Benchmarks extend last session’s jubilation, Sensex regains 18,600 mark

Extending last session’s jubilation, Indian equity benchmarks snapped the immensly volatile session near intraday high on Friday, recapturing their crucial 18,600 (Sensex) and 5,450 (Nifty) bastions. Pullback in last leg of trade mainly proved to be the essence of trade which helped the markets to garner a gain of over a percentage point supported by sharp appreciation in Indian rupee against dollar. Earlier, key Indian bourses traded with traction in morning deals supported by firm global cues. Sentiments also got a boost as Lok Sabha had given its nod to adopt the Land Acquisition Bill. The passage of said bill brought some cheer to select listed real estate companies that are already sitting on huge parcels of land. But, sentiments turned jittery and markets entered into red after the Prime Minister Manmohan Singh said that the rupee’s depreciation is a matter of concern but is part of a needed adjustment due to India’s large current account deficit.

Prime Minister said that rupee depreciation will see upward pressure on inflation, but added that RBI will work on containing it. He further said that the government will now have to undertake more difficult reforms, including reduction of subsidy and implementing GST, to put economy back on the path of stable, sustainable growth. Report that the Centre’s fiscal deficit ballooned to almost 63% of Budget Estimates for 2013-14 in just first four months of the year, too aided concern in investors’ mind. The deficit stood at Rs 3.40 lakh crore in April-July period, which was 62.8% of Rs 5.42 lakh crore pegged in the Budget.

Weakness in European counterparts too dampened the sentiments with CAC, DAX and FTSC all edging lower in early deals as investors awaited data on unemployment and consumer confidence from the euro zone. Though, some relief came in after most of the Asian markets ended in the green and oil prices tumbled as a possible US military strike on Syria appeared less likely.

Back home, sentiments turned jovial as Indian rupee staged sharp pullback. The Indian rupee appreciated near to 66 per dollar mark at the time of equity markets closing. Buying in software space too aided the sentiments as stocks like, Wipro, TCS and HCL Technologies edged higher on positive economic data in the US. Moreover, shares of two wheeler makers rose on expectations of pickup in sales during the upcoming festive season and on hopes good rains this year will boost rural sales. Meanwhile, traders awaited the first quarter GDP numbers to be announced after the market hours. Though, there is wide consensus that GDP will grow 4.7-4.8% in June quarter, showing India's economy slowing to dangerously low levels.

The NSE’s 50-share broadly followed index Nifty surged by over sixty points to gain its psychological 5,450 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex soared over two hundred points to end above the psychological 18,600 mark.

Broader markets, however struggled to get some traction during the session and ended the trade mixed. The market breadth remained in favour of advances, as there were 1,156 shares on the gaining side against 1,074 shares on the losing side, while 178 shares remained unchanged.

Finally, the BSE Sensex surged 218.68 points or 1.19% to settle at 18,619.72, while the CNX Nifty climbed by 62.75 points or 1.16% to end at 5,471.80.

The BSE Sensex touched a high and a low of 18,679.26 and 18,272.76, respectively. The BSE Mid cap index was down by 0.01% and Small cap index was up by 0.20%.

The top gainers on the Sensex were, Bajaj Auto up by 5.62%, Cipla up by 4.96%, TCS up by 3.96%, HDFC Bank up by 3.86% and Hindustan Unilever up by 3.70%, while, Jindal Steel down by 8.85%, Sesa Goa down by 2.70%, Tata Motors down by 2.35%, Hindalco down by 1.87% and Mahindra & Mahindra down by 1.61% were the top losers in the index. 

The top gainers on the BSE sectoral space were, Consumer Durables up by 1.90%, Health Care up by 1.59%, Bankex up by 1.59%, IT up by 1.54% and FMCG up by 1.54%, while Metal down 2.05%, Capital goods down 0.16%, Realty down 0.07% and Power down 0.03% were the top losers on the sectoral space.

