Strong revenue guidance from Infosys and firm global cues fortifes benchmarks

Boisterous benchmarks showcased an enthusiastic performance on Friday, by rallying over a percentage point and breaking many psychological levels in their northbound journey. Bourses traded fervently throughout the session gaining strength to strength, as investors continued hunt for fundamentally strong but oversold stocks. Frontline indices managed to extend their rally for fourth straight day with Sensex settling above its crucial 20,500 mark, while Nifty ended near its psychological 6,100 bastion as investors went for hefty across the board buying. Sentiments remained up-beat since morning after the information technology (IT) major Infosys revised its FY14 revenue guidance to 9-10% from 6-10% in dollar terms. Meanwhile, Infosys, on the consolidated basis, registered a growth of 1.60% in net profit at Rs 2407 crore as compared to Rs 2369 crore in the same quarter previous year. Total income of the company rose 27.56% to Rs 13475 crore for quarter under review as against Rs 10564 crore in corresponding quarter previous year.

Some strength also came in after Reserve Bank of India governor Raghuram Rajan said that Indian companies with high foreign currency debt could face difficulties but do not pose system-wide risks to the country's financial sector. Moreover, investors shrugged off report that Ficci has lowered the country’s economic growth forecast for 2013-14 fiscal to 5 percent from 6 percent projected in July.

Supportive cues from US markets provided the early leads to local markets, while firm opening in European counterparts too supported the domestic markets with CAC, DAX and FTSE all edging higher in early deals after Republicans signalled they were willing to make concessions on America's debt limit debate. Rally in Asian markets too boosted investors’ confidence with Japanese Nikkei ending by around one and a half percent as the yen weakened against the dollar.

Back home, traders were eyeing the Industrial growth numbers; the Index of Industrial Production (IIP) data for August though will be announced later in the day but is likely to remain on growth path after surprising in last month with a growth of 2.6 percent and coming out of contraction mood. Appreciation in Indian rupee too provided some support to the markets. The Indian rupee was trading near at 61 per dollar at the time of equity markets closing as against previous close of 61.27 per dollar.

Meanwhile, stocks related to banking sector edged higher after the Reserve Bank of India allowed banks to raise funds from global multilateral institutions until 30 November 2013, as long as the money raised is for general banking purposes and not for capital enhancement. Additionally, realty stocks remained on buyers’ radar after the stock market regulator Securities and Exchange Board of India (SEBI) on October 10 issued draft of guidelines on the setting up of real-estate investment trusts (REITs).

The NSE’s 50-share broadly followed index Nifty rose by around eighty points to end just shy of its psychological 6,100 level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged over two hundred and fifty points to reclaim the psychological 20,500 mark.

Moreover, broader markets too traded with traction and snapped the day’s trade in the green with gain of around half a percent. The market breadth remained in favour of advances, as there were 1,335 shares on the gaining side against 1,131 shares on the losing side, while 162 shares remained unchanged.

Finally, the BSE Sensex surged 255.68 points or 1.26%, to settle at 20528.59, while the CNX Nifty gained 75.25 points or 1.25% to settle at 6,096.20.

The BSE Sensex touched a high and a low of 20559.69 and 20368.06, respectively. The BSE Mid cap index was up by 0.33% and Small cap index gained 0.47%.

The top gainers on the Sensex were ICICI Bank up 5.01%, Infosys up 4.79%, L&T up 4.26%, Tata Motors up 3.60% and Maruti Suzuki up 3.01%, on the flip side, Coal India down 3.88%, Tata Power down 2.56%, NTPC down 2.47%, Hindalco Inds down 2.39%, and Sun Pharma down 2.14%, were the top losers on the index. 

On the BSE Sectoral front, IT up by 3.12%, Bankex up by 3.09%, Capital Goods up by 2.77%, Realty up by 2.66%, and Teck up by 2.56%, were the top gainers, while Metal down by 1.49%, Power down by 1.10%, Healthcare down by 1.09%, FMCG down by 0.92%, and Consumer Durables down by 0.65%, were the top losers on the sectoral front.

Meanwhile, concerned over acute liquidity crunch faced by the Indian fertiliser sector, fertiliser ministry has sought additional Rs 35,000 crore funds towards subsidy payment to companies. Fertiliser Minister Srikant Jena in a letter written to government has said that in order to address present liquidity concern of the sector, there is a need of immediate release of extra funds as the Department of Fertiliser (DoF) did not get funds under the first supplementary grants and second supplementary grants would be made available only in December. The DoF has been able to pay subsidy dues till May to fertiliser firms manufacturing urea locally, while for non-urea fertilizers, it can pay subsidy only till this month.

So far this fiscal, the DoF has been allocated Rs 70,586 crore funds towards subsidy payment to fertiliser firms against the total demand of Rs 1,05,497 crore for the 2013-14 fiscal. Rising fears for closure of two state-run firms, the fertilizer ministry added that state-run National Fertilisers (NFL) and Madras Fertilisers (MFL) could face closure by the end of this month due to liquidity crisis. Furthermore, private fertilizer firms are also facing the liquidity crunch as the government has exhausted its funds towards subsidy payment on indigenous urea.

Earlier in September, the Finance ministry had agreed to pay only Rs 5,500 crore subsidy under a special banking arrangement (SBA) as against Rs 12,000 crore sought by the Department of Fertilisers (DoF). Meanwhile, in order to support the industry, the Fertiliser Association of India (FAI) has recently filed a petition in the Delhi High Court seeking 14.75 percent interest on the delayed subsidy payments.

The CNX Nifty touched a high and low of 6,107.60 and 6,046.40 respectively.

The top gainers on the Nifty were ICICI Bank up by 5.37%, Bank of Baroda up by 4.94%, Infosys up by 4.82%, Larsen & Toubro up by 4.64% and HCL Technologies up by 3.52%. On the other hand, Coal India down by 4.03%, Hindalco Industries down by 2.82%, NTPC down by 2.77%, Tata Power down by 2.63%, and Sun Pharmaceuticals Industries down by 2.30%, were the top losers.

The European markets were trading in green, France’s CAC 40 was up by 0.02%, Germany’s DAX was up by 0.28%, and United Kingdom’s FTSE 100 was 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.