Benchmarks extend northward journey for the second straight day

Boisterous benchmarks once again showcased an enthusiastic performance on Thursday, by rallying close to two percentage points and breaking lots of psychological levels in their northbound journey on expectations that the US government’s partial shutdown may force Fed to delay tapering of monetary stimulus. Sentiments remained upbeat since beginning, as key bourses opened with a decent gain and there appeared not even an iota of profit booking in the session as the benchmarks fervently gained from strength to strength with investors continued hunt for fundamentally strong stocks. Frontline indices managed to extend their rally for second straight day and settled above their crucial 5,900 (Nifty) and 19,900 (Sensex) levels. Sentiments got bolstered after Indian rupee appreciated against the dollar after the current account deficit (CAD) for April-June quarter was in line with what the Street expected. The partially convertible rupee was trading at 61.82 per dollar at the time of equity markets closing as against the previous close of 62.46 on the Interbank Foreign Exchange.

Investors continued to trade jubilantly through the session despite report that Asian Development Bank (ADB) lowered India’s growth projection for 2013-14 to 4.7 percent from 6 percent earlier, saying the recent rupee depreciation and capital outflows could adversely impact the country’s economy. Some support also came in after Finance Minister P Chidambaram expressed his confidence of closing the fiscal with a better set of numbers than initially projected.

Risk appetite also got a boost after a gauge of China’s services industries jumped to six-month high, raising hopes that the world’s second-biggest economy will sustain a rebound after a two-quarter slowdown. Moreover, Asian markets ended mostly in the green. Though, European markets were trading mixed in early deals on Thursday amid concerns about the US government shutdown and weak private sector jobs data.

Back home, buying in metal and mining stocks too supported the sentiments. Stocks like NMDC, Tata Steel, Jindal Steel & Power, Hindalco, SAIL, JSW Steel, Hindustan Zinc etc. edged higher after encouraging data from China, the world’s largest consumer of copper and aluminium. Stocks related to automobile sector too remained on the buyers’ radar after most of the companies reported a slightly better-than-expected sales numbers for the month of September 2013 and on further expectations of better monsoons reviving growth during the festival season. Additionally, shares of cement makers also remained in demand on hopes that the cement prices are likely to go up further in the post-monsoon quarters and on the back of a festive season.

The NSE’s 50-share broadly followed index Nifty rose by around one hundred and thirty points to end above its psychological 5,900 level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged over three hundred and eighty points to reclaim the psychological 19,900 mark.

Moreover, broader markets too traded with great traction and snapped the day’s trade in the green with gain of around a percentage point. The market breadth remained in favour of advances, as there were 1,471 shares on the gaining side against 937 shares on the losing side, while 152 shares remained unchanged.

Finally, the BSE Sensex surged 384.92 points or 1.97%, to settle at 19902.07, while the CNX Nifty gained 129.65 points or 2.24% to settle at 5,909.70.

The BSE Sensex touched a high and a low of 19929.24 and 19583.97, respectively. The BSE Mid cap index was up by 1.38% and Small cap index gained 0.85%.

The top gainers on the Sensex were Sesa Goa up 7.21%, Bajaj Auto up 5.10%, Hindalco Inds up 4.34%, Tata Power up 4.04% and TCS up 4.02%, on the flip side, Hindustan Unilever down 1.61%, and ITC down 1.30%, were the only losers on the index. 

On the BSE Sectoral front, Metal up by 3.94%, Bankex up by 3.41%, Capital Goods up by 2.82%, Oil & Gas up by 2.46%, and IT up by 2.39%, were the top gainers, while FMCG was down by 0.88%, was the only losers on the sectoral front.

Meanwhile, concerned over the declining share of Indian Micro, Small and Medium Enterprises (MSME) in the global market, the MSME ministry has suggested such enterprises, especially start ups, to adopt innovative technologies in production in order to make them globally competitive.

MSME Secretary Madhav Lal, said that there is need to work within certain frameworks and policies as the MSME sector has been witnessing a slow growth phase with its share of exports falling from 40 percent to 36 percent now. On the other hand, countries such as China have been increasing their share consistently on the back of their superior global competitiveness. By adding further, Madhav Lal said that MSME is of the view that global competitiveness in MSME firms can be achieved only through well thought frameworks, therefore the ministry is presently working on those mechanisms to tackle the issues of innovation in these firms.

The MSME sector contributes around 8% of the country's GDP, 45% of the manufactured output and provides employment to over 8 crore persons engaged in over 3.6 crore units. Meanwhile, the government has been taking steps to boost the sector’s growth. In the 12th Five-Year Plan, the government has increased Budget allocation for the sector to Rs 24,000 crore from Rs 11,000 crore in the previous five-plan period. Further, it has also set up a six-member inter-ministerial panel, which will suggest measures to boost the MSME exports

The CNX Nifty touched a high and low of 5,917.60 and 5,802.70 respectively.

The top gainers on the Nifty were Sesa Goa up by 7.28%, Jaiprakash Associates up by 6.58%, Ambuja Cements up by 6.19%, Axis Bank up by 5.62% and Bank of Baroda up by 5.27%. On the other hand, Hindustan Unilever down by 1.81%, and ITC down by1.15%, were the only losers.

Most of the European markets were trading in red, France’s CAC 40 was down by 0.31%, and Germany’s DAX was down by 0.11%, while United Kingdom’s FTSE 100 was up by 0.18%.

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.