Sensex ends near 3 year high on Fed’s stance; Nifty surpasses 6,100 mark

Boisterous benchmarks exhibited an enthralling performance on Thursday, by rallying close to three and a half percentage points and breaking a lot of psychological levels in their northbound journey. Markets traded superbly throughout the session and both the gauges surpassed their crucial 6,100 (Nifty) and 20,600 (Sensex) bastions at the end, with Nifty closing at its highest level since May 30, while Sensex closing at its highest level since November 10, 2010. Though, small amount of profit booking was witnessed in dying hours of trade ahead of Reserve Bank of India’s (RBI) monetary policy review.

Sentiments remained up-beat since beginning as key bourses opened with a huge gap after the Federal Reserve chief Ben Bernanke surprised markets by continuing with its $85 billion dollar stimulus injection plan. Some encouragement also came in from Economic Affairs Secretary (DEA) Arvind Mayaram’s statement that economic growth will pick up in the third and fourth quarters of the current fiscal and the government will be able to meet its fiscal deficit target and also with the government issuing “safe harbor” rules to bring greater clarity in cross-border transactions, easing the deal for multinationals and Indian companies with overseas arms.

Firm opening in European counterparts too supported the sentiments with CAC, DAX and FTSE all trading with a gain of over a percentage point in early deals, after Fed refrained from tapering stimulus program at its highly anticipated monetary policy meeting. Moreover, Asian equity indices rallied with Japanese Nikkei ending higher by around two percent as the country’s exports climbed 14.7 percent year on year, beating expectations for an increase of 14.5 percent after collecting 12.2 percent in the previous month.

Back home, sentiments also got some boost after rupee strengthened significantly in Thursday’s trade tracking other emerging market currencies. The partially convertible rupee was trading at 61.84 per dollar at the time of equity markets closing against the previous close of 63.38 on the Interbank Foreign Exchange. Meanwhile, foreign institutional investors (FII) pumped dollars into Indian markets, net-buying into shares worth Rs 580 crore on September 18, 2013. So far this month, these investors have bought to the tune of over Rs 7,000 crore, after selling shares worth about Rs 22,000 crore in the preceding three months.

Moreover, shares of rate sensitive sectors such as auto, realty, infra and banking remained on buyers’ radar on hopes that the Reserve Bank of India (RBI) may roll back its tightening measures taken in order to contain the forex volatility in its monetary policy review on September 19, 2013. Additionally, shares of oil marketing companies such as BPCL, HPCL and Indian Oil, along with ONGC and GAIL India rallied by up to 8% after the Indian Rupee hit one month high against the US Dollar.

The NSE’s 50-share broadly followed index Nifty rose by over two hundred and ten points to end above its psychological 6,100 level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged by around six hundred and ninety points to gain psychological 20,600 mark.

Moreover, broader markets too traded with traction and ended the session with a gain of over a percent. The market breadth remained in favour of advances, as there were 1,429 shares on the gaining side against 998 shares on the losing side, while 156 shares remained unchanged.

Finally, the BSE Sensex rushed by 684.48 points or 3.43% to settle at 20,646.64, while the CNX Nifty surged 216.10 points or 3.66% to settle at 6,115.55.

The BSE Sensex touched a high and a low of 20,739.69 and 20,347.30, respectively. The BSE Mid cap index was up by 2.21% and Small cap index gained 1.16%.

The top gainers on the Sensex were SBI up 8.07%, Tata Steel up 6.96%, ICICI Bank up 6.55%, Tata Power up 6.48% and L&T up 6.26%, on the flip side, Wipro down 1.87%, and Coal India down 0.03%, were the only losers on the index. 

On the BSE Sectoral front, Bankex up by 6.78%, Realty up by 5.34%, Capital Goods up by 4.75%, Metal up by 3.80% and PSU up 3.58%, were the top gainers, while IT down by 0.20%, was the only losers on the sectoral front.

Meanwhile, amid rising concerns over the deteriorating macroeconomic indicators of the country, the Department of Economic Affairs (DEA) secretary Arvind Mayaram said that Indian economy growth is likely to pick up in the third and fourth quarters of the current fiscal. The Indian economic growth had slowed down to a four year low at 4.4 percent in Q1 FY14.

Mayaram assured investors that there was no need to get excessively worried over the country’s fiscal deficit and said that the government would be able to achieve fiscal deficit target of 4.8 percent of GDP in the current fiscal. In order to cut government spending in non-critical areas, the government has recently announced a slew of austerity measures including banning government departments for holding meetings in 5-star hotels among others. Meanwhile, the government has been introducing austerity measures since 2008-09. Earlier, in November 2012, austerity measures announced by government helped it to contain the fiscal deficit at 4.9 percent of GDP in the previous financial year, against the budgeted target of 5.1 percent of GDP.

Referring to the rising inflation, Mayaram said that inflation would come down in near future on the back of strong farm output. Indian agricultural growth would get a boost from a strong monsoon and expected to grow by 4-5 percent in the current fiscal as against 1.7 percent in the previous fiscal. The wholesale price inflation rose to a six-month high of 6.10% in July as against 5.79% for the month of July on account of record climb in food prices.

The CNX Nifty touched a high and low of 6,142.50 and 6,040.15 respectively. 

The top gainers on the Nifty were PNB up by 9.20%, Bank of Baroda up by 9.12%, JP Associates up by 8.86%, Kotak Mahindra Bank up by 8.08% and State Bank of India up by 8.05%. On the other hand, HCL Technologies down by 0.66%, Infosys down by 0.24%, and Coal India down by 0.13%, were the top losers.

The European markets were trading in green, France’s CAC 40 was up by 1.01%, Germany’s DAX was up by 1.11%, and United Kingdom’s FTSE 100 was up by 1.40%.

All the Asian markets concluded Thursday’s trade in green after the Federal Reserve’s surprise move to leave its stimulus measures intact. Indonesian equities surged in early trade, though the advance was later pared, while the Philippines added 2.9% and Hong Kong’s Hang Seng too ended the trade in green. South Korean markets are closed from September 18 for the rest of the week for the Chuseok holidays. Trade will resume on September 23. Shanghai Composite and Taiwan Weighted remained closed on account of Mid-autumn Festival. Annual profit growth of China’s state firms gathered speed in the first eight months of 2013 reinforcing views that the world’s second-largest economy is regaining some traction. The state-owned non-financial companies made combined profits of 1.5 trillion yuan ($245.04 billion) for January-August, up 9.7 percent from the same period a year ago, the Ministry of Finance stated.

Japanese exports put in their best performance in three years but were not enough to prevent a record August trade deficit hit by soaring energy costs. The monthly deficit of 960.3 billion yen was well up from 768.4 billion yen a year earlier, marking the worst-ever August deficit and extending a string of shortfalls to 14 months -- tying the previous record set more than three decades ago. But the cheaper yen also pushed up Japan’s exports, with the value of shipments rising 14.7 percent, helped by strong demand for vehicles. The trade data released showed that the value of shipments to the key US market jumped 20.6 percent from a year earlier, while exports to the troubled euro zone were up 18 percent. The exports to China rose 15.8 percent despite a rumbling territorial dispute between Tokyo and Beijing that flared anew last year, denting trade ties. Separately, Japan’s All industries activity index rose more-than-expected last month. The Japanese Ministry of Economy, Trade and Industry stated that Japan’s All Industries Activity Index rose to a seasonally adjusted 0.5%, from -0.6% in the preceding month.