Markets extend last session’s rally; Nifty reclaims 5,600 mark

Extending last session’s northward journey, Indian equity benchmarks ended Monday’s session on a firm note with key bourses garnering gains of around a percentage point. After initial volatility, markets traded firmly as sentiments remained buoyed after the central bank announced more measures to support the domestic currency. The Reserve Bank of India (RBI) on August 8, 2013 announced that it will sell government bonds worth Rs 22,000 crore every Monday to check volatility in the forex market. Sentiments also got boosted after India’s exports surged 11.64% at $25.83 billion in July 2013 against $23.14 billion in the same month of the previous year, while imports during July, 2013 were down 6.20% to $38.10 billion from $40.62 billion in the same period last year, pulled down by inbound shipments of gold.

However, investors cashed out some gains in late trade, ahead of the industrial output data scheduled later in the day. Street expects the industrial production to remain subdued in June which would drag down factory output growth in the first quarter of the current financial year. But, reassurance from Finance Minister P Chidambaram that India’s Current Account Deficit being contained at 3.7% of GDP, helped frontline gauges to end above their crucial 5,600 (Nifty) and 18,900 (Sensex) levels.

Asian markets too provided support to the domestic markets with most of the regional peers ending in the green terrain, as sentiments remained buoyed by positive economic data out of China late last week. China reported industrial growth for July reached a five-month high, easing fears that the world’s second largest economy was heading towards a slowdown. Though, European markets traded lower in early deals.

Back home, benchmarks continued to trade higher in noon deals supported by buying in metal and mining stocks amid hopes that Beijing would step in to support the economy. Steel major Tata Steel spurted ahead of its Q1 results on August 13, 2013. Bucking the trend, stocks related to banking segment ended mostly lower after the RBI’s fresh steps to drain cash from the banking system. Some pressure also came in after State Bank of India (SBI), on the consolidated basis, registered 11.82% fall in its net profit after taxes and minority interest at Rs 4298.56 crore for the quarter as compared to Rs 4874.70 crore for the same quarter in the previous year. Meanwhile, gross non-performing assets (NPAs) increased to 5.56% in the April-June quarter as against 4.99% in the same quarter previous year while, net NPAs surged to 2.83%.

The NSE’s 50-share broadly followed index Nifty rose by around fifty points to regain the psychological 5,600 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged over one hundred and fifty points to reclaim the psychological 18,900 mark.

Moreover, broader markets too traded with traction and snapped the day’s trade in the green with gain of over one and a half percent. The market breadth remained in favour of advances, as there were 1,443 shares on the gaining side against 826 shares on the losing side, while 113 shares remained unchanged.

Finally, the BSE Sensex gained 157.64 points or 0.84% to settle at 18946.98, while the CNX Nifty rose by 46.75 points or 0.84% to end at 5,612.40.

The BSE Sensex touched a high and a low of 19066.97 and 18796.01, respectively. The BSE Mid cap index was up by 1.54 points and Small cap index was up by 1.56%.

The top gainers on the Sensex were, Jindal Steel up by 9.43%, Tata Steel up 8.29%, Sun Pharma up 6.60%, HDFC up 3.23% and ITC up by 3.16%, while SBI down by 3.41%, Tata Power down 3.28%, RIL down 2.33%, Dr Reddys Lab down 1.75% and TCS down by 1.70% were the top losers on the index. 

The top gainers on the BSE sectoral space were, Metal up 4.52%, FMCG up 2.30%, Health Care up 2.00%, Capital Goods up 1.95% and PSU up 1.33%, while Bankex down 1.07% and Oil & Gas down 0.51% were the only losers on the sectoral space.

Meanwhile, the Reserve Bank of India (RBI), which just got its new governor- Raghuram Rajan, is now gearing up for setting a high-level panel of eminent experts from the banking and financial sector to screen applications of 26 aspirants for new banking licences.

It is expected that financial regulators like IIRDA, SEBI and PFRDA could represent this committee. While, some top officials from the government too may be invited to join the High Level Advisory Committee (HLAC). India’s Apex bank currently is screening the prima facie eligibility of the applicants including ‘fit and proper’ criteria and other relevant parameters.

