Benchmarks extend northward journey to fifth day in a row; Nifty surpasses 6,100 mark

Extending their northward journey to fifth consecutive day, Indian equity benchmarks snapped the session with gain of over quarter a percent and frontline gauges surpassing their crucial 20,600 (Sensex) and 6,100 (Nifty) levels, supported by buying in software and technology counters after upbeat results of bellwether Infosys last week. Some support also came in with Finance Minister P Chidambaram questioning IMF’s low growth projection of 3.8 percent for India for the current fiscal and saying that the government will not hesitate to take difficult decisions to contain fiscal and current account deficits. Meanwhile, foreign institutional investors (FIIs) bought shares worth a net Rs 1010.45 crore on Friday, October 11, 2013.

However, profit booking was seen at higher levels as higher-than-expected headline inflation in September weighed on market sentiment. September Wholesale Price Index (WPI) grew at its fastest pace in seven months at 6.46% against 6.1% in August. July WPI inflation was revised to 5.85% versus 5.79%. Onions drove up inflation as prices rose by a massive 322% against 244% increase in August. Some cautiousness also crept in on the back of lower than expected IIP numbers of August, which was announced late Friday and came at a meager 0.6% versus a robust 2.8% in July. Meanwhile, Indian rupee weakened ahead of the Thursday’s deadline for the US debt ceiling.

Global cues too remained pessimistic with most of the Asian markets ending in the red amid concerns about the political impasse in the US on the debt ceiling issue. However, Chinese market remained higher by over a percent despite the data showing China’s export growth unexpectedly fizzled in September. Moreover, European indices were trading mostly lower with investors taking a cautious stance after US politicians failed over the weekend to resolve budget issues and the world's biggest economy moving closer towards a debt default.

Back home, sentiments once again turned up-beat with investors piling up positions in banking stocks after Reserve Bank of India’s (RBI) governor, Raghuram Rajan announced big reforms in the offing for the banking sector. He said that RBI will soon come out with major reforms in the banking sector that will allow foreign banks to enter India in a big way and even take over domestic lenders. Meanwhile, index heavyweight Reliance Industries too ended in green ahead of Q2 earnings, slated to be released later in the evening. Stocks related to auto sector too remained on the buyers’ radar on expectations of higher demand during the ongoing festive season.

The NSE’s 50-share broadly followed index Nifty rose by over fifteen points to end above its psychological 6,100 level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged around eighty points to surpass the psychological 20,600 mark.

Broader markets too traded with traction and snapped the day’s trade in the green with gain of over half a percent. The market breadth remained in favour of advances, as there were 1,291 shares on the gaining side against 1,130 shares on the losing side, while 154 shares remained unchanged.

Finally, the BSE Sensex gained 78.95 points or 0.38%, to settle at 20607.54, while the CNX Nifty added 16.50 points or 0.27% to settle at 6,112.70.

The BSE Sensex touched a high and a low of 20645.94 and 20497.88, respectively. The BSE Mid cap index was up by 0.62% and Small cap index gained 0.51%.

The top gainers on the Sensex were TCS up 4.27%, Wipro up 2.58%, Infosys up 1.52%, Tata Motors up 1.48% and HDFC Bank up 1.08%, on the flip side, Hindalco Inds down 3.15%, Tata Steel down 1.88%, Cipla down 1.75%, Gail India down 1.71%, and BHEL down 1.56%, were the top losers on the index. 

On the BSE Sectoral front, IT up by 2.32%, Teck up by 1.82%, Bankex up by 0.55%, Auto up by 0.45%, and Oil & Gas up by 0.35%, were the top gainers, while Metal down by 0.64%, FMCG down by 0.57%, Capital Goods down by 0.42%, Healthcare down by 0.36%, and Realty down by 0.35%, were the top losers on the sectoral front.

Meanwhile, in order to increase penetration of foreign banks in the country, the Reserve Bank of India (RBI) will soon unveil major reforms in the banking sector that will allow foreign banks to enter India in a big way. The RBI has planned to enhance the penetration level of Indian banking industry as it plays an important role in the economic development of the country and is the most dominant segment of the financial sector. Banks help channel savings to investments and encourage economic growth by allocating savings to investments that have potential to yield higher returns.

The RBI governor Raghuram Rajan has said that the reform to facilitate entry of foreign banks in India is a part of the five pillars of reforms, which the RBI is going to implement in the next few years. By adding further, the governor said that global banks will have to enter in domestic market through one route either by branch network or fully owned subsidiary as it will simplify RBI regulatory function. The RBI would allow a lot of freedom for foreign banks having wholly-owned subsidiaries structure and will come up with details for these banks in the next couple of weeks, he added.

Rajan further added that financial inclusion, monetary policy framework and deepening of Indian markets are another area of policy reforms. Referring to RBI monitory policy framework, he said that ordinary monetary policy would be focused on containing inflation and not directed towards external sectors as the price situation was an issue for the economy. Meanwhile, the governor has expressed need to make monetary policy framework more explicit to bring it up to modern standards of transparency and credibility.

The CNX Nifty touched a high and low of 6,124.10 and 6,082.90 respectively.

The top gainers on the Nifty were TCS up by 4.55%, Ambuja Cements up by 2.77%, Wipro up by 2.41%, ACC up by 2.27% and Bank of Baroda up by 1.63%. On the other hand, Hindalco Industries down by 3.24%, Asian Paints down by 3.02%, GAIL (India) down by 2.14%, Cipla down by 2.06%, and Tata Steel down by 1.96%, were the top losers.

Most of the European markets were trading in red, France’s CAC 40 was down by 0.11%, and Germany’s DAX was down by 0.15%, while United Kingdom’s FTSE 100 was up by 0.10%

Most of the Asian markets barring Shanghai Composite concluded Monday’s trade in red weighed by an unexpected drop in exports from China and the threat of default by the world’s largest economy later this week. Hong Kong, Indonesian and Japanese markets remained closed for the trade today on account of public holidays. China’s exports fell 0.3% in September from a year earlier, ending two consecutive months of rises. Imports, however, increased 7.4% last month from a year ago, accelerating from August’s 7% rise. This left the country with a trade surplus of $15.2 billion in September, compared with $28.52 billion in August and 44.7% less than the same month last year.

Chinese consumer prices rose faster than expected in September though remaining within the government’s target range, while wholesale prices hit their 19th straight month of decline. China’s consumer price index rose 3.1% in September compared to the year-earlier period, accelerating from a 2.6% gain in August. Producer price inflation in China rose more-than-expected last month to an annual rate of -1.3%, from -1.6% in the preceding month.

Singapore’s gross domestic product rose unexpectedly in the last quarter to a seasonally adjusted 5.1%, from 3.8% in the preceding quarter. Retail sales in Singapore rose less-than-expected last month. The Statistics Singapore stated that Singaporean Retail Sales rose to a seasonally adjusted -7.8%, from -8.2% in the preceding month whose figure was revised down from -7.8%.