Post Session: Quick Review

It turned out to be dream run for Indian equity markets, which for fourth consecutive session put up an enthralling show, by rallying close to four odd percent in single trading session. Brisk buying by foreign and domestic investors on improved risk appetite after Russia offered to help put Syria's chemical weapons under international control, calmed fears of an imminent strike against the country, got the bulls’ berserk on the bourses. On the domestic front, retreat of rupee to two-week high level of 64 psychological mark on hopes of more market-friendly measures by Raghuram Rajan, after the Reserve Bank of India, late on Friday, made it easier for non-residents to buy shares of listed companies also bolstered sentiments. Nevertheless, the sudden spike of the bourses during the last trading hour on the back of better than expected trade deficit data, which for the month of August fell to $10.91 billion from $12.27 billion in the previous month, got the bourses soaring above the psychological 20,000 (Sensex) and  5,900 (Nifty) levels respectively. Although, facing stiff resistance, benchmarks shied away from these levels by the close of trade, its closing remained at levels last seen on July 25.

On the global front, receiving a positive hand-over from Asian counterparts, European markets too were traded in green, helped by receding expectations of US led military action against Syria and after better-than-expected Chinese macro data. Late on Monday, US President Barack Obama said he saw a possible breakthrough in the crisis with Syria, after Russia proposed that Damascus hand over its chemical weapons for destruction, which could prevent planned strikes. Also boosting sentiment on Tuesday was data which showed China's industrial output growth beat forecasts in August, adding to recent data pointing to a pick-up in growth in the world's second-largest economy.

Closer home, benchmark indices extended the strong rally after a long weekend, led by buying among index heavyweights like Tata Motors, HDFC, HUL, ITC and L&T. Meanwhile, top gainers on BSE sectoral front, were Auto, Capital Goods and Consumer Durables counters. Additionally, telecom stocks also rang loud for second consecutive session after telecom regulator TRAI recommended a sharp 60% cut in the floor price of mobile phone spectrum for an upcoming auction after two previous sales drew lukewarm response because of high reserve price. The market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 1503: 828, while 143 scrips remained unchanged. (Provisional)

The BSE Sensex gained 702.50 points or 3.65% to settle at 19972.56.The index touched a high and a low of 20012.69 and 19444.66 respectively.  Among the 30-share Sensex pack, 26 stocks gained, while 4 stocks declined. (Provisional)

The BSE Mid cap and Small cap indices ended higher by 1.40% and 1.07% respectively. (Provisional)

On the BSE Sectoral front, Auto up by 6.02%, Capital Goods up by 5.15%, FMCG up by 5.04%, Consumer Durables up by 4.83% and Teck up by 2.95% were the top gainers, while there were no losers in the space. (Provisional)

The top gainers on the Sensex were Tata Motors up by 9.88%, Bharti Airtel up by 8.15%, Hero MotoCorp up by 7.22%, L&T up by 7.11% and Sesa Goa up by 6.30%, while, Dr Reddys Lab down by 0.76%, Gail India down by 0.43%, SBI down by 0.11% and TCS down by 0.08% were the only losers in the index. (Provisional)

Meanwhile, in order to succeed in the next round of spectrum auctions, telecom regulator, Telecom Regulatory Authority of India (TRAI) recommended up to 60% cut in minimum auction prices for mobile phone spectrum on account of lukewarm interest from telecom companies in two previous sales. In yet another relief to most operators, including Bharti Airtel and Vodafone India, TRAI also recommended trading of airwaves between operators and suggested a flat spectrum usage charge, instead of one linked to the quantity of spectrum held.

The regulator, however, held its ground firmly on the controversial spectrum re-farming issue, reiterating that the operators holding spectrum in either 900 MHz or 1800 MHz bands should give up those airwaves on expiry of the licences and buy them back though auctions. Further, the regulator abstained from offering any suggestions on the pricing of the 800 MHz band, used by CDMA operators, saying no auction is required due to the lack of demand.

Thus with this, regulator has recommended Rs 1,496 crore per MHz as the floor price for pan-India spectrum in the 1800 MHz band, which is about 37% lower than the March auction price, where four service areas, including the crucial circles of Delhi and Mumbai, had gone unsold. Further, in the lucrative 900 MHz band, which is eyed by most operators as it is highly efficient and stands cheaper to roll out services, it recommended a reserve price of Rs 288 crore per MHz for Delhi, Rs 262 crore for Mumbai and Rs 100 crore for Kolkata. These rates are about 60% lower than the previous reserve price.

