Benchmarks extend northward journey for the fourth straight day

Boisterous benchmarks once again showcased an enthusiastic performance on Tuesday, by rallying close to four percentage points and breaking lots of psychological levels in their northbound journey. Sentiments remained up-beat since beginning as key bourses opened with a huge gap on upside and there appeared not even an iota of profit booking in the session as the benchmarks managed to fervently gain from strength to strength with investors continued hunt for fundamentally strong stocks. Frontline indices managed to extend their rally for fourth straight day and settled near their crucial 5,900 (Nifty) and 20,000 (Sensex) levels. Sentiments got bolstered after Indian rupee appreciated against the dollar as receding geopolitical risks from Syria and strong exports in August helped lift the currency.

Supportive cues from US markets provided the much needed support to local markets initially, as sentiments got boosted by signs that the US will wait before launching a military strike against Syria. Moreover, firm opening in European counterparts too aided the sentiments with CAC, DAX and FTSE all trading with a gain of around a percent. Moreover, all the Asian equity indices ended in the green after China’s August real activity data came in stronger than expected, which will help sustain the market rally due to improving market sentiment towards China’s economy.

Back home, markets extended their rally in late trade after India’s trade deficit for the month of August narrowed to $10.9 billion, versus $12.26 billion in July down 11% month-on-month. The deficit narrowed on the back of improving exports and declining imports. The exports stood at $26.14 billion in the month of August as against $25.83 billion in July (up 1.2% month-on-month), while the imports came in at $37.05 billion versus $38.10 billion in July. Imports saw a decline of 2.7% month-on-month. Some support also came in after telecom stocks like, Bharti Airtel, Idea Cellular and Reliance Communication surged, as the Telecom Regulatory Authority of India (TRAI) proposed a hefty cut of up to 60 percent in minimum auction prices for mobile phone spectrum in a response to lukewarm interest. The regulator has recommended a 37 percent cut in the all-India reserve price of the 1800 megahertz frequency band that is used for basic mobile services.

The aviation stocks too traded jubilantly as the aviation ministry called for state governments across the country to discuss on a possible mechanism to reduce the tax on aviation turbine fuel (ATF) whose price was hiked by a steep 6.9% last week. Additionally, shares of multinational companies (MNC) remained in limelight after the Reserve Bank of India (RBI) has changed the rules to make it easier for foreign and non- resident Indian (NRI) promoters to raise stake in listed Indian companies.

The NSE’s 50-share broadly followed index Nifty rose by over two hundred and ten points to end just shy of its psychological 5,900 level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged over seven hundred points to reclaim the psychological 19,950 mark.

Moreover, broader markets too traded with traction and snapped the day’s trade in the green with gain of over a percentage point. The market breadth remained in favour of advances, as there were 1,503 shares on the gaining side against 828 shares on the losing side, while 143 shares remained unchanged.

Finally, the BSE Sensex surged 727.04 points or 3.77% to settle at 19,997.10, while the CNX Nifty climbed by 216.35 points or 3.81% to end at 5,896.75.

The BSE Sensex touched a high and a low of 20,012.69 and 19,444.66, respectively. The BSE Mid cap index was up by 1.37% and Small cap index gained 1.10%.

The top gainers on the Sensex were, Tata Motors up 9.88%, Bharti Airtel up 8.15%, Hero MotoCorp up 7.22%, L&T up 7.11% and Sesa Goa up 6.30%. On the flip side, Dr Reddys down 0.76%, SBI down 0.11%, and TCS down 0.08%, were the few losers on the index. 

On the BSE Sectoral front, Auto up by 5.98%, Capital Goods up by 5.50%, FMCG up by 5.30%, Consumer Durables up by 4.80% and Power up by 3.04% were the top gainers, while there were no losers on the Sectoral space.

Meanwhile, amid rising debt flows, deceleration in GDP growth and depreciating rupee, the country’s key external debt indicators witnessed some deterioration in FY13. India's external debt stock increased by 13% to $390 billion in the reported fiscal as against $345.5 billion in FY12 as the country scrambled to raise quick funds to meet the record high current account deficit. Indian external debt to GDP ratio also went up to 21.2% in the FY13 against 19.7% in FY12.  The country debt rose mainly due to increase in short term debt, commercial borrowings and non-resident Indian deposits.

The share of short-term debt to total debt country rose to 24.8% at the end of 2012-13 from 22.6% a year ago, while share of concessional debt in the total debt dropped. However, magnitude of increase in external debt was offset to some extent due to gain resulting from appreciation of the US dollar against Indian rupee and other international currencies. Referring to the currency composition to the total debt, the US dollar denominated debt continued to be the largest component with a share of 57.2%, followed by rupee (24%), special drawing rights SDR (7.5%), Japanese yen (6.3%) and euro (3.5%).

Meanwhile, NRI deposits increased by $12.2 billion to $70.8 billion at end-March 2013 primarily due to increase in rupee denominated NRI deposits. The ratio of foreign exchange reserves to external debt at end-March 2013 at 74.9% was lower than the level of end-March 2012 at 85.2%.

The CNX Nifty touched a high and low of 5,904.85 and 5,738.20 respectively. 

The top gainers on the Nifty were Tata Motor up by 9.82%, Bharti Airtel up by 8.37%, Ambuja Cement up 7.66%, Hero Motocorp up by 7.19% and ACC up by 7.02%. On the other hand, NMDC down by 2.27%, BPCL down by 1.50%, Bank of Baroda down 1.35%, Cairn India down 1.28% and Dr Reddy was down by 0.86% were the top losers.

The European markets were trading in green, France’s CAC 40 was up by 1.37%, Germany’s DAX was up by 1.79% and the United Kingdom’s FTSE 100 gained 0.77%.

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.