Benchmarks recovering from their lows end flat on Monday

Indian equity benchmarks, despite sluggish opening, managed to end the extremely volatile session near the neutral lines on Monday. Buying which emerged in late trade mainly acted as saving grace for domestic equity markets and helped Nifty to re-conquer its crucial 5,900 mark, while Sensex just shied away from 19,900 mark. Earlier, markets made a shaky start tracking weakness in Asian markets; moreover investors opted to remain on sidelines ahead of the Infosys’ quarterly results later this week that will kick start the earnings season for July-September quarter. Some cautiousness also came in after study by CII Ascon showed that industrial growth in the three months ended 30 September remained dismal despite the government introducing a number of reform measures to boost the economy.

Choppy start in European counterparts too dampened the sentiments with CAD, DAX and FTSE all trading lower in early deals amid concerns that the political deadlock in the US could continue, potentially hampering efforts to raise the US government’s borrowing limit. Moreover, most of the Asian markets shut shop in the red terrain with investors choosing to trim down positions on account of US lawmakers’ wrangle over the debt limit and partial government shutdown.

Back home, weakness in Indian rupee against dollar too dampened the sentiments. The partially convertible rupee was trading at 61.84 per dollar at the time of equity markets closing against the previous close of 61.44 on the Interbank Foreign Exchange. Moreover, stocks related to banking sector remained under heavy selling pressure, led by the sharp fall of ICICI Bank which slipped by 1.50% on reports of raising an alarm over loan default by Dabhol power plant after being rendered idle due to fuel supply issues.

However, key bourses witnessed sharp recovery in last leg of trade, supported by buying in software and technology counters on rupee weakness against the dollar. Sentiments also got some support as shares of metal companies continued their northward journey after encouraging data from China and on hopes of higher net profit growth on sequential basis. Additionally, shares of select non-banking finance companies (NBFC) that applied for the banking licenses edged higher after Finance Minister P Chidambaram said that the Reserve Bank of India (RBI) would shortly issue seven licenses.

The NSE’s 50-share broadly followed index Nifty declined marginally to hold its psychological 5,900 level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by over twenty points to end tad below its psychological 19,900 mark.

Moreover, broader markets outperformed benchmarks and ended the session with gain of around half a percentage point. The market breadth remained in favour of advances, as there were 1,279 shares on the gaining side against 1090 shares on the losing side, while 153 shares remained unchanged.

Finally, the BSE Sensex lost 20.85 points or 0.10%, to settle at 19895.10, while the CNX Nifty declined by 1.15 points or 0.02% to settle at 5,906.15.

The BSE Sensex touched a high and a low of 19921.38 and 19647.88, respectively. The BSE Mid cap index was up by 0.45% and Small cap index gained 0.47%.

The top gainers on the Sensex were Tata Steel up 4.13%, Hindalco Inds up 3.22%, TCS up 2.52%, Jindal Steel up 1.59% and BHEL up 1.53%, on the flip side, Coal India down 3.19%, Bharti Airtel down 1.71%, ICICI Bank down 1.50%, Maruti Suzuki down 1.46%, and L&T down 1.37%, were the top losers on the index. 

On the BSE Sectoral front, IT up by 1.21%, Metal up by 0.91%, Teck up by 0.89%, Healthcare up by 0.87%, and Power up by 0.45%, were the top gainers, while Bankex down by 1.16%, PSU down by 0.41%, Capital Goods down by 0.39%, Realty down by 0.32%, and Consumer Durables down by 0.29%, were the top losers on the sectoral front.

Meanwhile, emphasizing the need to boost domestic gas and oil output and to meet the growing energy needs of the country, Oil Minister Veerappa Moily said that India will become energy independent by 2030 as expert panel is preparing a road map for enhancing domestic oil and gas production.

The government has set up a committee led by former finance secretary Vijay Kelkar to prepare road map aimed at boosting the domestic production of oil and gas and help India achieve energy security. India currently imports around 80% of its oil needs and 25% of its natural gas requirements and the committee forecasts it to be lowered by 50% by 2020 and by 75% in 2025 through intensive exploration and exploitation of untapped reserves. Oil minister further added that country has enough resources of oil and natural gas, but there is need to explore these resources. Presently, only 0.93 million sq km area in India is held under exploration and production in 19 basins as compared to total estimated sedimentary area of 3.14 million square kilometres, comprising 26 sedimentary basins.

Moreover, the government will announce 10th round of New Exploration Licensing Policy (NELP) auction of around 68 oil and gas blocks in January, 2014, which will be the second highest offering of blocks since 1999. As per the government, 10th round of auction is likely to be held on new terms wherein a bidder shall be asked to quote the amount of oil or gas output it is willing to offer to the government from the first day of production. Presently, oil companies are allowed to share the profit with the government only after recovering the entire cost of exploration and production.

The CNX Nifty touched a high and low of 5,912.00 and 5,825.85 respectively.

The top gainers on the Nifty were Ranbaxy Laboratories up by 5.47%, Tata Steel up by 4.51%, BPCL up by 4.09%, TCS up by 3.06% and Hindalco Industries up by 3.05%. On the other hand, Coal India down by 3.24%, Bharti Airtel down by 1.98%, Axis Bank down by 1.97%, ICICI Bank down by 1.50%, and Maruti Suzuki India down by 1.43%, were the top losers.

The European markets were trading in red, France’s CAC 40 was down by 1.00%, Germany’s DAX was down by 1.14%, and United Kingdom’s FTSE 100 was down by 0.84%.

Most of the Asian markets barring KLSE Composite concluded Monday’s trade in red as budget gridlock in Washington which shut down the US government now threatens to trigger a devastating debt default. Shanghai Stock Market was closed on account of National Day and will be open for trading on October 8. The World Bank cut its growth forecast for developing economies in East Asia and the Pacific region as a whole in 2013 to 7.1% from the previous forecast of 7.8%. The World Bank expects the Chinese economy to expand by 7.5% this year, down from its April forecast of 8.3% and below the International Monetary Fund’s most recent forecast of 7.75%. China’s 2014 growth is estimated at 7.7%, the World Bank stated, down 0.3% point from the previous prediction.

Japan’s index of leading economic indicators rose less-than-expected last month. The Cabinet Office stated that Japan’s index of leading economic indicators rose to a seasonally adjusted 106.5, from 107.7 in the preceding month whose figure was revised down from 107.8. Taiwan’s trade balance fell more-than-expected last month to a seasonally adjusted annual rate of 2.35B, from 4.59B in the preceding month. Consumer price inflation in Taiwan rose more-than-expected in the last quarter. The National Statistics Taiwan reported that Taiwanese CPI rose to a seasonally adjusted annual rate of 0.83%, from -0.79% in the preceding quarter.