Indian benchmarks snap two days losing streak

Snapping two days losing streak, Indian equity benchmarks ended the session in the positive terrain with frontline gauges recapturing their crucial 5,750 (Nifty) and 19,500 (Sensex) bastions. Key indices opened on a cautious note after India’s CAD in first quarter FY14 was reported at 4.9 percent, comparatively higher than 3.6 percent of GDP registered in the previous quarter ended March 2013, however it was narrower than expected at $21.8 billion. But sentiments turned upbeat from report that Core Sector, the eight key infrastructure industries, grew at their fastest pace in seven months at 3.7% in August compared with an expansion of 3.1% in the previous month, boosted by robust performance in electricity, cement, steel and petroleum refinery products. Sentiments also got some support after the Reserve Bank has decided to conduct open market operations (OMOs) by purchasing government securities for an aggregate amount of Rs 10,000 crore on October 7.

Some support also came in after European markets opened mostly in the green terrain. Moreover, rally in Asian counters too supported the domestic sentiments with Japanese market ending higher by around quarter a percent after a report showed that confidence among large Japanese manufacturers increased before Prime Minister Shinzo Abe unveils plans for an economic-support package. However, gains in the region remained capped as global risk appetite was frail on concerns over political dysfunction in US, as lawmakers failed to keep the government running.

Back home, appreciation in Indian rupee too supported the sentiments. The partially convertible rupee was at 62.38 per dollar at the time of equity markets closing, as against yesterday’s close of 62.62 on the Interbank Foreign Exchange. Sentiments also remained upbeat as buying accelerated in Auto space after companies like Maruti Suzuki and TVS Motor reported better than expected September sales numbers. Some support also came in from Economic Affairs Secretary Arvind Mayaram’s statement that the economy will grow at more than 5% in the current financial year ending in March 2014. He also said that India will finance its current account deficit fully in the fiscal year ending March without drawing down on its reserves, and will also contain the fiscal deficit at 4.8% of GDP.

However, gains remained capped to some extent, as Indian manufacturing activity shrank for a second consecutive month in September mainly on account of decline in new orders. The HSBC Purchasing Managers’ Index (PMI) stood at 49.6 points in the month of September, marginally up from 48.5 points in August, indicating moderate contraction in the sector, as a reading above 50 indicates growth and below that depicts contraction. Meanwhile, shares of public sector oil marketing companies (OMCs) viz. BPCL, HPCL and IOC declined after petrol prices reduced by Rs 3.05 per litre, while there was no one time hike in diesel.

The NSE’s 50-share broadly followed index Nifty rose by over forty points to regain the psychological 5,750 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex -- gained around one hundred and forty points to end above its psychological 19,500 mark.

Moreover, broader markets too traded in line with benchmarks and ended the session in the green with gain of around half a percent. The market breadth remained in favour of advances, as there were 1,320 shares on the gaining side against 1,007 shares on the losing side, while 159 shares remained unchanged.

Finally, the BSE Sensex surged 137.38 points or 0.71%, to settle at 19517.15, while the CNX Nifty gained 44.75 points or 0.78% to settle at 5,780.05.

The BSE Sensex touched a high and a low of 19532.91 and 19264.72, respectively. The BSE Mid cap index was up by 0.57% and Small cap index gained 0.47%.

The top gainers on the Sensex were HDFC Bank up 3.03%, BHEL up 2.95%, ICICI Bank up 2.94%, HDFC  up 2.73% and Bajaj Auto up 2.35%, on the flip side, Tata Power down 3.82%, Sesa Goa down 2.91%, NTPC down by 2.87%, ONGC down by 2.11%, and Jindal Steel down by 1.30%, were the top losers on the index. 

On the BSE Sectoral front, Realty up by 2.69%, Bankex up by 2.67%, Capital Goods up by 1.53%, Auto up by 0.90%, and Consumer Durables up by 0.63%, were the top gainers, while Oil & Gas down by 0.62%, Power down by 0.59%, Metal down by 0.30%, and PSU down by 0.18%, were the top losers on the sectoral front.

Meanwhile, in order to bring transparency in tainted coal sector of the country, the government may set up proposed coal regulator before the auctioning of coal mines scheduled in January. Earlier, in June, the Cabinet had given approval for the independent coal regulatory bill that needs to be cleared by Parliament before it becomes a law. At present, government is seeking few legal clarifications from the Law Ministry and can issue an executive order soon for immediately set up of a coal regulator.

Meanwhile, the need to set up the regulator was felt long-time back and once the regulator is set up, it will discontinue monopolistic practices of the Coal India. Further, the regulator will have powers to adjudicate on disputes related to price, quality, and supplies and also supervise the supply and demand of coal in the country. Moreover, the regulator will be empowered to resolve disputes including those arising out of fuel supply agreements (FSAs), however, it will not determine fuel rates, a job that will continue to be vested with the producers.

Recently, the government has approved the new methodology for auctioning coal blocks in order to provide upfront and production-linked payments and benchmarking of coal sale prices. The move will ensure greater transparency in auctioning the fully explored coal blocks and will also enable the government to allot coal mining licences through competitive bidding for the first time.

The CNX Nifty touched a high and low of 5,786.45 and 5,700.95 respectively.

The top gainers on the Nifty were DLF up by 6.99%, Ranbaxy Laboratories up by 5.90%, IndusInd Bank up by 4.66%, Axis Bank up by 3.98% and ICICI Bank up by 3.45%. On the other hand, Tata Power down by 3.88%, Sesa Goa down by 3.18%, NTPC down by 2.61%, ONGC down by 2.18%, and Hindustan Unilever down by 1.82%, were the top losers.

Most of the European markets were trading in green, France’s CAC 40 was up by 0.74%, and Germany’s DAX was up by 0.61%, while United Kingdom’s FTSE 100 was down by 0.21%.

The Asian markets concluded Tuesday’s trade in green following modest sell-off sparked after deadline for US government shutdown passed. Hong Kong market was closed on account of National Day, while Shanghai Stock Market will remain close from October 1 to October 7 on account of Golden Week holiday. Japanese Prime Minister Shinzo Abe proceeded with an April sales-tax increase and will implement a stimulus program as he tries to rein in the world’s biggest debt burden without jeopardizing efforts to end deflation. Sentiment among large Japanese companies sharply improved in the three months to September, the Bank of Japan’s Tankan survey showed. The Tankan Manufacturing index rose to a seasonally adjusted 12 from 4 in the preceding quarter.

Indonesia recorded a surprise trade surplus for August, its first in five months, offering some relief to the ailing rupiah, but the country’s current account deficit will likely keep weighing on Asia’s weakest currency this year. Southeast Asia’s largest economy had a trade surplus of $130 million in August, compared with a record $2.3 billion deficit the previous month. Indonesia’s consumer price index rose 8.40% in September year on year, the Central Statistics Agency (BPS) reported. That was down from the 8.79% increase in August. Indonesian President Susilo Bambang Yudhoyono’s administration plans to release additional economic measures to the raft of policies announced in August, as the government seeks to address weakening economic growth and a depreciating rupiah.

Hong Kong’s government spending from April to August amounted to $170.3 billion, while revenue collected totaled $126.3 billion, resulting in a $44 billion deficit. Financial Services & the Treasury Bureau stated that the deficit was mainly because some major types of revenue, including salaries and profits taxes, were mostly received towards the end of a financial year. The fiscal reserves stood at $689.9 billion as at August 31. South Korea’s trade balance fell more-than-expected to a seasonally adjusted 3.71B, from 4.85B in the preceding quarter.