Buying in late trade help benchmarks to keep their head above water

Key domestic benchmarks managed to keep their head above water on Monday, extending their gaining streak for the second straight day, after a stirring tussle between bulls and bears throughout the session. Buying which emerged in late trade mainly acted as saving grace for domestic equity markets and helped them to close at highest level since November 2010. Overall, sentiments remained up-beat as some support came in from Planning Commission Deputy Chairman Montek Singh Ahluwalia’s statement that Current Account Deficit is likely to be lower than the projection of 3.8 percent of the GDP and India will be in a better position to neutralise the impact of the tapering of monetary stimulus by the US Fed. Some boost also came in after Reserve Bank of India (RBI) said that it has no immediate plan to close the dollar-swap window for oil companies and it will be done in a calibrated manner.

However, gains remained capped as investors booked profit in software and technology counters post some encouraging second quarter earnings. Depreciation in Indian rupee against dollar too weighed down sentiments. The rupee extended fall to a second session, trading at 61.48 as compared to Friday’s close of 61.28, tracking mild weakness in Asian FX.

Supportive cues from US markets gave a good start to the local markets and sentiments remained up-beat on hopes that the Fed will delay the tapering of its bond buying programme due to the partial shutdown of the US government. Moreover, Asian markets ended mostly higher, Japanese Markets ending higher by around a percent after Bank of Japan’s Governor Haruhiko Kuroda maintaining an upbeat assessment of the economy, saying it is recovering moderately and will continue to do so. However, disappointing start of European markets took their toll on domestic sentiments and capped up-side.

Back home, sentiments also got some boost from report that foreign institutional investors (FIIs) bought shares worth a net Rs 1752.98 crore on October 18 2013. While, some support came in from capital goods counter after industry heavyweight L&T came up with a better than expected numbers during the weekend. Meanwhile, sugar stocks like Bajaj Hindusthan, Shree Renuka Sugar, Balrampur Chini, Mawana Sugars and Rana Sugars all edged higher during the trade on report that India’s sugar output dropped by 4.5% to 25.14 million tonnes in 2012-13 marketing year ended last month, due to lower crushing and recovery levels in key producing states. Additionally, stocks related to metal and mining counter remained on buyers’ radar as data last week showed acceleration in China’s GDP growth in Q3 September 2013.

The NSE’s 50-share broadly followed index Nifty rose by over fifteen points to end above its psychological 6,200 level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged above 10 points to end near the psychological 20,900 mark.

Broader markets, however, outperformed benchmarks and ended the session with a gain of around a percentage point. The market breadth remained in favour of advances, as there were 1,452 shares on the gaining side against 985 shares on the losing side, while 157 shares remained unchanged.

Finally, the BSE Sensex added 11.00 points or 0.05%, to settle at 20893.89, while the CNX Nifty gained 15.60 points or 0.25% to settle at 6,204.95.

The BSE Sensex touched a high and a low of 20970.92 and 20768.99, respectively. The BSE Mid cap index gained 0.86% and Small cap index was up by 1.27%.

The top gainers on the Sensex were L&T up 6.05%, Maruti Suzuki up 3.20%, Hindalco Inds up 3.10%, Tata Steel up 2.34% and SSLT up 1.97%, on the flip side, Jindal Steel down 3.66%, ITC down 2.63%, TCS down 2.21 %, BHEL down 1.52%, and Bharti Airtel down 1.14%, were the top losers on the index. 

On the BSE Sectoral front, Capital Goods up by 4.19%, Realty up by 2.96%, Metal up by 1.74%, Power up by 1.09 %, and PSU up by 0.91%, were the top gainers, while FMCG down by 1.22%, IT down by 0.53%, and Teck down by 0.33%, were only losers on the sectoral front.

Meanwhile, Planning Commission Deputy Chairman Montek Singh Ahluwalia has reassured government’s commitment to bring down the Current Account Deficit (CAD) to a more tolerable state and has said that CAD is likely to be lower than the projection of 3.8 percent of the GDP and India will be in a better position to neutralise the impact of the tapering of monetary stimulus by the US Fed

The government has proposed to bring the CAD down to $70 billion or 3.8% of the GDP from its all-time high of 4.8% of GDP or $88.2 billion reached during 2012-13.

Ahluwalia elaborating his assumptions said that “Taper is delayed, secondly the CAD looks good. By the time taper happens, we are going to look in much better shape. Now rupee has come to a much more maintainable position. So the threat on the rupee will be much less as and when the taper happens. So we will be in a better situation next year.”

Though, he also said that Finance Ministry made this projection of CAD six months ago probably on higher assumption of growth but the situation is that growth is low and the imports too are affected because of growth. However, in view of the growth grooming because of agriculture and its impact on non-agriculture demand which is not very import intensive then current account deficit may be lower.

The CNX Nifty touched a high and low of 6,218.95 and 6,163.30 respectively.

The top gainers on the Nifty were Asian Paints up by 8.81%, Larsen & Toubro up by 6.20%, DLF up by 5.94%, IDFC up by 4.82% and Maruti Suzuki India up by 3.55%. On the other hand, Jindal Steel & Power down by 3.54%, ITC down by 2.67%, TCS down by 2.07%, HCL Technologies down by 1.68%, and BHEL down by 1.52%, were the top losers.

Most of the European markets were trading in red, France’s CAC 40 was down by 0.34%, and Germany’s DAX was down by 0.11%, while United Kingdom’s FTSE 100 was up by 0.21%.

All the Asian markets barring Taiwan Weighted concluded Monday’s trade in green as sentiment was buoyed by hope of fresh measures from the Chinese government. The State Council notified that it will continue to deepen economic reform and transform the economy, pushing up technology stocks expected to benefit from new policies. South Korea and Malaysia signed a currency swap agreement worth $4.7 billion, in a move to encourage bilateral trade and help curb currency swings. In Hong Kong, rising prices of vegetables accelerated consumer prices by 4.6 percent in September over the same month a year earlier, compared with 4.5 percent in August. In the first nine months, the Composite CPI increased by 4.3 percent on year.  

Japan logged a record run of monthly trade deficits after the country’s energy bill soared in September, but exports to China were buoyant after a territorial dispute a year earlier hammered demand for Japanese goods. Japan’s trade deficit expanded 64.1 percent on-year to $9.5 billion in September as a weak yen pushed up import costs. The merchandise trade shortfall came to 932.1 billion yen ($9.5 billion) against a deficit the previous year of 568.2 billion yen. That was the 15th straight month of deficit, the longest spell since comparable data started in 1979. The Japanese Ministry of Economy, Trade and Industry stated that Japan’s All Industries Activity Index rose to a seasonally adjusted 0.3%, from 0.4% in the preceding month whose figure was revised down from 0.5%.