Post Session: Quick Review

Finally August F&O series ended on a high note, with both Sensex and Nifty, scooping gains of close to two percent and ending past the psychological 18,300 and 5350 levels respectively. Contrary to the expected trend, F&O expiry session turned out to be extremely stable one, with markets steadily gaining ground and ending near day’s highest point. RBI’s latest measure to curb Rupee’s volatility, too supported the Indian equity markets, besides lifting Indian currency from historic low levels scaled in the previous session. Adding to the slew of measures to shore-up currency, RBI opened a forex swap window to help the three state-owned oil marketing companies (OMCs), IOC, BPCL and HPCL to meet their entire daily dollar requirements. Further, positive global set-up also added fuel to the pull-back rally of bourses. Gains of today’s trading session came even as global rating agency, Moody said that Food Security Bill a credit negative. Moody's currently has a “Baa3” sovereign rating on India, or its lowest investment-grade rating, with a 'stable' outlook.

On the global front, Asian shares ended higher on Thursday after two days of steep losses as fears abated that US-led forces would soon launch a military strike on Syria, and oil prices retreated from a six-month peak. Meanwhile, European stocks rose, snapping a three-day drop, as investors awaited data on US economic growth and Vodafone (VOD) Group Plc surged to an 11-year high. US index futures and Asian shares also climbed.

Closer home, market remained in jaunty mood for the entire trading session, with no speck of profit-booking once throughout the session. Amidst across-board rally, stocks from Oil & Gas, Metal and Fast Moving Consumer Goods counters outperformed. Public sector oil marketing companies rallied after Reserve Bank of India (RBI) opened special dollar window to fulfill their reserve requirements. The market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 1272: 988, while 142 scrips remained unchanged. (Provisional)

The BSE Sensex gained 309.72 points or 1.72% to settle at 18305.87.The index touched a high and a low of 18455.66 and 18071.22 respectively.  The BSE Mid cap and Small cap indices ended higher by 1.41% and 0.65% respectively. (Provisional)

On the BSE Sectoral front, Oil & Gas up by 2.17%, Metal up by 2.06%, FMCG up by 1.95%, Capital Goods up by 1.93% and Auto up by 1.63% were the top gainers, while there were the no losers. (Provisional)

Out of the 30 stocks on the Sensex, 23 settled higher, while 7 stocks settled lower. The top gainers on the Sensex were Sesa Goa up by 12.09%, HDFC up by 5.73%, Hindalco Inds up by 5.19%, Dr Reddys Lab up by 3.84% and Bharti Airtel up by 3.77%. On the flip side,  Coal India down by 1.79%, Infosys down by 1.58%, SBI was down by 1.14%, Cipla was down by 1.03% and Bajaj Auto was down by 0.79% were the top losers on the Sensex. (Provisional)

Meanwhile, in its latest attempt to shore up a currency that has slumped to historic lows, Reserve Bank of India (RBI) has opened a forex swap window to help the three state-owned oil marketing companies (OMCs), IOC, BPCL and HPCL to meet their entire daily dollar requirements. The PSU oil companies are the biggest buyers of dollars, requiring $ 8-8.5 billion every month for the import of an average 7.5 million tonnes of crude oil.

With this decision, RBI aims at curbing volatility in the Rupee, which has been losing ground against the dollar. With its 4% slide on Wednesday to a life low of 68.80/$, the rupee has lost a fifth of its value this year. However, this is not for the first time that India’s Apex bank has resorted to such measures as in last 2008 global financial crisis too it had opened such window.

Further, under the swap facility, RBI will undertake sell/buy USD-INR forex swaps for a fixed tenor with the oil marketing companies through a designated bank. The swap facility, which has operationalised with immediate effect, will remain in place until further notice. This move, while reducing immediate demand pressures for dollar, would reduce volatility in the currency market and help restrict the sharp slide in the rupee against the dollar.

However, the OMCs would have to return the dollars they would source from RBI at a later date. The assumption is that dollar flows will improve, helping the OMCs to buy the US currency and return the money to RBI. Nevertheless, the immediate advantage is that demand of $ 13 billion goes out of the system. With the total monthly import bill coming to about $ 30 billion, one-third of the demand is taken out of the system. 

India VIX, a gauge for markets short term expectation of volatility lost 9.17% at 29.41 from its previous close of 32.38 on Thursday. (Provisional)

The CNX Nifty gained 95.85 points or 1.81% to settle at 5,380.85. The index touched high and low of 5,428.90 and 5,303.00 respectively. Out of the 50 stocks on the Nifty, 38 ended in the green, while 12 ended in the red.

The major gainers of the Nifty were Sesa Goa up 12.83%, Hindalco Industries up by 5.78%, HDFC up by 5.73%, Lupin up by 5.10% and Kotak Bank up by 4.92%. The key losers were PNB down by 2.05%, UltraTech Cement down by 1.96%, Coal India down by 1.54%, Infosys down by 1.36% and State Bank of India down by 1.06%.(Provisional)

Most of the European markets were trading in green with, France’s CAC 40 up by 0.06%, Germany’s DAX up by 0.35% and the United Kingdom’s FTSE 100 up by 0.46%.

Most of the Asian markets, barring Shanghai Composite concluded Thursday’s trade in green on signs that US-led military strike on Syria may be delayed. The earlier selloff across Asia in August has taken its heaviest toll on stocks in Indonesia and the Philippines, leaving them heading for their worst monthly slump since the height of the 2008 global financial crisis. The benchmark indexes in Indonesia and the Philippines - down 12.3% and 11.1%, respectively, in August, with just one more trading day left - are set for the biggest drop since October 2008. Thailand has also been battered, down 9.9% this month, though it suffered more during September 2011, when the country was ravished by heavy flooding.

Japan’s July retail sales fell 0.3% from a year earlier, marking their first annualized drop since April, the Ministry of Economy, Trade and Industry stated. The decline marked a swing from June’s sharp 1.6% rise and trailed expectations for a 0.6% increase as reported. Large-scale retailers suffered a larger drop, falling 1.6% on a comparable-store basis after rising 3.5% in June. The declining sales came as the yen strengthened during July, with the dollar starting the month above 99 yen and ending it below 98 yen. Separately, the International Monetary Fund stated that China’s focus on investment and export-led growth to power the economy may have led to rising inequality adding that the country should shift to a more inclusive growth to rebalance the economy and make it more sustainable. According to the government report the country will work to ensure quality and steady economic growth in the second half of 2013 by boosting demand, industrial upgrading and reforms.

Bank Indonesia raised its key interest rate for the third time in almost four months in a bid to curb depreciation in the rupiah, which is at its lowest in four years. The central bank held a special meeting in Jakarta and it increased the BI policy rate to 7% from 6.50%. Bank Indonesia had kept the rate unchanged on August 15, after raising it by a total of 75 basis points from a record low 5.75 in a move to curb accelerating inflation. The government had raised subsidized fuel prices in June by an average 33% to narrow the state’s budget deficit.

Philippines reported economic growth in the second quarter matching expectations and easing fears that the country is slowing down. Gross domestic product rose 7.5% in the three months through June from a year earlier, compared with a 7.7% gain in the previous quarter, the National Statistical Coordination Board stated. Philippine expansion matched China’s for a second quarter as the Southeast Asian nation withstands a regional slowdown that has prompted policy makers in Thailand, Malaysia and Indonesia to cut growth estimates.