Benchmarks extend jubilation for fourth straight day

Extending jubilation for fourth day in a row, Indian equity markets snapped the Wednesday’s trade with a gain of over half a percent and frontline gauges recapturing their crucial 5,700 (Nifty) and 19,350 (Sensex) bastions. Benchmarks, despite some volatility, gained strength as sentiments got support with report that foreign institutional investors (FII) bought Rs 2.27 billion of cash shares on August 13, while domestic institutions were net buyers of Rs 1.15 billion of shares. But, the bourses witnessed a steep fall, tumbling near intraday low after India’s main inflation gauge, based on monthly WPI, shot higher to 5.79% (Provisional) for the month of July, way above the Reserve Bank of India’s (RBI) perceived comfort level of 5% and against 4.86% (Provisional) for the previous month of June. Primary Articles inflation increased to 8.99 per cent as against 8.14 per cent in June and Fuel & Power inflation moved up to 11.31 per cent as against 7.12 per cent in June.

Despite ugly WPI numbers, markets bounced back in late trade as buying was visible in oil gas sector with stocks like BPCL, HPCL and IOC edging higher after Oil Minister Veerappa Moily said that Government will consider a request from oil marketing companies to be allowed to raise diesel prices by more than the approved 50 paise a month. Some support also came in after international crude started showing some decline after surging in last three sessions.

Firm opening in European counterparts too provided some support to domestic markets, as CAC, DAX and FTSE all edged higher in early deals after the German economy grew by 0.7 percent in the second quarter, its largest expansion in over a year. While the French economy expanded by 0.5 percent, more than twice, as fast as expected and exited its own shallow recession. Asian markets too ended mostly in the green with Japanese Nikkei surging over a percent as yen weakened and on back of good economic data across the globe

Back home, continued buying in metal and mining stocks too supported the sentiments amid hopes that Beijing would step in to support the economy. Auto sector too surged over three percent on BSE led by over 9% surge in Tata Motors. The stock of the auto major zoomed after Jaguar Land Rover (JLR) reported a strong 21% year-on-year (yoy) jump in global sales of 31,611 units in July. However, gains remained capped as investors remained cautious on continuous decline in Indian rupee, which fell to 61.36 against the dollar at the time of equity markets closing as against the previous close of 61.28 at the Interbank Foreign Exchange market. Meanwhile, Financial Technologies tumbled nearly 14% during the session on BSE, on reports that a top stockbrokers threatened to seek legal recourse if the National Spot Exchange (NSEL) was unable to repay its dues to the brokers and investors.

The NSE’s 50-share broadly followed index Nifty rose by over forty points to end comfortably above its psychological 5,700 level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged over one hundred and thirty points to reclaim the psychological 19,350 mark.

Moreover, broader markets too traded with traction and snapped the day’s trade in the green with gain of around half a percent. The market breadth remained in favour of advances, as there were 1298 shares on the gaining side against 1048 shares on the losing side, while 154 shares remained unchanged.

Finally, the BSE Sensex gained 137.75 points or 0.72% to settle at 19367.59, while the CNX Nifty rose by 43.00 points or 0.75% to end at 5,742.30.

The BSE Sensex touched a high and a low of 19392.56 and 19203.63, respectively. The BSE Mid cap index was up by 0.66 points and Small cap index was up by 0.30%.

The top gainers on the Sensex were, Tata Motors up by 9.67%, Hindalco Industries up by 7.16%, ONGC up by 5.27%, Gail India up by 3.79% and Tata Steel up by 3.59%. On the flip side,  BHEL down by 1.86%, Dr Reddys Lab down by 1.57%, Wipro was down by 1.39%, HDFC  was down by 1.22% and Bharti Airtel was down by 1.07%, were the top losers on the index. 

The top gainers on the BSE sectoral space were, Auto up by 3.34%, Consumer Durables up by 2.91%, Oil & Gas up by 2.89%, Metal up by 2.81% and Realty up by 2.25% were the top gainers, while Capital Goods down by 0.80%, IT down by 0.38%, Health Caredown by 0.20% and Teck down by 0.11%, were the only losers on the sectoral space.

Meanwhile, giving some respite for the oil marketing companies, the country's oil minister, M Veerappa Moily said, “Government will consider a request from oil marketing companies to be allowed to raise diesel prices by more than the approved 50 paise a month, to bridge the losses”. The decision is yet to be taken. However, he ruled out any hike in LPG and Kerosene prices.

In January, fuel retailers were given the freedom to raise the price of subsidized diesel every month, while bulk buyers were asked to pay market rates. Since, then firms for seven times have raised diesel rates, cumulatively taking up the price of the fuel by Rs. 3.75 per litre. Meanwhile, petrol prices have been raised by five times since June. While, petrol price was last hiked by 70 paisa per litre, diesel price was upped by 50 paisa per litre on 31st July this year.

Further while, an increase in diesel prices may see prices of essential commodities go up, there is little the government can do about it, as it tries to rein in the widening current account deficit which is one of the major reasons for the rupee's slide.

The CNX Nifty touched a high and low of 5,754.55 and 5,690.20 respectively. 

The top gainers on the Nifty were Tata Motors up 9.82%, Hindalco Industries up by 7.22%, BPCL up by 6.50%, NMDC up by 5.83% and DLF up by 5.65%. On the flip side, the top losers of the index were, HCL Tech down by 2.19%, Ranbaxy down by 1.82%, BHEL down by 1.74%, Dr. Reddy's Laboratories down by 1.35% and Reliance Infrastructure down by 1.27%.

Most of the European markets were trading in green with, France’s CAC 40 up by 0.33% and Germany’s DAX up by 0.11%, while the United Kingdom’s FTSE 100 down by 0.02%.

Most of the Asian markets concluded Wednesday’s trade in green. Japan’s Nikkei share average closed at a one-week high after the dollar clawed back ground against the yen but stocks fell in much of Asia after US sales data reinforced expectations that the Federal Reserve will soon pare its stimulus. South Korea shares ended at their highest level in more than two months amid continued bargain hunting by foreign investors for large-cap technology and automobile shares. Foreign investors were net buyers of 360.0 billion won ($322.80 million) worth of stocks, the most since June 28. Hong Kong Exchanges trading was cancelled due to Issuance of Typhoon Signal No. 8.

China’s financial institutions attracted the least foreign equity investment in more than a year in the second quarter amid a slower inflow of foreign capital. The institutions, including banks, brokerages and insurers, attracted a total of $442 million in such investment from April to June, nearly a fourth of the first quarter’s total and the lowest since authorities started compiling the data last year.

Indonesia’s central bank is likely to keep its main interest rate on hold at Thursday’s monthly meeting but some doubt it will be able to avoid another hike in coming months to battle high inflation and help a sliding currency. Since June, the central bank has raised both the benchmark rate and the overnight deposit facility rate, or FASBI, by a total of 75 basis points each to combat inflation expectations from a big fuel price hike and support the rupiah. Indonesia will release its latest balance of payments data on Friday.