Meanwhile, in a bid to boost the country’s exports, the Commerce Ministry has asked the Finance Ministry to include export credit in priority sector lending of all banks, to boost overseas sales as the flow of credit to the export sector is declining. During FY08 to FY13, the share of export credit in total credit witnessed a sharp decline of 8 percent and has come down to 11.36 percent from 19.82 percent.

The broad categories of priority sector include Agriculture, Small Scale Industries, Small Business / Service Enterprises, Micro Credit, Education loans and Housing loans. Presently, only foreign banks are required to disburse 12 percent of their credit to export companies under the priority sector, while, for other banks export finance is outside the required 40 percent priority sector lending.

In July, country's merchandise exports grew 11.6 percent, however, overseas shipments from major sectors such as engineering and textiles were still in the negative zone. In the previous fiscal, Indian exports declined by 1.76% to $300.6 billion which were the first ever decline since 2009-10. Slowing growth in exports and increasing imports are putting pressure on the current account deficit (CAD), which widened to a record high of 4.8 percent of GDP in the previous fiscal. However, the government is making all efforts to boost country’s export and has recently announced a slew of measures including sops for Special Economic Zones (SEZs) and extension of the popular EPCG scheme to all sectors to boost shipments.

The CNX Nifty touched a high and low of 5,493.30 and 5,360.20 respectively. 

The top gainers on the Nifty were Bajaj Auto up by 5.26%, Cipla up by 5.05%, TCS up by 4.26%, HDFC up by 4.24% and Hindustan Unilever up by 4.20%. On the other hand, Jindal Steel down by 9.22%, Grasim down by 3.16%, Ranbaxy down by 2.63%, Tata Steel down by 2.53% and Hindalco down by 2.43%.

The European markets were trading in red, France’s CAC 40 down by 0.45%, Germany’s DAX down by 0.44% and the United Kingdom’s FTSE 100 was down by 0.38%.

Most of the Asian markets, barring Nikkei 225 and Straits Times concluded Friday’s trade in green on signs of a positive lead from Wall Street. Japanese stocks fell on caution ahead of the month’s end and a long weekend in the US, while Australian and South Korean shares ended higher after a positive lead from Wall Street. Hong Kong shares were largely flat with positive bias with many investors staying on the sidelines awaiting a report on the health of Chinese manufacturing.  China’s official manufacturing purchasing managers index (PMI) for August, the latest indicator of manufacturing activity in the mainland, is due on Sunday. The Korea Composite Stock Price Index concluded to their highest close in nearly three months on upbeat US data and a sixth consecutive day of net buying by foreign investors. Stock markets in China rose alongside most regional peers lifted by finance, insurance and retailers after Chinese bank earnings beat expectations.

Japan posted some strong economic data, with the Finance Ministry reporting a second straight rise for consumer prices in July and a drop in the jobless rate. The core consumer price index, which excludes volatile fresh-food costs, rose 0.7% from a year earlier, accelerating from June’s 0.4% rise. The gain was the largest since November 2008 and marked a victory for the government of Prime Minister Shinzo Abe and the Bank of Japan, which have been pushing policies to rid Japan of crippling deflation. On a monthly basis, the core CPI was up 0.1%. Meanwhile, August core CPI for metropolitan Tokyo -- seen as a leading indicator for the nation as a whole -- was 0.5% higher than a year earlier, compared to a projected 0.4% rise seen. Separately, the unemployment rate slipped to 3.8% from 3.9% in June marking the second consecutive monthly drop for the jobless rate. In other data, spending for households of two or more people edged up a price-adjusted 0.1% during July, swinging from a 0.4% drop in June. The data provided evidence the Bank of Japan’s unprecedented monetary easing was yielding results in its attempt to pull the nation from an era of falling prices.

Chinese banks have extended 37.1 billion yuan ($6 billion) of loans to 6,626 micro and small businesses and farmers in Shanghai during the first half of this year, the Shanghai Bureau of the China Banking Regulatory Commission stated. Under the program that encourages lending to small companies and farmers, new loans of this type rose 10.5 billion yuan during the first half. The loans were made under a program organized by the regulator as the local government boosted measures to support small businesses amid the nation’s economic slowdown.