However, RBI will have first and final say on selecting the applicants. Given that application will first be screened by RBI, post to which it shall be referred to the high level panel for the scrutiny. The panel will have its own procedures for screening the applications. It will reserve the right to call for more information as well as have discussions with any applicants and seek clarification on any issue as may be required by it. However, post the scrutiny the committee will submit its recommendations to RBI, who will take a final decision on issue of an in-principle approval for setting up of a bank.

Tata Sons along with firms controlled by billionaires Anil Ambani and Kumar Mangalam Birla are among the 26 companies who have applied for banking licence last month.  Among public sector entities, India Post and IFCI have submitted applications. Micro finance institutions like Bandhan Financial Services, Janalakshmi Financial too expressed their intention to set up a bank.

The CNX Nifty touched a high and low of 5,644.10 and 5,557.10 respectively. 

The top gainers on the Nifty were Jindal Steel up 9.09%, Tata Steel up 7.68%, Sun Pharmaceuticals up 7.13%, NMDC up 6.58% and Hero MotoCorp up by 3.56%.

On the flip side, the top losers of the index were, SBI down 4.02%, Tata Power down 3.28%, Reliance Industries down 2.73%, ndusInd Bank down 2.01% and PNB down by 1.79%.

The European markets were trading in red, France’s CAC 40 down by 0.40%, the United Kingdom’s FTSE 100 down by 0.28% and Germany’s DAX down by 0.72%.

All the Asian markets barring Jakarta Composite and Nikkei 225 concluded Monday’s trade in green. China shares soared to their highest closing levels since mid-June, as solid Chinese economic data released late Friday buoyed cyclical sectors from financials and property to coal and cement and amid hopes that Beijing would step in to support the economy. Seoul shares edged higher, reversing early losses as steel producers lifted the broader market on a day of low volume. The Nikkei share average dropped to a 7-week low after Japan’s economy grew more slowly than expected in the last quarter. Japan’s economy grew an annualized 2.6% in the April-June period, the Cabinet Officer reported, cooling sharply from a rapid 4.1% gain in the first calendar quarter. On a seasonally adjusted quarterly basis, gross domestic product rose 0.6% from the first quarter's 0.9% increase.

Indonesia’s retail sales in June rose 14.8% from a year earlier, ahead of the Ramadan holiday period when consumption normally increases. June’s growth pace topped a revised 12% in the previous month, driven by information and communication equipment, which includes mobile phones and pre-paid phone cards, and by clothing and fuel. The retailers expected retail sales to ease slightly in the next three months as consumption returns to normal after the Muslim festivities. Separately, the street expects Bank Indonesia, the country’s central bank, to maintain its benchmark interest rate at 6.50% when the board meets on Thursday to discuss ways to boost the slowing economy amid acceleration in inflation. The benchmark rate, known as the BI rate, has been raised twice this year - once each in June and July - by a total of 75 basis points, as the central bank seeks to tame a pick-up in inflation. Rising inflation in Indonesia makes it less valuable to hold rupiah-denominated assets.

China’s factory output grew in July at its fastest pace since the start of the year, adding to a run of data suggesting the world’s second-largest economy may be stabilizing after more than two years of slumping growth. Factory output rose 9.7% in July from a year earlier, the fastest growth since output grew 9.9% over January and February. A steadying economy would be a relief to China’s leaders, who worry that further slow down could derail their efforts to rebalance the economy away from its credit- and investment-driven growth model to one in favor of consumption. Singapore lowered its forecast for exports this year as a slowing expansion in China crimps demand for the nation’s goods, even as services helped the economy grow more than initially estimated last quarter. Non-oil domestic exports may be unchanged or rise 1% in 2013, compared with a previous forecast of 2% to 4%, the trade promotion agency stated. Gross domestic product rose an annualized 15.5% in the three months through June from the previous quarter, when it grew a revised 1.7%, the Trade Ministry stated.