Post Session: Quick Review

After taking a breather in the last session, Indian equity markets resumed their northbound journey on Tuesday. However, what looked as splendid session in early trade, turned out to be merely a flat one with modest gains, as most of euphoria witnessed on account of RBI’s liquidity measures fizzled out by the close of the trade.  RBI’s move to reduce the marginal standing facility (MSF) rate by a further 50 basis points from 9.5% to 9.0% with immediate effect and decision of providing additional liquidity in the markets through term repos of 7-day and 14-day tenor for a notified amount equivalent to 0.25% of NDTL of the banking system through variable rate auctions on every Friday beginning October 11, led a rally at Dalal Street in the first half of the trading session. However, the indices started paring gains with the negative start of European markets, which despite receiving positive hand over from Asian peers, were trading lower for second consecutive session, near the fourth month low level, as investors watched the start of the US earnings-reporting season and efforts to end a government shutdown in the world’s largest economy.  Meanwhile, Asian shares clocked a positive close on Tuesday after data showed China's services industry continued expansion, soothing to some extent nerves jarred by fears of a US debt default as the US government shutdown entered a second week.

Closer home, benchmarks although recovered from afternoon’s low level, but failed to regain similar kind of exuberance as witnessed in the early deals when Sensex and Nifty surpassed the crucial 20,000 and 5,950 levels respectively. Profit-booking in banking counter, which had fuelled rally at Indian equity markets in the early deals after the Reserve Bank reduced the marginal standing facility rate to improve liquidity in the system, mainly tapered with some of the bourses gains. Thus, by the close, Sensex and Nifty, gaining over quarter of a percentage, settled above the crucial 19,950 and 5,900 respectively.

However, the positive momentum of bourses by the close of trade was sustained by stocks belonging to Realty, Capital Goods and Fast Moving Consumer Goods counters, which witnessing maximum buying interest, emerged as top gaining indices.  On the flip side, stocks from Metal, Information Technology and Public Sector Undertaking counters were the weak spells of the trade. The overall market breadth on BSE ended in the favour of advances which thumped declines in the ratio of 1276:1141; while 147 shares ended unchanged. (Provisional)

The BSE Sensex gained 88.51 points or 0.44 to settle at 19983.61.The index touched a high and a low of 20150.27 and 19936.72 respectively.  Among the 30-share Sensex, 13 stocks gained, while 16 stocks declined, while 1 stock ended unchanged. (Provisional)

The BSE Mid cap and Small cap indices ended higher by 0.19% and 0.53% respectively. (Provisional)

On the BSE Sectoral front, Realty up by 1.57%, Capital Goods up by 1.32%, FMCG up by 0.78%, Power up by 0.76% and Bankex up by 0.67% were the top gainers, while Metal down by 0.80%, IT down by 0.25%, PSU down by 0.06% were the losers. (Provisional)

The top gainers on the Sensex were Tata power up by 2.69%, Bharti Airtel up by 2.62%, L&T up by 2.42%, ITC up by 2.19% and  ICICI Bank up by 2.04%, while, Hindalco Industries down by 1.81%, SBI down by 1.46%, SSLT down by 1.27%, Coal India down by 1.20% and  Tata Steel down by 1.13% were the top losers in the index. (Provisional)

Meanwhile, coming as a bolt out of the blue, the Reserve Bank of India (RBI) after a review of evolving liquidity conditions and in continuation of calibrated withdrawal of exceptional measures undertaken since July 2013, reduced the marginal standing facility (MSF) rate by a further 50 basis points from 9.5% to 9.0% with immediate effect. 

Further, the central Bank has also decided providing additional liquidity in the markets through term repos of 7-day and 14-day tenor for a notified amount equivalent to 0.25% of net demand and time liabilities (NDTL) of the banking system through variable rate auctions on every Friday beginning October 11, 2013.

The latest measures suggests of RBI’s growing comfort with Indian currency’s current level of Indian currency which after strengthening considerably,  depreciated  a bit on Monday.  Earlier, too in its Mid-Quarter Review of September 2013, RBI in its effort to normalise liquidity conditions, reduced the marginal standing facility (MSF) rate by 75 basis points from 10.25% to 9.5% and later decided to conduct open market purchase operations of Rs. 9,974 crore were conducted today to inject liquidity into the system.

These latest measures also come at time when there is weakness in American currency, stuck close to 8-month lows against a basket of major currencies as the partial US government shutdown continues with no signs of a softening in the positions of politicians over the debt-ceiling limit or budget impasse.

India VIX, a gauge for markets short term expectation, lost 1.04% at 26.55 from its previous close of 26.83 on Monday. (Provisional)

The CNX Nifty gained 22.55 points or 0.38% to settle at 5,928.40. The index touched high and low of 5,981.70 and 5,913.00 respectively. Out of the 50 stocks on the Nifty, 23 ended in the green, while 27 ended in the red.

The major gainers of the Nifty were BHarti Airtel up by 2.51%, L&T up by 2.21%, ITC up by 2.09%, Jindal Steel up by 2.04% and ICICI Bank up by 2.00%. The key losers were BPCL down by 3.23%, Hindalco Industries down by 2.05%, SBI down by 2.02%, IDFC down by 1.93% and BHEL down by 1.44% (Provisional)

Most of the European markets were trading in red with, France’s CAC 40 down by 0.53%, the United Kingdom’s FTSE 100 down by 0.65% and Germany’s DAX down by 0.18%.

All the Asian markets concluded Tuesday’s trade in green despite a budget gridlock in Washington. Shanghai Composite resumed trading after the National Week public holiday. China’s non-manufacturing purchasing managers’ index (PMI) rose to 55.4 percent in September from 53.9 percent for August, according to official data released. A PMI reading of more than 50 percent indicates expansion in non-manufacturing activity, while a reading below 50 percent indicates contraction. Investors are now looking ahead to trade and inflation data, out over the weekend and early next week, to see whether China will produce further signs of an economic recovery that have helped support stocks in recent weeks.

Bank Indonesia held its benchmark reference rate unchanged for the first time since May, thanks to encouraging data and developments that have eased pressure on the ailing rupiah. Between June and September, the central bank had raised the rate 150 basis points to 7.25 percent to battle inflation and boost the battered currency. Indonesia’s current account deficit is likely to be 3.4% of gross domestic product this year, central bank governor stated. The deficit hit 4.4% of GDP in the second quarter, helping drive down sentiment about the rupiah, which is now Asia’s worst performing currency.

Japan’s current account balance rose less-than-expected last month. The Ministry of Finance stated that Japan’s Current Account rose to a seasonally adjusted 0.35T, from 0.33T in the preceding month. Hong Kong foreign currency reserve assets amounted to $303.5 billion at the end of September, down from $303.9 billion in August, the Monetary Authority reported. The total foreign currency reserve assets represent more than seven times the currency in circulation, or about 51% of Hong Kong dollar M3. The Monetary Authority of Singapore will probably refrain from easing monetary policy this month as taming inflation takes priority over reviving economic growth.