Rupee appreciation bolsters Indian benchmarks by over 2%

August series futures and options expiry session turned out to be a splendid one for the domestic frontline indices, as they staged a superb performance throughout the day to end near intraday high, recapturing the psychological 5,400 (Nifty) and 18,400 (Sensex) bastions. Sentiments remained up-beat since beginning after key bourses opened with a huge gap on upside, supported by appreciation in Indian rupee against dollar. Benchmarks also got some strength after government turned down fears of any sharp spike in fiscal deficit this year because of the food security programme that will be implemented once the legislation is through in Parliament. Strength to the bourses also came in on back of buying witnessed in oil marketing companies (OMCs) viz. BPCL, HPCL and IOC after the central bank opened a special window to sell dollars to meet the daily dollar requirements of the three public sector oil companies.

Supportive cues from US markets too provided the much needed support to local markets, as they ended higher with modest gains overnight, mainly on the back of bargain hunting at lower levels and optimism of delay in Fed’s tapering after the report of a bigger than expected drop in pending home sales in July. European markets trading higher in early deals following positive cues from Wall Street, despite uncertainty about the potential US intervention in Syria too aided the sentiments. While, most of the Asian equity indices ended in the green as market-men opted to buy battered down fundamentally strong stocks.

Back home, the rupee was trading at Rs 67.32 per dollar at the time of equity markets closing as against previous close of 68.80 per dollar after the Reserve Bank of India announced measures late Wednesday to curb rupee fall through dollar flows. Markets continued its bull run despite some concern, as the global rating agency Standard and Poor's has cautioned that large deficit economies including India could face more economic problems in the near term.

The NSE’s 50-share broadly followed index Nifty surged by over one hundred and twenty points to hold its psychological 5,400 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex soared over four hundred points to end above the psychological 18,400 mark. For the day, markets logged highest ever turnover of over Rs 4.57 lakh crore.

Broader markets too traded with traction and ended the session with a gain between 0.50-1.50 percentage points. The market breadth remained in favour of advances, as there were 1,275 shares on the gaining side against 989 shares on the losing side, while 138 shares remained unchanged.

Finally, the BSE Sensex surged 404.89 points or 2.25% to settle at 18,401.04, while the CNX Nifty climbed by 124.05 points or 2.35% to end at 5,409.05.

The BSE Sensex touched a high and a low of 18,455.66 and 18,071.22, respectively. The BSE Mid cap index was up by 1.47% and Small cap index was up by 0.69%.

The top gainers on the Sensex were, Sesa Goa up by 13.54%, HDFC up by 6.30%, Hindalco up by 4.65%, Reliance up by 4.22% and Bharti Airtel up by 3.89%, while, Coal India down by 1.65%, SBI down by 0.60%, Tata Power down by 0.52%, Tata Steel down by 0.38% and Infosys down by 0.36% were the top losers in the index. 

The top gainers on the BSE sectoral space were, Oil & Gas up by 2.86%, Metal up by 2.38%, FMCG up by 2.29%, Capital Goods up by 2.20% and Auto up by 2.10%, while there was no loser on the sectoral space.

Meanwhile, in order to determine the mandate for the use of excess coal from captive mines, the Coal Ministry is working on a policy for using the surplus coal that has been delayed for the past two years. Coal ministry is of the view that excess coal should be given to Coal India or its subsidiary at a notified price and has started a fresh round of discussions with ministries including Power and Steel in order to format policy for the use of excess coal from captive mines.

After that, it will take draft to the Cabinet for its consideration. As per the Coal Mines Act 1973, that oversees captive mining, all coal mined from the block must be used entirely for the respective end-use project. Earlier, when the policy was floated, the Prime Minister’s Office (PMO) expressed concerns and directed the nodal Ministry to put it on hold. The Law ministry also raised objections over diversion of excess coal from mines attached to Ultra Mega Power Projects (UMPP).

Several private firms had approached the government for using excess coal for other projects. Reliance Power had received the Government’s approval to use excess coal from attached mines in Sasan Ultra Mega Power Project (UMMP) to another project.

The CNX Nifty touched a high and low of 5,428.90 and 5,303.00 respectively. 

The top gainers on the Nifty were Sesa Goa up by 12.83%, Hindalco up by 5.78%, HDFC up by 5.73%, Lupin up by 5.10% and Kotak Bank up by 4.92%. On the other hand, PNB down by 2.05%, Ultratech Cement down by 1.96%, Coal India down by 1.54%, Infosys down by 1.36% and SBI down by 1.06%.

The European markets were trading in green, France’s CAC 40 up by 0.21%, Germany’s DAX up by 0.08% and the United Kingdom’s FTSE 100 was up by 0.55%.

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.