Post Session: Quick Review

Raghuram Rajan’s dazzling debut bowled over the markets, which gained over two percent for the day. Excitement of traders on account of spate of measure outlined by the new governor, remained evident throughout the session, which briefly took Sensex and Nifty, spiraling above the crucial 19,000 and 5,600 levels respectively. However, benchmarks facing stiff resistance near those levels, surrendered some ground, closing near to it. Both Sensex and Nifty, logging triple digit gains, closed at the highest level since August 14. Spate of measures announced by the new governor in his maiden speech, to support the ailing currency and liberalizing markets, provided a shot of confidence for investors unnerved by the country's worst economic crisis in two decades.  Besides, local equity markets also got a sentimental boost with the passage of Pension Fund Regulatory and Development Authority (PFRDA) Bill, which paves the way for individuals to plan for their post-retirement needs and allows foreign investors to acquire up to 26% stake in the sector. On the global front, Asian markets were mostly higher on Thursday, following gains on Wall Street, though shares in Sydney fell ahead of this weekend's federal elections. Meanwhile, European stocks climbed to over a week high level early on Thursday, lifted by growing signs of a global economic recovery, although gains were capped ahead of ECB chief Mario Draghi's press conference.

Closer home, major contributor to the rally were the stocks from banking, which ascended the most since 2009 after governor said that RBI will take steps to reduce the Statutory Liquidity Ratio (SLR) and introduce greater regulatory and supervisory control over the domestic operations of foreign banks. Gush of euphoria ran across these stocks post the governor highlighted that the central bank would offer special concessional window to bank for swapping FCNR dollar funds, mobilized for a minimum tenor of three years and over, at a fixed rate of 3.5% per annum for the tenor of the deposit. Following the suit were stocks from Realty and Consumer Durable counters. Meanwhile, NBFC stocks, viz Bajaj Finance, JM Financial, LIC Housing Finance, L&T Finance Holdings, IDFC, India Infoline, etc also gained fervor after the new RBI governor reiterated that new bank licences will most likely be announced around January 2014. On the flip side, the exceptions to this rally were stocks of Information Technology and Health Care counters. The market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 1488: 847, while 139 scrips remained unchanged. (Provisional)

The BSE Sensex gained 390.64 points or 2.10% to settle at 18958.19.The index touched a high and a low of 19117.52 and 18847.02 respectively.  Among the 30-share Sensex, 18 stocks gained, while 12 stocks declined. (Provisional)

The BSE Mid cap and Small cap indices ended higher by 1.71% and 1.61% respectively. (Provisional)

On the BSE Sectoral front, Bankex up by 9.22%, Realty up by 5.08%, PSU up by 4.62%, Consumer Durables up by 4.60% and Capital Goods up by 3.59% were the top gainers, while IT down by 3.09%, Teck down by 2.30% and Health Care down by 0.36% were the only losers in the space. (Provisional)

The top gainers on the Sensex were SBI up by 9.65%, ICICI Bank up by 8.82%, BHEL up by 8.24%, HDFC Bank up by 7.80% and Coal India up by 6.65%, while, Sesa Goa down by 6.58%, Wipro down by 3.60%, TCS down by 3.48%, Infosys down by 3.41% and Gail India down by 1.54% were the only losers in the index. (Provisional)

Meanwhile, amid rising concerns over the deteriorating macroeconomic indicators of the country, Prime Minister's economic advisor C Rangarajan expects that Indian economy will grow at around 5.5 percent in the current fiscal on the back of strong farm output, adding that the county needs to address the issues that had thwarted GDP expansion. Earlier, in April, PMEAC had said that economic slowdown has bottomed out and Indian GDP growth would be at 6.4 percent in FY14.

By adding further, Rangarajan said that agriculture growth will likely get a boost from a strong monsoon and it should grow by 4-5 percent in the current fiscal as against 1.7 percent in the previous fiscal. If the non-farm sector grows at the same rate as last year, the GDP growth rate would be closer to 5.5 percent in the current fiscal.

At present, domestic economy is struggling with slowdown as all the macro-economic indicators have deteriorated with the current account deficit (CAD) widening to a record high of 4.8 percent of GDP in the FY14. The domestic currency also depreciated to a record low of over 68.50 against the US dollar. Further, Indian economic growth also slowed down to four year low at 4.4 percent in Q1 FY14.

Concerned over the high fiscal deficit of the country, Rangarajan pitched for substantial increase in diesel prices to meet the fiscal deficit target as the rupee depreciated over 20 percent since May. The government has set the target to contain the country’s fiscal deficit at 4.8 percent of GDP in FY14.  

India VIX, a gauge for markets short term expectation of volatility lost 8.29% at 28.53 from its previous close of 31.11 on Wednesday. (Provisional)

The CNX Nifty gained 144.85 points or 2.66% to settle at 5,592.95. The index touched high and low of 5,625.75 and 5,552.70 respectively. Out of the 50 stocks on the Nifty, 33 ended in the green, while 16 ended in the red and one stock remains unchanged.

The major gainers of the Nifty were Axis Bank up 15.91%, Kotak Bank up by 9.43%, SBI up by 9.36%, ICICI Bank up by 8.84% and Bank of Baroda up by 8.72%. The key losers were Sesa Goa down by 6.77%, TCS down by 3.63%, Infosys down by 3.53%, Lupin down by 2.63% and HCL Tech down by 1.96%. (Provisional)

Most of the European markets were trading in green with, France’s CAC 40 up by 0.09% and the United Kingdom’s FTSE 100 up by 0.02%, while Germany’s DAX down by 0.17%.

Most of the Asian markets barring Shanghai Composite and Jakarta Composite concluded Thursday’s trade in green. Hong Kong shares closed at their highest in more than three months while Seoul shares rose to their highest closing level in three months, buoyed by continued foreign capital inflows after bullish global data bolstered investor confidence. Foreign investors were net buyers for a 10th straight session, purchasing 513.3 billion won ($469 million) worth of local shares, the most since February 20. Shanghai shares slipped for the first time in five days as weakness in material counters offset strength for property developers after official media reported that regulators will release new sector refinancing rules in the coming weeks.

The Bank of Japan (BOJ) formally proclaimed that the world’s third-biggest economy is back on a recovery track, a move that could tip the balance in favor of a planned sales tax hike from next spring as Prime Minister Shinzo Abe nears a final decision on the matter. The upgrade in the central bank’s assessment will also likely strengthen speculation that the BOJ will hold off on any additional easing for the time being, at least until the sales tax increase from April. The BOJ’s nine-member policy board decided to stand pat on monetary policy. BOJ voted unanimously to maintain its pledge of increasing base money, or cash and deposits at the central bank, at an annual pace of 60 trillion yen ($602 billion) to 70 trillion yen. The policy board stated that the country’s economy is recovering moderately and the tone of the language is the strongest since March 2008, when the central bank described the economy as expanding moderately.

Meanwhile, the International Monetary Fund warned the Group of 20 that emerging economies were slowing more than expected and under pressure from US plans to slow its stimulus. The IMF stated that recent indicators pointed to stronger growth in several advanced countries, but key emerging economies have slowed. Since its July report on global developments and risks, the IMF raised concern that growth projections for emerging economies are being revised downward with risks still to the downside.