Benchmarks resume northward journey; Bank, metals lead rally

Boisterous benchmarks, resuming their northward journey after a day of break, staged an enthusiastic performance on Friday, by rallying over two percentage points and breaking lots of psychological levels in their northward rally. Sentiments remained up-beat since beginning as key bourses opened with a huge gap and there appeared not even an iota of profit booking in the session as the benchmarks managed to fervently gain from strength to strength with investors continued hunt for fundamentally strong stocks. Frontline indices managed to settle near their crucial 6,200 (Nifty) and 20,900 (Sensex) bastions as investors took to hefty across the board buying. Sentiments got bolstered after study commissioned by market regulator Securities and Exchange Board of India (SEBI) suggested lowering of securities transaction tax (STT) to boost the capital market. Moreover, appreciation in Indian rupee in early deals too supported the markets positively.

Supportive cues from US markets also supported the local markets initially, as sentiments got boosted report of decline in initial jobless claims and rise in regional manufacturing activity. Meanwhile, Asian markets too ended mostly in the green with Chinese Shanghai ending higher after the nation’s economy grew 7.8% in the third quarter, its fastest pace this year and in line with expectations, as firmer foreign and domestic demand lifted factory production and retail sales. Rally in Indian markets extended further after European counterparts too opened in the green.

Back home, the market sentiment was boosted by data showing foreign institutional investors (FIIs) bought shares worth a net Rs 821.50 crore from the equity markets on October 17, 2013. Frontline gauges extended their rally in late trade as investors continued to pile-up positions in metal stocks. Scrip like Steel Authority of India, Tata Steel, Jindal Steel and Power, Sesa Sterlite, Hindustan Zinc, Hindalco and JSW Steel edged higher after China’s economy grew at its fastest pace this year for the quarter ended September. Stocks related to banking counter too remained on buyers’ radar with scrip like ICICI Bank, State Bank of India, Federal Bank, Indusind Bank, Bank of Baroda, Canara Bank, Kotak Mahindra Bank all edging higher on expectation that Reserve Bank of India (RBI) would increase the cap of the amount that banks could borrow through repo window in its upcoming monetary policy review on October 29, 2013. Meanwhile, some support also came in from buying in public sector oil marketing companies after crude oil prices eased to three months low on demand concern. Moreover, Aivation stocks too traded jubilantly after crude oil prices eased and rupee strengthened against the dollar.

The NSE’s 50-share broadly followed index Nifty rose by over one hundred and forty points to end above its psychological 6,150 level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged around four hundred and seventy points to surpass the psychological 20,800 mark.

Broader markets too traded with traction and snapped the day’s trade in the green with gain of around a percent. The market breadth remained in favour of advances, as there were 1,406 shares on the gaining side against 1,075 shares on the losing side, while 171 shares remained unchanged.

Finally, the BSE Sensex surged 467.38 points or 2.29%, to settle at 20882.89, while the CNX Nifty gained 143.50 points or 2.37% to settle at 6,189.35.

The BSE Sensex touched a high and a low of 20932.23 and 20486.78, respectively. The BSE Mid cap index gained 0.99% and Small cap index was up by 0.66%.

The top gainers on the Sensex were Sesa Sterlite (SSLT) up 6.05%, Tata Steel up 5.92%, ICICI Bank up 4.44%, L&T up 4.19% and HDFC Bank up 3.46%, on the flip side, Bajaj Auto down 0.56%, was the only loser on the index. 

On the BSE Sectoral front, Bankex up by 3.93%, Metal up by 3.32%, Capital Goods up by 3.03%, Realty up by 2.81%, and Oil & Gas up by 2.07%, were the top gainers, while there were no losers on the sectoral front.

Meanwhile, the government has reduced the import tariff value of gold and silver to $418 per 10 gram and $699 per kg, respectively, in line with global rates of the precious metals, which could lead to some softening in the price of the precious metal. Tariff value or the base price is set to determine the customs duty on the precious metal and to prevent under invoicing. Earlier, tariff value was fixed at $436 per 10 gram for gold and $702 per kg for silver during the last fortnight. Further, the government’s move will provide some respite to consumers in ongoing festival season in the country.

However, rising gold import has become a cause of concern for the government as it remains second major factor after crude oil for widening the current account deficit (CAD) of the country. Indian CAD widened to a record high of 4.9 percent of GDP in the April-June quarter, 2013. The government has set target to contain country’s CAD at 3.7 percent of GDP for the current fiscal.

Meanwhile, the government’s measures to contain the gold imports have started yielding as imports of gold and silver plunged more than 80% to $0.8 billion in September from $4.6 billion a year earlier. Recently, apex bank has introduced 80/20 rule under which 20% of all gold imports by jewellers has to be re-exported. India’s gold import is likely to come down to between 800-850 tonnes from 950 tonnes in FY13 on the back of sharp hike in import duty by the government and restrictions by the RBI.

The CNX Nifty touched a high and low of 6,201.45 and 6,070.90 respectively.

The top gainers on the Nifty were IndusInd Bank up by 6.39%, Tata Steel up by 6.09%, Sesa Sterlite up by 5.97%, Axis Bank up by 5.55% and Jaiprakash Associates up by 5.14%. On the other hand, Bajaj Auto down by 0.02 was the only loser.

The European markets were trading in green, France’s CAC 40 was up by 0.49%, Germany’s DAX was up by 0.14%, and United Kingdom’s FTSE 100 was up by 0.28%.

Most of the Asian markets barring Nikkei 225 concluded Friday’s trade in green following a batch of economic data from China that were roughly in line with expectations. While Chinese data showed the economy grew at its fastest clip of the year in the third quarter, more recent statistics for September suggested a mild slowdown is now underway. China’s gross domestic product was 7.8% higher in the July-September quarter compared to a year earlier, accelerating from the second quarter’s 7.5% increase, and a 7.7% rise in the first quarter, the National Bureau of Statistics. Industrial production in China, which measures output at factories, workshops and mines, gained 10.2 percent in September year-on-year, the National Bureau of Statistics stated, while retail sales, a key indicator for consumer spending, was up 13.3 percent. China's business climate index, a major gauge of the country's macroeconomic outlook, rebounded slightly in the third quarter. The business climate index was 121.5 points for the third quarter, up 0.9 points from the previous quarter. Besides, fixed asset investment, a measure of government spending on infrastructure, was up by 20.2 percent during the first nine months of the year.

The volume of Hong Kong’s domestic exports dropped 11.3% in August, compared to the same month last year, while that of goods re-exports fell by 1.6%, the Census & Statistics Department announced. Taken together, the volume of total exports of goods decreased by 1.7%, while the volume of goods imports was almost unchanged. The prices of total exports of goods for the month increased by 1.1% year-on-year, while the prices of imports of goods went up 0.5%. Indonesian bonds rose this week, pushing the 10-year yield to the lowest level in almost three months, as speculation that Federal Reserve will delay tapering stimulus drove inflows.