.67% and Small cap index was up by 0.66%.

The top gainers on the Sensex were, Sterlite Industries up by 4.78%, Hindalco Industries up 4.74%, HDFC Bank up 3.32%, Bharti Airtel up 3.31% and Hero MotoCorp up by 3.27%, while Maruti Suzuki down by 2.43%, Wipro down 0.45% and Cipla down by 0.11% were the top losers on the index. 

The top gainers on the BSE Sectoral space were, Metal up 3.00%, Bankex up 2.48%, Realty up 2.44%, Capital Goods up 1.84% and Oil & Gas up 1.80%, while Consumer Durables down 0.64% was the only loser on the sectoral space.

Meanwhile, the government is considering incentives for gold jewellery exporters, who have been suffering due to the restrictions imposed on gold imports to contain current account deficit (CAD), which widened to a record high to 4.8 percent of GDP in the FY13. The Jewellery exports are expected to decline considerably in the current fiscal due to limited availability of gold inventory in the domestic market with government regularly announcing measures to curb demand.

The government may go for the demand of gold jewellery exporters to increase the duty drawback rate to 8 per cent. It has already increased the duty drawback rate to 6 per cent from 4 per cent earlier. Under the duty drawback scheme, the revenue department refunds the duty incidence such as excise, customs, and service tax on the imported inputs used in the manufacture of exported goods. Further, the government is also expected to remove the restrictions on sale of gold in the domestic market.

India exported around $39 billion worth various precious gems and jewellery in the FY13. But the situation started weakening with different government measures and in May, Indian exports declined by 1.1% to $24.51 billion from $24.78 recorded in May’12 mainly due to the restriction on gold exports from Special Economic Zones (SEZ). Gold exports from SEZs in May declined by $0.8 billion, which forced the government to resume gold trading activities from SEZs, which would help reviving the gold exports.

The CNX Nifty touched a high and low of 5,948.85 and 5,887.95 respectively. 

The top gainers on the Nifty were Sesa Goa up 6.25%, Hindalco Industries up 4.43%, Bharti Airtel up 3.43%, Kotak Mahindra Bank up 3.26% and IndusInd Bank up by 3.24%.

On the flip side, the top losers of the index were, Maruti Suzuki down 2.84%, Ranbaxy Laboratories down 1.10% and Tata Motors down by 0.30%.

The European markets were trading in green, France’s CAC 40 up by 0.74%, the United Kingdom’s FTSE 100 up by 0.45% and Germany’s DAX up by 1.01%.

Asian markets concluded the Thursday’s trade on firm note after US Federal Reserve Chairman Ben Bernanke reiterated the need for accommodative policy. China’s Shanghai Composite gained the most in nearly seven month on Fed moves and on expectations that the country's central government may take measures to stimulate the economy. The market rallied amid talks that the central government may introduce mild stimulus measures to revitalize the economy after China posted surprise falls in both exports and imports yesterday. On the economy front, Confidence of China businesses fell to a seven year low in the second quarter of this year against improved sentiment in major developed countries. An index measuring business optimism on China’s mainland dropped to 4% in the second quarter from 25% in the first quarter, according to Grant Thornton, a global auditing firm.

Japan’s Nikkei closed in positive territory as investors waited for the outcome of Bank of Japan’s policy meeting. The Bank of Japan is widely expected to hold monetary policy steady at the conclusion of its regular two-day meeting and could hike its view of the economy. Besides, Japan’s core machinery orders rose 10.5% in May from the previous month, beating median estimate of a 1.3% gain. Jakarta Composite too concluded the trade in positive turf on Fed minutes. Indonesia Central Bank surprised the market by hiking its benchmark policy rate by 50 basis points, twice as much as expected, to 6.50% as it stepped up its battle to stem outflows and combat inflation. The central bank also raised the overnight deposit facility rate, known as FASBI, by 50 basis points to 4.75%.

Meanwhile, the International Monetary Fund predicted that economic growth in Indonesia and across Southeast Asia will slow as central banks tighten monetary policies and the United States scales back its stimulus program. Average 2013 economic growth for five countries in Southeast Asia - Indonesia, Malaysia, the Philippines, Thailand, and Vietnam - is forecast at 5.6% this year, down from an April estimate of 5.9%.