TRAI's recommendations, which need to be cleared by the telecom department and then the cabinet, come amid a deep economic slowdown in India as well as strife in a sector hurt by huge debt and intense competition. Approval of these recommendations would be win-win situation for both the parties, i.e., telecom players as well as government. A successful auction is important to the government, as this would help them to improve its strained finances and meet its budgeted fiscal deficit target of 4.8% of GDP in the fiscal year to end-March. The proposals need cabinet approval.

India VIX, a gauge for markets short term expectation of volatility gained 2.75% at 29.44  from its previous close of 28.65 on Friday. (Provisional)

The CNX Nifty gained 216.35 points or 3.81% to settle at 5,896.75. The index touched high and low of 5,904.85 and 5,738.20 respectively. Out of the 50 stocks on the Nifty, 41 ended in the green, while 9 ended in the red.

The major gainers of the Nifty were Tata Motors up 9.82%, Bharti Airtel up by 8.37%, Ambuja Cements up by 7.66%, Hero MotoCorp up by 7.19% and ACC up by 7.02%. The key losers were NMDC down by 2.27%, BPCL down by 1.50%, Bank of Baroda down by 1.35%, Cairn India down by 1.28% and Dr. Reddy's Laboratories down by 0.86%. (Provisional)

Most of the European markets were trading in green with, France’s CAC 40 up by 1.34%, Germany’s DAX up by 1.67% and the United Kingdom’s FTSE 100 up by 0.70%.

All the Asian markets concluded Tuesday’s trade in green as the latest data from China continued to point towards a recovery in the world’s second-largest economy, while there were also signs that Syrian tensions are easing. Chinese economic data released showed a stronger-than-anticipated picture in August for the industrial and retail sectors, sending stocks higher. China’s industrial production rose to its fastest in 17 months in August, the latest in a series of better-than-expected indicators. The main gauge of output at China’s factories, workshops and mines increased 10.4 percent year-on-year in August, the National Bureau of Statistics (NBS) stated, the strongest growth since March 2012. Meanwhile, retail sales increased by 13.4% compared to August last year, with the forecast have expected sales growth to hold steady at July’s 13.2% rate.

Besides, China’s consumer inflation growth eased in August, paving the way for the central government to adjust its policies to further bolster economic expansion. The Consumer Price Index, the main gauge of inflation, rose 2.6 percent from a year earlier last month, the National Bureau of Statistics reported. June and July saw 2.7 percent increases. The government has set a target of 3.5 percent for the year. Separately, Shanghai’s new home sales stayed above the 250,000-square-meter threshold for the second straight week despite a slight dip, with robust sales of mid- to high-end homes. The purchases of new homes, excluding government subsidized affordable housing, fell 6.5 percent to 259,100 square meters last week.

A revised estimate showed Japan’s economy expanded faster in April-June than earlier reported, clocking a real annualized growth rate of 3.8 percent thanks to higher spending on private and public investment. The first preliminary estimate had put the rate of growth for the world’s third-largest economy at 2.6 percent. The Cabinet Office also stated that the economy expanded 0.9 percent from the previous quarter, compared with an earlier estimate of a 0.6 percent increase. The stronger data make it more likely the government will go ahead with a planned sales tax increase that some economists worry could slow the recovery, but which is needed to help curb the country’s massive national debt. Indonesia’s finance ministry sold 12 trillion rupiah ($1.08 billion) of bonds at an auction, well above an indicative target of 8 trillion, as demand for state debt increased despite an economic slowdown and recent turmoil in emerging markets.

Meanwhile, the OECD Development Center stated that Indonesia is among emerging Asian nations with weak business cycles, due to prolonged weak external demand and a deficit in the current account. The Organization for Economic Cooperation and Development added that the slowdown in China has weakened the growth momentum of the 10-member Association of Southeast Asian Nations. Thailand entered a technical recession in the second quarter, while Indonesia’s year-on-year growth momentum is slowing to 5.8 percent in the second quarter from 6 percent a quarter earlier. Elsewhere in Asia, the OECD saw signs of growth stabilization in China and a more positive outlook for the Philippines and Singapore.