Benchmarks extend previous session’s jubilation in early deals

Extending previous session’s jubilation, Indian equity benchmarks have made a gap-up opening and are trading with a gain of over two percent, surpassing their crucial 18,950 (Sensex) and 5,550 (Nifty) levels as sentiments remained up-beat after country’s new central bank governor unveiled fresh measures to shore up the rupee and aid overseas inflows. The Reserve Bank of India (RBI) has decided to offer banks a window to swap fresh foreign currency non-resident (banks) dollar funds. These are mobilized for a minimum tenor of three years and at a fixed rate of 3.5 per cent per annum. RBI’s move follows banks’ request to consider a special concessional window to swap FCNR deposits. RBI has also decided to raise the current overseas borrowing limit of the unimpaired tier-I capital. Meanwhile, shares of companies that have applied for a banking licence viz. Bajaj Finance, JM Financial, LIC Housing Finance, IFCI, L&T Finance Holdings, Muthoot Finance, India Infoline and IDFC remained on the buyers’ radar after the Reserve Bank of India (RBI) Governor Mr Raghuram Rajan roughly indicated that new bank licenses are likely to be announced around January 2014.

Global cues too remained euphoric with the US markets extending their gains for the second day as traders continued picking up stocks at lower levels. Moreover, most of the Asian equity benchmarks were trading in the green at this point of time with South Korea’s Kospi Composite surging by a percentage point as Samsung Electronics, which accounts for 18 per cent of the index’s weighting, rose 1.9 per cent after unveiling its smartwatch.

Back home, sentiments also got encouraged with the passage of the Pension Fund Regulatory and Development Authority Bill, 2011 in the Lok Sabha. Recovery in Indian rupee too supported the sentiments. The partially convertible rupee was trading at 65.83 per dollar in early deals against the yesterday’s close of 67.09 on the Interbank Foreign Exchange. On the sectoral front, banking witnessed the maximum gain in trade followed by consumer durables and realty, while software and technology remained the top losers on the BSE sectoral space. The broader indices too were trading with great traction, while the market breadth on the BSE was positive; there were 939 shares on the gaining side against 254 shares on the losing side while 36 shares remain unchanged.

The BSE Sensex opened at 18857.60; about 290 points higher compared to its previous closing of 18234.66, and has touched a high and a low of 19117.52 and 18857.60 respectively.

The index is currently trading at 18973.91, up by 406.36 points or 2.19%. There were 23 stocks advancing against 7 declines on the index.

The overall market breadth has made a strong start with 76.40% stocks advancing against 20.67% declines. The broader indices, the BSE Mid cap and Small cap indices were up by 1.41% and 1.06% respectively. 

The few gaining sectoral indices on the BSE were, Bankex up by 6.93%, Consumer Durables up by 3.65%, Realty up by 3.28%, FMCG up by 3.20% and Capital Goods up by 2.52%, while IT down by 1.98% and Teck down by 1.19% were the only losers on the sectoral index.

The top gainers on the Sensex were ICICI Bank up by 7.73%, HDFC Bank up by 5.70%, HDFC up by 4.84%, ITC up by 4.47% and SBI up by 4.07%. On the flip side, TCS was down by 2.66%, Infosys was down by 2.08%, Wipro was down by 0.83%, Gail India was down by 0.58% and Tata Steel was down by 0.29% were the top losers on the Sensex.

Meanwhile, pointing to a further slowdown in Indian economy, the growth in services sector, which make up nearly 60% of country’ economics output, eased further during August on account of decline in new businesses amid tough economic conditions. The HSBC services Purchasing Managers’ Index (PMI), based on a survey of around 400 companies fell to 47.6 in August from 47.9 in the previous month, the weakest since April 2009. The survey indicated that four out of the six monitored sub-categories, recorded a reduction in business activity with fastest contraction being witnessed in Transport & Storage sub-sector.

Slowdown in service sector activity because of the decline in new business orders suggested that an uncertain economic outlook had dampened client confidence and also made services firms less optimistic about the year ahead. A sub-index for the Indian PMI that measures new businesses fell to 46.6 in August from 47.8 in July, the lowest in over four years. Further, decline in new business also slowed down the employment growth in Indian service sector. Similarly, the HSBC India Composite Output Index, which measures activity in both the manufacturing and services sector, came down to 47.6 from 48.4 in June, indicating moderate contraction overall.

Further, August data signaled broadly a steady inflation reading as input prices continued the trend that started in April 2009. Service providers indicated that a range of raw materials, fuel, transport and labour costs increased over the month. However, overall rate of charge inflation eased to the weakest in three months as firms raised their selling prices only marginally in August, amid reports of increased competitive pressures. The overall unfinished work fell for the first time since July 2012, as lower new business levels forced the service firms to work on their backlogs in August.

The CNX Nifty opened at 5,553.75; about 105 point higher as compared to its previous closing of 5,448.10, and has touched a high and a low of 5,625.75 and 5,553.75 respectively.

The index is currently trading at 5,586.15, up by 138.05 points or 2.53%. There were 42 stocks advancing against 8 declines on the index.

The top gainers of the Nifty were IndusInd Bank up by 11.15%, Axis Bank up by 9.24%, Kotak Mahindra Bank up by 9.23%, ICICI Bank up by 7.85% and HDFC Bank up by 6.39%. On the flip side, TCS down by 2.88%, Infosys down by 2.33%, HCL Tech down by 1.45%, Gail down by 0.63% and Tata Steel down by 0.24% were the major losers on the index.

Most of the Asian equity indices were trading in red; Hang Seng surged 274.22 points or 1.23% to 22,600.44, Jakarta Composite rose 32.05 points or 0.79% to 4,105.51, KLSE Composite gained 6.33 points or 0.37% to 1,723.09, Straits Times strengthened 33.97 points or 1.13% to 3,049.39, Seoul Composite added 19.33 points or 1.00% to 1,952.36 and Taiwan Weighted was up by 74.66 points or 0.92% to 8,158.10.

On the flip side, Shanghai Composite slipped 1.59 points or 0.07% to 2,126.03 and Nikkei 225 was down by 68.64 points or 0.49% to 13,985.23.