Post Session: Quick Review

Better than expected FY13-14 revenue guidance from IT bellwether Infosys worked wonders for Indian equity markets, which for third consecutive session registered a positive close. Highest closing of Infosys since April 2011, on account of company’s upward revision of guidance for the 2013-14 fiscal to 9-10% from 6-10% earlier, despite a marginal 1.6% rise in its consolidated net profit to Rs 2,407 crore for the second quarter ended September 30, 2013, led to the fireworks at Dalal Street ahead of the release of August IIP figures, which is expected to add up to the positive vibes. Meanwhile, rally of banking shares after Reserve Bank of India allowed lenders to raise funds from global multilateral institutions until November 30, also added to the upbeat mood for barometer gauges. Nevertheless, the relentless across the board value picking ensured that the frontline indices settle comfortably above the psychological 6,100 (Nifty) and 20,500 (Sensex) levels. Meanwhile, broader indices showing some degree of underperformance, ended with gains of over a percent. Besides a sanguine close to the session, markets for the week rallied over 3%, while broader indices too ended with smart gains of over 2%.

On the global front, Asian pacific  and European shares were in upbeat mood, as investors took a chance and cheered perceiving a progress in Washington to avert a possible default, even though questions remained over whether a deal could be  struck. Republican legislators, who have not passed budget funding, on Thursday offered a plan that would extend the US government’s borrowing authority for several weeks, staving off a default that could come as soon as October 17.

Closer home, optimistic statements from Finance Minister P Chidambaram, who expects economy to grow by 5 to 5.5% in the current financial year on the back of good monsoon, robust farm output and impact of reform measures undertaken by the government in past one year, also cheered markets. Additionally, Rupee appreciation to highest level since August 13 after HSBC slashed its USD/INR forecast for the end of the year to 62 from 65 previously, citing improvements in the current account deficit and measures to attract inflows, also heartened investors. On the BSE, Banking, Information Technology, Capital Goods and Realty pivotals garnered most of the attention, while Metal, Power and Health Care stocks were the top laggards. Rate sensitive Realty stocks also put up a good show after market watchdog Securities and Exchange Board of India (SEBI) issued draft guidelines to set up Real Estate Investment Trusts (REITs) in India, which could open up new funding channels for real estate assets in the country. The market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 1317: 1149, while 162 scrips remained unchanged. (Provisional)

The BSE Sensex gained 234.24 points or 1.16 % to settle at 20507.15.The index touched a high and a low of 20559.69 and 20368.06 respectively. Among the 30-share Sensex, 20 stocks gained, while 10 stocks declined. (Provisional)

The BSE Mid cap and Small cap indices ended higher by 0.28% and 0.48% respectively. (Provisional)

On the BSE Sectoral front, IT up by 3.14%, Bankex up by 2.94%, Capital Goods up by 2.89%, Teck up by 2.52% and Realty up by 2.42% were the top gainers, while Metal down by 1.66%, Power down by 1.23%, Health Care down by 1.20%, FMCG down by 1.09% and Consumer Durables down by 0.75% were the only losers in the space. (Provisional)

The top gainers on the Sensex were ICICI Bank up by 5.09%, Infosys up by 4.91%, L&T up by 4.48%, Tata Motors up by 3.30% and Maruti Suzuki up by 3.21%, while, Coal India down by 3.95%, Hindalco Industries down by 2.82%, Tata Power down by 2.80%, Sun Pharma down by 2.39% and SSLT down by 2.35% were the only losers in the index. (Provisional)

Meanwhile, with an aim to lure investments to the country’s dwindling realty sector, market watchdog Securities and Exchange Board of India (SEBI) has issued draft guidelines to set up Real Estate Investment Trusts (REITs) in India, which could open up new funding channels for real estate assets in the country. However, the regulator, in its draft note for a separate regulatory framework has allowed REITs only for large assets.

As per the draft guidelines, all the REIT Schemes will be close-ended real estate investment schemes that will invest in real estate, whose returns will be derived mainly from rental income or capital gains from real estate. The objective of REITs, to be registered as trusts with SEBI, will be to organize, operate and manage real estate collective investments.

Further, as per the proposal, A REIT will be first set up as trusts which will have trustees, sponsors, managers and a principal valuer. The trust, once formed, will initially apply for a SEBI registration and only after getting approval, will be allowed to offer units to the public and get the units listed, similar to initial public offering (IPOs) of equity shares, albeit in a different structure.

However, only those companies can come with IPO, whose assets size under the REIT is not less than Rs 1,000 crore ($160 million). Further, SEBI has called for a minimum initial offer size of Rs 250 crore and minimum public float of 25% to ensure adequate public participation and float in the units. Consequently, it is proposed that the minimum subscription and unit size would be Rs 2 lakh and Rs 1 lakh respectively.

The total REIT market size in the Asia-Pacific region is approximately $205 billion but India, so far has been unable to take advantage of this funding opportunity, mainly because of the lack of an existing regulatory framework. The country back in 2008 too, issued draft regulations for REITs, but they were withdrawn in favour of allowing asset management firms to launch real estate mutual funds, with that initiative failing tooIndia VIX, a gauge for markets short term expectation of volatility lost 8.84% at 23.59 from its previous close of 25.88 on Thursday. (Provisional)

The CNX Nifty gained 71.45 points or 1.19% to settle at 6,092.40. The index touched high and low of 6,107.60 and 6,046.40 respectively. Out of the 50 stocks on the Nifty, 27 ended in the green, while 23 ended in the red.

The major gainers of the Nifty were ICICI Bank up 5.37%, Bank of Baroda up by 4.94%, Infosys up by 4.82%, L&Tup by 4.64% and HCL Tech up by 3.52%. The key losers were Coal India down by 4.03%, Hindalco down by 2.82%, NTPC down by 2.77%, Tata Power down by 2.63% and Sun Pharmaceuticals down by 2.30%. (Provisional)

Most of the European markets were trading in green with, France’s CAC 40 up by 0.02%, Germany’s DAX up by 0.34% and the United Kingdom’s FTSE 100 up by 0.72%.

All the Asian markets concluded Friday’s trade in green as signs of progress in the US budget stalemate provided relief to markets. The House Republicans stated that they will offer a six-week extension to the nation’s borrowing limit in exchange for negotiations on spending. Japan and Hong Kong were both heading into a long weekend with public holidays on Monday. Bank Indonesia, the central bank, expects lending from commercial banks to slow further this year as consumers and corporations ease demand on the back of a depreciating rupiah and rising inflation. Lending growth expanded 22.2 percent in August from a year earlier, marginally down on July’s 22.3 percent. Japan’s Corporate Goods Price Index fell to a seasonally adjusted annual rate of 2.3%, from 2.4% in the preceding month. The Bank of Japan stated that Japan’s M2 Money Stock remained unchanged at a seasonally adjusted 3.8%, from 3.8% in the preceding month whose figure was revised up from 3.7%.

Chinese households expressed the highest confidence level so far this year in September. The China Wealth Index, compiled by the Bank of Communications to gauge sentiment among Chinese households, rose to 131 in September, up from 120 in July and 128 in May. A reading above 100 reflects optimism, and last month’s reading indicated people’s renewed hopes for a better economic performance. The deputy governor of the People’s Bank of China stated that economic growth in China is expected to be above 7.5 percent this year.