Post Session: Quick Review

Giving two hoots to the partial shutdown in the US, Indian equity markets after taking a breather in previous trading session, resumed trade with vigor on Thursday as markets remained shut for trade on Wednesday on account of ‘Gandhi Jayanti. Like most emerging markets, local equity markets too showed an uptick in trade after US dollar sagged to eight-month lows following a failure by the US lawmakers to resolve a budget impasse that damped demand for the unit worldwide, which led to appreciation of all the emerging market’s currency. The Indian currency too strengthened the most in a fortnight on account of weakness of dollar globally and also better than expected Q1 Current Account Deficit (CAD) data.

Further, Finance Minister P Chidambaram’s confidence of closing the fiscal with a better set of CAD numbers than initially projected, also added to the positive milieu. Thus, finding solace with all of recent happenings, both 30 and 50 share index, Sensex and Nifty, went on adding gains and halted only at day’s highest point, which was past the crucial 19,900 and 5,900 psychological levels respectively, with spectacular gains of over two percent.

On the global front, following Asian shares, European shares too edged higher in early trading on Thursday after declines in the previous session, with strong economic data from China offsetting concerns about the impact of a prolonged US government shutdown. Expectations that some recent disappointing economic numbers would force the US Federal Reserve to keep its policies loose for longer were also seen underpinning the market.

Closer home, secular move of the bourses was mainly on account of across the board frenzied buying activities, with stocks from defensive Fast Moving Consumer Goods only acting as spoil sports, while those of Metal, Banking and Capital Goods counters emerging as the prominent gainers. Metal stocks firmed up on hopes that encouraging data from China would result in higher demand as it the world's largest consumer of metals. IT stocks too scooped up gains ahead of Infosys' second quarter earnings due to be released next week. Additionally, Auto stocks too were on investors’ radar on better-than-expected September sales numbers. The market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 1461: 950, while 149 scrips remained unchanged. (Provisional)

The BSE Sensex gained 384.92 points or 1.97% to settle at 19902.07.The index touched a high and a low of 19929.24 and 19583.97 respectively.  Among the 30-share Sensex pack, 27 stocks gained, while 3 stocks declined. (Provisional)

The BSE Mid cap and Small cap indices ended higher by 1.34% and 0.87% respectively. (Provisional)

On the BSE Sectoral front, Metal up by 3.90%, Bankex up by 3.26%, Capital Goods up by 2.82%, Auto up by 2.62% and IT up by 2.40% were the top gainers, while FMCG down by 0.89% was the only loser in the space. (Provisional)

The top gainers on the Sensex were Sesa Goa up by 7.10%, Bajaj Auto up by 5.36%, Hindalco Industries up by 4.29%, HDFC Bank up by 4.14% and TCS up by 4.08%, while, Hindustan Unilever down by 1.91%, ITC down by 1.17% and NTPC down by 0.10% were the only losers in the index. (Provisional)

Meanwhile, amid rising concerns over the fiscal deficit number touching around three-fourths of the budget estimate in the first five months of the fiscal, Finance Minister P Chidambaram said the government is planning to trim non-plan expenditure in order to meet the fiscal deficit target of 4.8 percent for the current fiscal.

Recently, to cut government spending in non-critical areas, the government has 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 FY13, against the budgeted target of 5.1 percent of GDP.

By adding further, Finance Minister said that the government had deliberately front-loaded the planned expenditure, which was running around 4-5 per cent ahead of the year earlier, as the borrowing reached 74.6 percent.

Chidambaram said he was confident on Indian economy’s growth to recover in the second half of this fiscal year on the back of rising core sector growth, higher exports and credit expansion to some sectors. Buoyed by better-than-expected Q1 current account deficit (CAD) numbers at 4.9 percent of GDP, Chidambaram said that CAD for the current fiscal will be contained lower than initially projected. The government has set a target to contain CAD at $70 billion or 3.7 percent of GDP for the financial year

India VIX, a gauge for markets short term expectation of volatility lost 2.32% at 25.17 from its previous close of 25.77 on Tuesday. (Provisional)

The CNX Nifty gained 128.40 points or 2.22% to settle at 5,908.45. The index touched high and low of 5,917.60 and 5,802.70 respectively. Out of the 50 stocks on the Nifty, 48 ended in the green, while 2 ended in the red.

The major gainers of the Nifty were Sesa Goa up 7.28%, JP Associate up by 6.58%, Ambuja Cements up by 6.19%, Axis Bank up by 5.62% and Bank of Baroda up by 5.27%. The key losers were Hindustan Unilever down by 1.81% and ITC down by 1.15%. (Provisional)

Most of the European markets were trading in red with, France’s CAC 40 down by 0.36% and Germany’s DAX down by 0.12%, while the United Kingdom’s FTSE 100 up by 0.14%.

Most of the Asian markets, barring Nikkei 225 and Straits Times concluded Thursday’s trade in green after reporting an encouraging non-manufacturing activity in China. Shanghai Stock Market remained close on account of National Day and will open for trading on October 8. Seoul Composite was closed on account of National Foundation Day. China’s official non-manufacturing Purchasing Managers’ Index rose to a six-month high of 55.4 in September from 53.9 in August, a China Federation of Logistics and Purchasing statement showed. A reading above 50 indicates on-month expansion in non-manufacturing activity from the previous month and anything below that indicates contraction. The new orders sub-index climbed to 53.4 in September from 50.9, but the business expectations sub-index fell to 60.1 from 62.9. The Asian Development Bank has further down scaled its growth forecast for China this year to 7.6% due to weak domestic demand and at 7.4% next year.

In Hong Kong, the value of total retail sales in August, provisionally estimated at $38.7 billion, rose 8.1% year-on-year. The Census & Statistics Department stated that after netting out the effect of price changes over the same period, the total retail sales volume grew 7.2%. The manufacturing activity in Singapore remained unchanged last month at 50.5, from 50.5 in the preceding month. The Asian Development Bank (ADB) stated that Indonesia’s economic growth will lag in the coming years as monetary tightening policies curb consumer spending in Southeast Asia’s largest economy. The report added that Indonesian economy is expected to grow 5.7% in 2013, less than previous estimates of 6%, and is projected to expand 6% in 2014, down from 6.6% annual growth