September F&O expiry session ends on a quite note

The September series futures and options contract expiry day turned out to be a lackluster session for the benchmark indices, as the session lacked the flavor of high volatility, which typically surfaces on F&O settlement day. During the session, the frontline equity indices traded in an extremely tight range hardly budging from the psychological 5,900 (Nifty) and 20,000 (Sensex) levels. Nevertheless, markets traded in the green terrain for most part of the day’s trade, as sentiments got some boost from Reserve Bank of India’s (RBI) assurance that it would provide liquidity to the market and can also undertake open market operations if required. RBI relaxed the minimum maturity tenure for banks’ foreign currency borrowings’ to one year from three years, in order to use the central bank's swap facility which was set up to support the ailing rupee.

Sentiments also remained up-beat on report that indirect tax collections grew at 4.1 percent in the April-August period of this fiscal total collection of indirect taxes stood at about Rs 1,67,000 crore during the first five months of the 2012-13 fiscal. Moreover, some support also came in from report that foreign institutional investors (FII) bought shares worth Rs 382 crore on September 25, 2013, while domestic institutional investors (DII) sold shares worth Rs 473 crore. Appreciation in Indian rupee too aided the sentiments; the partially convertible rupee was trading at 62.15 versus its previous close of 62.44/45. Some support also came in from buying in two-wheeler stocks on expectations of pick-up in sales during the upcoming festive season and on hopes of good rains this year which will boost rural sales.

However, the gains on the upside remained capped as global cues remained sluggish with the US markets ending lower overnight, while the Asian markets too shut shop mostly in the red with lingering concerns in US about the possibility of a government shutdown at the end of the month. Moreover, European markets too turned negative after a positive start.

Back home, sentiments also remained dampened as oil and gas sector declined over a percentage point led by Reliance Industries (RIL) despite Oil Minister M Veerappa Moily said that his ministry has not moved the Cabinet for appointing a consultant to study the reasons for falling gas output at the KG-D6 block operated by Reliance. Moreover, stocks related to consumer durables segment too declined after RBI banned zero percent interest rate scheme offered by the banks for purchase of consumer goods.

The NSE’s 50-share broadly followed index Nifty rose by around ten points to hold the psychological 5,850 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex -- gained around forty points to end tad below its psychological 19,900 mark.

Moreover, broader markets too traded in line with benchmarks and ended the session in the green with mild gains. The market breadth remained in favour of advances, as there were 1,183 shares on the gaining side against 1,134 shares on the losing side, while 143 shares remained unchanged.Finally, the BSE Sensex gained by 37.61 points or 0.19%, to settle at 19893.85 while the CNX Nifty added by 8.40 points or 0.14% to settle at 5,882.25.

The BSE Sensex touched a high and a low of 19997.28 and 19826.99, respectively. The BSE Mid cap index gained 0.20% and Small cap index was up by 0.57%.

The top gainers on the Sensex were BHEL up 7.39%, Tata Steel up 3.18%, Coal India up 2.73%, Sun Pharma up 2.62% and Dr Reddys Lab up 1.50%, on the flip side, Jindal Steel down 3.16%, Gail India down 1.82%, Hero MotoCorp down by 1.58%, Sesa Goa down by 1.43%, and RIL down by 1.00%, were the top losers on the index. 

On the BSE Sectoral front, Healthcare up by 0.84%, Power up by 0.82%, Capital Goods up by 0.63%, FMCG up by 0.56%, and Metal up by 0.55%, were the top gainers, while Oil & Gas down by 1.14%, Consumer Durables down by 0.99%, Realty down by 0.61%, IT down by 0.26%, and Teck down by 0.22%, were the top losers on the sectoral front.

Meanwhile, in order to ease tight liquidity situation ahead of the festival season, the Reserve Bank of India (RBI) plans to take measures such as bond purchases to support the flow of credit to productive sectors of the economy. Currently, central bank injects about Rs 1.5 lakh crore into the system daily through the liquidity adjustment facility (LAF), marginal standing facility (MSF) and the export credit refinance facility.

In order to restore adequate supply of money for credit flows, central bank has started a calibrated unwinding of exceptional steps taken since July. The RBI has lowered the minimum maturity period for banks from three years to one year for the borrowings made on or before November 30, 2013 for the purpose of availing of the swap facility. However, foreign currency borrowing by banks beyond 50 percent of their tier I capital shall be of a minimum maturity of three years.

The RBI said that present liquidity tightening condition in the market is mainly due to the prospective effects of banks' half-yearly account closure, seasonal pick-up in credit demand, festival-related demand for currency and sluggish deposit growth. Liquidity has also tightened due to uncertainties about the government's borrowing programme for the second half of 2013-14. The government has revealed that it would borrow Rs 2.35 lakh crore from the market in the second half of the current fiscal of the total Rs 5.79 lakh crore projected in the Budget. The government borrowing stood at Rs 3.44 lakh crore in the first half of FY14.

The CNX Nifty touched a high and low of 5,917.65 and 5,864.10 respectively.

The top gainers on the Nifty were BHEL up by 5.59%, Tata Steel up by 3.50%, Jaiprakash Associates up by 3.35%, Coal India up by 2.85% and Sun Pharmaceuticals Industries up by 2.28%. On the other hand, Jindal Steel & Power down by 3.27%, Ambuja Cements down by 2.59%, PNB down by 2.22%, GAIL (India) down by 1.94%, and Reliance Infrastructure down by 1.62%, were the top losers.

The European markets were trading in red, France’s CAC 40 was down by 0.50%, Germany’s DAX was down by 0.40%, and United Kingdom’s FTSE 100 was down by 0.20%.

Most of the Asian markets concluded Thursday’s trade in red, as investors kept eye on controversial budget negotiations going in Washington. China’s Shanghai Composite fell as investors reduced exposure ahead of the long Golden Week holiday starting Tuesday. China’s recent economic data reinforce the International Monetary Fund’s forecast that the world’s second-largest economy will avoid a second-half slowdown and grow 7.75% this year. The IMF expected China’s economy to sustain its pace of growth despite a difficult international environment. The current level of consumer confidence in South Korea fell unexpectedly last month. The Bank of Korea stated that South Korean Consumer Confidence fell to 102, from 105 in the preceding month.

Industrial production in Taiwan rose unexpectedly last month. The Ministry of Economic Affairs Taiwan stated that Taiwanese Industrial Production rose to a seasonally adjusted annual rate of 2.07%, from -0.40% in the preceding month whose figure was revised down from 2.07% while industrial production in Singapore rose less-than-expected last month. The Statistics Singapore stated that Singaporean Industrial Production rose to an annual rate of 3.5%, from 3.0% in the preceding month whose figure was revised up from 2.7%.