Markets end last day of October F&O expiry in great style

Thursday turned out to be a remarkable day of trade for Indian equity markets with both the frontline indices, after trading choppy for most part of the session, changed gears in late trade to end near their all time high. Earlier, the domestic markets made lackluster start tailing sluggish global cues as the Fed indicated that it may start paring stimulus sooner than previously forecasted. But, buying which emerged in last leg of trade helped key gauges to end the last day of Futures & Options expiry of October month in a great style, near their psychological 21,200 (Sensex) and 6,300 (Nifty) levels led by public sector banks such as State Bank of India, Punjab National Bank, Bank of Baroda, Bank of India, Union Bank of India etc, which edged higher on hopes of stabilizing asset quality and valuations. Sentiments also got some boost after Reserve Bank Governor Raghuram Rajan said that India now is in a better position to face the US Federal Reserve’s unwinding of its easy money policy whenever it takes place.

Global cues remained weak with all the Asian counters ending in the red after the US Federal Reserve’s latest policy outlook was deemed less dovish than some had wagered on, lifting both bond yields and the dollar. Moreover, weak opening in European market too dampened the sentiments, as better-than-estimated earnings offset speculations that the Federal Reserve may trim bond purchases sooner than estimated.

Back home, sentiments remained up-beat after foreign investors remained net buyers for 19th consecutive session on October 30, buying shares worth a net Rs 1016.77 crore. Some boost to the local bourses came in after investors continued buying public sector oil marketing companies viz. BPCL, HPCL and IOC after the recommendations of expert panel headed by former Planning Commission member Kirit S Parikh that Diesel prices should be hiked by a steep Rs 5 per litre, kerosene by Rs 4 a litre and cooking gas (LPG) rates by Rs 250 per cylinder immediately to cut fuel subsidy bill by Rs 72,000 crore. Also, it suggested that the number of subsidised cooking gas cylinders supplied to households in a year should be cut to 6 bottles of 14.2-kg from the current quota of 9.

Meanwhile, slew of strong second quarter result from public sector lenders too boosted the sentiments. Allahabad Bank reported a rise of 17.76% in its net profit at Rs 275.81 crore for the quarter ended September 30, 2013 as compared to Rs 234.20 crore for the same quarter in the previous year. Moreover, bank of India reported over two fold jump in its net profit at Rs 621.77 crore for the quarter ended September 30, 2013 as compared to Rs 301.85 crore for the same quarter in the previous year.

The NSE’s 50-share broadly followed index Nifty rose by around fifty points to end near its psychological 6,300 level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged by over one hundred and thirty points to end above the psychological 21,150 mark.

Broader markets too traded with traction and ended the session with a gain of around a percentage point. The market breadth remained in favour of advances, as there were 1,319 shares on the gaining side against 1,161 shares on the losing side, while 177 shares remained unchanged.

Finally, the BSE Sensex surged by 130.55 points or 0.62%, to settle at 21164.52, while the CNX Nifty gained 47.45 points or 0.76% to settle at 6,299.15.

The BSE Sensex touched a high and a low of 21205.44 and 20991.98, respectively. The BSE Mid cap index gained 1.43% and Small cap index was up by 0.53%.

The top gainers on the Sensex were SBI up 4.33%, Tata Steel up 2.45%, Gail India up 2.31%, Tata Power up 1.99% and ICICI Bank up 1.96%, on the flip side Dr Reddys Lab down 2.64%, Sun Pharma down 1.72%, Cipla down 1.16%, Mahindra & Mahindra down 0.97%, and Hindustan Unilever down 0.67%, were the top losers on the index. 

On the BSE Sectoral front, Consumer Durables up by 2.65%, PSU up by 2.47%, Bankex up by 1.93%, Metal up by 1.73%, and Oil & Gas up by 1.44%, were the top gainers, while Healthcare down by 1.26%, was the only loser on the sectoral front.

Meanwhile, the government has hiked the import tariff value of gold to $442 per 10 gram from $418 in line with global prices of the precious metal amid rising gold supply in domestic market during the festival season. Tariff value or the base price is set to determine the customs duty on the precious metal and to prevent under invoicing. However, the import tariff value of silver has been kept unchanged at $699 per kg. 

At present, gold is being sold at a high premium in domestic market owing to the supply crunch caused by government's measures to restrict the import of precious metal in an effort to check country’s widening current account deficit (CAD). Rising gold import has become a cause of concern for the government as it remains second major factor after crude oil for high CAD, which 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, the RBI has introduced 80/20 rule under which 20% of all gold imports by jewellers have to be re-exported and the government has hiked gold imports rates to 15%. India’s gold import is likely to come down to between 800-850 tonnes in current fiscal from 950 tonnes in FY13 on the back of sharp hike in import duty by the government and restrictions put by the RBI.

The CNX Nifty touched a high and low of 6,309.05 and 6,235.90 respectively.

The top gainers on the Nifty were Bank of Baroda up by 10.98%, PNB up by 9.44%, State Bank of India up by 4.35%, Jaiprakash Associates up by 4.14% and IDFC up by 3.46%. On the other hand, Dr. Reddy's Laboratories down by 3.49%, Ambuja Cements down by 2.80%, Sun Pharmaceuticals Industries down by 1.71%, Lupin down by 1.68%, and Ranbaxy Laboratories down by1.31%, were the top losers.

Most of the European markets were trading in red, France’s CAC 40 was up by 0.12%, while Germany’s DAX was down by 0.21%, and United Kingdom’s FTSE 100 was down by 0.42%.

The Asian markets concluded Thursday’s trade in red after the Federal Reserve left monetary policy unchanged, while China was weighed down by declines in banking stocks. Lenders in China were in focus after several of the country’s largest banks reported their third-quarter earnings, with profit growth continuing to decline as the sector faced a maturing economy and interest-rate pressure. The Bank of Japan kept its monetary policy unchanged by a unanimous vote, as was widely expected, while also keeping its inflation forecast steady. Bank of Japan raised its growth projection for the fiscal year beginning April 2014 from 1.3% to 1.5%. However, it held to its previous outlook for 1.9% core consumer inflation in fiscal 2015, excluding the effects of a new consumption-tax hike.

China’s international balance of payments showed a surplus in the third quarter of this year, marking the fourth straight quarter of surpluses. The surplus under the current account totaled $39.7 billion in the three months, the data released by the State Administration of Foreign Exchange showed. In Hong Kong, the total retail sales value in September, provisionally estimated at $35.8 billion, rose 5.1% year-on-year, the Census & Statistics Department reported. After netting out the effect of price changes over the same period, the total retail sales volume grew 4.9% in the month. The revised estimate of the value of total retail sales in August increased 8.1% over the same period a year earlier, while the volume of total retail sales grew 7.2%. Separately, government expenditure for the April-September period amounted to $201.6 billion, with $141.5 billion in revenue, resulting in a $60.1 billion deficit. Fiscal reserves stood at $673.8 billion as at September 30.