Benchmarks extend last session’s jubilation on Friday

Extending last session’s euphoria, Indian equity benchmarks snapped Friday’s session with a gain of over a percentage point, recapturing their crucial 5,450 (Nifty) and 18,500 (Sensex) bastions, buoyed by supportive global cues coupled with appreciation in Indian rupee against dollar. After an initial volatility, domestic bourses gained strength as investors opted to invest in battered down but fundamentally strong stocks. Some support also came in from Fitch statement that the rupee depreciation would not trigger a change in its ratings and will maintain a ‘Stable Outlook’ on India’s sovereign rating at ‘BBB-’, mainly on the back of the country’s sizable forex reserves, fiscal deficit management and structural reforms. Meanwhile, sentiments remained calm to some extent after Finance Minister P Chidambaram, who in a bid to allay investors’ fears about the rupee falling 5.5 per cent in five days, said that though the currency is undervalued and has overshot appropriate levels, there is no need for excessive and unwarranted pessimism.

Supportive cues from US markets too provided support to local markets in early deals. Rally in most of the Asian markets also boosted the traders’ moral with Japanese Nikkei surging sharply over two percent with the yen declining against the US dollar. Recovery in European counterparts after a steep fall too helped the sentiments of local investors.

Back home, appreciation in Indian rupee against dollar remained the major reason for jubilation in domestic markets. The rupee was quoting at 64.11 per dollar at the time of equity markets closing as compared with previous close of Rs 64.63. Metal stocks continued to remain on the buyers’ radar on a report showing that China’s manufacturing unexpectedly expanded in August. Some support also came in from buying in index heavyweight Reliance Industries (RIL) which rose over one and a half percent after the company announced a new gas condensate discovery off the east coast of India in the Cauvery basin. Moreover, software stocks continued to edge higher on recent steep slide of the rupee against the dollar.

The NSE’s 50-share broadly followed index Nifty rose by over sixty points to end comfortably above its psychological 5,450 level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged over two hundred points to reclaim the psychological 18,500 mark.

Moreover, broader markets too ended the session in the green with a gain of around a percentage points. The market breadth remained in favour of advances, as there were 1,336 shares on the gaining side against 981 shares on the losing side, while 151 shares remained unchanged.

Finally, the BSE Sensex surged 206.50 points or 1.13% to settle at 18,519.44, while the CNX Nifty climbed 63.30 points or 1.17% to end at 5,471.75.

The BSE Sensex touched a high and a low of 18,546.60 and 18,210.75, respectively. The BSE Mid cap index was up by 0.91% and Small cap index was up by 0.74%.

The top gainers on the Sensex were, BHEL up by 8.10%, Tata Power up by 4.14%, Jindal Steel up 3.89%, Tata Steel up 3.27% and Tata Motors up 2.85%. On the flip side, NTPC down by 1.60%, Bharti Airtel up 1.55%, Cipla up 1.43%, Infosys up 0.82% and SBI was down by 0.74% were the top losers on the index. 

The top gainers on the BSE sectoral space were, Capital Goods up 2.04%, Bankex up 1.91%, Oil & Gas up 1.59%, Consumer Durables up 1.55% and Auto up 1.51%, while Realty down by 1.33% was the only loser on the sectoral space.

Meanwhile, expressing need to boost investment into the country, the Federation of Indian Chambers of Commerce and Industry (FICCI) said that the government should focus on bringing more reforms to kick start investments and set the economic growth rolling on the fast track. Indian economy’s growth is likely to remain flat in the first quarter of the current fiscal on account of sluggish economic conditions. 

Pointing out that, Finance Minister P Chidambaram's statement on growth being the key focus area as encouraging, FICCI president Naina Lal Kidwai said that presently there is need to return the investment cycle into the country and to continue the momentum on the reform front. By adding further, she added that India should focus on introducing goods and services tax (GST) and speed up the implementation of infrastructure projects cleared by Cabinet Committee on Investment (CCI) and restart investments.

At present, Indian economy is struggling with slowdown and all macro-economic indicators are deteriorating. Recently, domestic currency depreciated to a record low of over 65 per dollar on account of high current account deficit (CAD), which widened due to high gold imports and crude oil prices. In the last fiscal year, India’s economic growth slowed down to decade low of 5 percent owing to the poor performance of farm, manufacturing and mining sectors.

The CNX Nifty touched a high and low of 5,478.80 and 5,377.80 respectively. 

The top gainers on the Nifty were BHEL up 8.10%, Tata Power up by 5.09%, HCL Tech up 5.06%, JP Associates up 4.20% and Jindal Steel up by 3.64%. On the flip side, the top losers of the index were, DLF down by 4.87%, Ultra Tech Cement down by 3.58%, Sesa Goa down by 2.21%, Bharti Airtel down by 1.73% and Cipla down by 1.35%.

The European markets were trading mixed, France’s CAC 40 down by 0.45%, Germany’s DAX down by 0.02% and the United Kingdom’s FTSE 100 up by 0.19%.

The Asian markets concluded Friday’s trade on a mixed note with Japanese stocks leding, cheering gains on Wall Street and a weakened yen, while Chinese stocks retreated amid concerns about liquidity conditions. Seoul shares ended higher to snap a five-day losing streak. Hong Kong shares surrendered early gains and edged lower, dragged by afternoon weakness in Chinese markets as investors stayed cautious ahead of a slew of earnings reports from heavyweight Chinese financials next week. Today’s performance helped the Nikkei Average erase losses it had accumulated earlier in the week. But the Shanghai Composite, the Hang Seng Index and the KOSPI suffered weekly losses. Meanwhile, US investment bank Goldman Sachs expects the rout in Asian emerging market currencies to continue, downgrading its forecasts for battered currencies in the region. Goldman revised down its three, six and 12-month targets for the Malaysian ringgit, Thai Baht and Indonesian rupiah. The currencies, together with their emerging-market peers, have taken a beating recently amid expectations for an unwinding of US monetary stimulus.

Foreign direct investment to China surged to $9.41 billion in July registering 24.13% year on year increase, as the country continues to have robust growth in investment from abroad despite economic slowdown. At the same China’s Outbound Direct Investment (ODI) crossed $ 50 billion mark in the first six months registering a 20% increase. China attracted $9.41 billion in FDI in July which amounted to $71.39 billion in the first seven months up 7.09% from the same period last year, the Commerce Ministry stated. FDI in China’s manufacturing sector dropped 2.42%, taking a 41.18% share of the inflow.

Indonesia announced a package of policy measures to reduce imports and boost investment in labor-intensive industries as it struggles to revive confidence and consumer spending in Southeast Asia’s largest economy. Indonesia has faced sell-offs in the rupiah, stocks and bonds after an unexpectedly large second-quarter current-account deficit triggered fears that the weak global economy will only further erode exports at a time when a surge in inflation is crimping domestic demand. The government also revised its GDP growth estimate for this year to 5.9-6.0%, down from 6.3% earlier. Indonesia’s rupiah headed for its worst week since 2008 and government bonds dropped after the country posted a record current-account deficit amid speculation the Federal Reserve will soon start tapering stimulus.