Benchmarks extend northward journey for third day in a row

Boisterous benchmarks once again showcased an enthusiastic performance on Friday, by rallying over one and a half percentage points and breaking a lot of psychological levels in their northbound journey. Barring initial volatility, there appeared not even an iota of profit booking in the session, as the benchmarks managed to fervently gain from strength to strength as investors continued hunt for fundamentally strong but oversold stocks. Frontline indices managed to extend their rally for third straight day and settled over their crucial 5,650 (Nifty) and 19,250 (Sensex) levels as investors took to hefty across the board buying. Sentiments remained up-beat on the back of recent measures announced by the Reserve Bank of India (RBI) governor Raghuram Rajan.

Sentiments also got some boost from gross direct tax collection, which grew by over 14 per cent in the first five months (April-August) of this fiscal to Rs 1.88 lakh crore against Rs 1.64 lakh crore in the same period last year. Meanwhile, industry body CII has expressed the hope that the central bank would shift towards an expansionary monetary policy by cutting interest rates to stimulate growth. Finance Minister P Chidambaram too has asserted in the Lok Sabha that rupee will correct itself and the growth will bounce back.

Global cues too remained supportive with the US markets ending modestly higher ahead of the monthly jobs report, continuing their gaining streak for the third straight day. Moreover, Asian markets too ended mostly in the green as investors opted to buy battered down but fundamentally strong stocks. Though, European markets witnessed mixed trade in early deals on Friday ahead of the release of the crucial US nonfarm jobs data, expected later in the day.

Back home, appreciation in Indian rupee aided the sentiments. The partially convertible rupee was trading near 65 per dollar mark at the time of equity market closing against the yesterday’s close of 66.01 on the Interbank Foreign Exchange. Buying in telecom too aided the sentiments. Stocks like Bharti Airtel, Reliance Communication and Idea Cellular surged on reports that the Telecom Regulatory Authority of India will meet on September 6 2013, to consider spectrum pricing. Additionally, aviation stocks viz. Spicejet and Jet Air India edged higher as airlines in India recently announced a steep hike in airfares to mitigate the impact of the sharp fall in the rupee and surge in jet fuel prices.

The NSE’s 50-share broadly followed index Nifty surged by around ninety points to end over its psychological 5,650 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex soared over two hundred and ninety points to end above the psychological 19,250 mark.

Broader markets too traded with traction and ended the session with a gain of over one and a half percentage point. The market breadth remained in favour of advances, as there were 1,487 shares on the gaining side against 849 shares on the losing side, while 138 shares remained unchanged.

Finally, the BSE Sensex surged 290.30 points or 1.53% to settle at 19,270.06, while the CNX Nifty climbed by 87.45 points or 1.56% to end at 5,680.40.

The BSE Sensex touched a high and a low of 19,293.96 and 18,929.38, respectively. The BSE Mid cap index was up by 0.57% and Small cap index was up by 0.63%.

The top gainers on the Sensex were, ICICI Bank up 7.37%, ONGC up 7.17%, Bharti Airtel up 5.47%, Cipla up 4.49% and L&T up 3.58%. On the flip side, Tata Power down 2.61%, Coal India down 2.12%, Sesa Goa down 1.90%, Hindustan Unilever down 1.62% and Hero MotoCorp down 0.76% were the top losers on the index. 

On the BSE Sectoral front, Bankex up by 2.89%, Capital Goods up by 2.77%, Oil & Gas up by 2.20%, PSU up by 2.11% and Power up by 1.80% were the top gainers, while Consumer Durables down 0.66%, Realty down 0.17%, Auto down 0.02% and IT down 0.01% were the top losers in the space.

Meanwhile, enthused by the pro-reform approach adopted by new RBI Governor Raghuram Rajan, the industry body, Confederation of Indian Industry (CII) expects that the central bank would shift focus towards an expansionary monetary policy by cutting interest rates which in turn would spur investments and bring back economic growth. CII president K Gopalakrishnan said that various reforms suggested by the RBI governor including financial inclusion, facilitating investment flows, promoting financial savings, addressing the rupee depreciation and rising inflation are timely and reflect an innovative approach to tackle the hurdles facing the economy and revive investor confidence. 

Raghuram Rajan, after taking charge as the 23rd Governor of the central bank has laid out a detailed roadmap for his innings in the short-term and came out with a slew of measures, including more trade settlement in rupees to rescue the battered financial markets and hinted at a shift in focus from inflation control pursued by his predecessor, to boost the economic growth, which slowed down to the four year low at 4.4 percent in the April -June quarter of this fiscal.

Gopalakrishnan further said that amidst various degrees of uncertainty owing to an array of global and domestic issues that the industry in India is faced with today, the RBI can be a pillar of strength and provide direction and the RBI Governor’s statement on the issue of internationalization of the Rupee and capital inflows,  is indicative of bold thinking.

The CNX Nifty touched a high and low of 5,688.60 and 5,566.15 respectively. 

The top gainers on the Nifty were ICICI Bank up by 7.64%, Bharti Airtel up by 5.81%, Cipla up 5.23%, ONGC up 5.15% and Asian Paints up by 4.83%. On the other hand, Bank of Baroda down by 2.70%, Coal India down by 2.49%, Tata Power down 2.41%, Sesa Goa down 2.38% and Lupin was down by 1.90% were the top losers.

The European markets were trading in red, France’s CAC 40 down by 0.08%, Germany’s DAX down by 0.16% and the United Kingdom’s FTSE 100 down by 0.12%.

Most of the Asian markets barring Nikkei 225 and Taiwan Weighted concluded Friday’s trade in green. Japan’s Nikkei fell snapping a four-day winning streak, as investors opted to book profits from a recent sharp rally in real estate and construction firms as doubts emerged on Tokyo’s chances of winning its bid to stage the 2020 Summer Olympics. Seoul shares edged higher to a fresh three-month closing high as foreigners extended their buying streak to 11 sessions, though gains were capped as investor’s awaited crucial US jobs data. Foreign investors were net buyers of 423.4 billion won ($385.48 million) of local shares and 1.5 trillion won for the week.

Japan’s index of leading economic indicators rose less-than-expected last month, official data showed. The Cabinet Office stated that Japan’s index of leading economic indicators rose to a seasonally adjusted 107.8, from 107.2 in the preceding month whose figure was revised up from 107.0. Singapore overtook Japan as Asia’s biggest foreign-exchange center for the first time as trading surged in the past three years, the city’s central bank reported, citing a survey by the Bank for International Settlements. Separately, China re-launched trade of its treasury bond futures today, 18 years after banning it following a multi-billion-yuan trading scandal. The three five-year treasury bond futures contracts started trading on the Shanghai-based China Financial Futures Exchange.