Markets went for a rally after seven days of lull

The last trading day of the week finally saw the tide turning in the favour of the bulls, when the Indian equity markets fervently rallied over a percent to break the seven days losing streak on Thursday.There were global as well domestic factors that took the markets higher for the day. While, the concern of FII outflow were eased with Janet Yellen defending the central bank’s unconventional asset purchase program, called it the best way to get the economy back to normal. On the other hand Reserve Bank of India (RBI) Governor Raghuram Rajan in his last day’s after market hour press meeting said that the 2 percent industrial growth in September is disappointing, but hoped that the economic situation would improve in the second half of the fiscal on the back of good monsoon and exports. He also said that any change in benchmark interest rate would depend upon the price situation and other macro-economic factors.

The global markets remained in jubilant mood, while the US markets shrugging early weakness turned higher overnight, the Asian markets surged rejoicing the testimony of Janet Yellen, defending quantitative easing that signaled stimulus will be maintained until the US economy improves. The European markets made a mixed start and slightly weighed on the sentiments of the local markets.

Back home, the mood of the markets remained jubilant since start and traders went for value buying at lower levels induced by positive global cues and assertion of RBI governor Raghuram Rajan’s assertion that the current account deficit (CAD) in the current fiscal will come down to $56 billion, less than 3 per cent of GDP, and lower than the government estimate of $70 billion and $88 billion reported last year. Rajan added the RBI will choose the most appropriate solution to settling the dollar swaps with oil companies when the time comes and soothed the nerves of traders who were worried on rise in dollar against rupee. However, some profit booking emerged during the noon trade after the WPI inflation numbers were announced. India's main inflation gauge, based on monthly WPI, accelerated to highest level since February at 7% for the month of October as against 6.46% (Provisional) for the previous month of September and 7.32% during the corresponding month in the previous year. Markets came off their day’s high on the concern of another rate hike by RBI in view of the rising inflation. Though, the volume remained on higher side of about 1.60 lakh crore and the broader indices outperformed the benchmarks. Sectorally the day was of the rate sensitives and led by auto, bankex and realty surged by over two percent, however defensive healthcare and IT gauges suffered minor cuts on the BSE.

Finally, the BSE Sensex surged by 205.02 points or 1.02%, to settle at 20399.42, while the CNX Nifty gained 66.55 points or 1.11% to settle at 6,056.15.

The BSE Sensex touched a high and a low of 20568.99 and 20348.27, respectively. The BSE Mid cap index was up by 1.06%, while the Small cap index gained 1.09%.

The top gainers on the Sensex were Tata Motors up 5.52%, Tata Steel up 4.58%, ICICI Bank up 3.58%, Mahindra & Mahindra up 3.36%, and Hero MotoCorp up 2.34%, on the flip side Coal India down 3.81%, Cipla down 2.05%, Sun Pharma down 1.34%, TCS down 1.29%, and Gail India down 1.04%, were the top losers on the index. 

On the BSE Sectoral front, Auto up by 2.91%, Bankex up by 2.66%, Realty up by 2.28%, Capital Goods up by 1.88%, and Power up by 1.73%, were the top gainers, while Healthcare down by 0.39% and IT down by 0.11%, were the only losers on the sectoral front.

Meanwhile, in a move to enhance country’s service exports, the government would soon come out with an action plan for five major service sectors such as entertainment, logistics, IT, tourism and healthcare. The move is aimed to boost exports from these sectors as the commerce ministry is of the view that exports basket of India's service sector is not well diversified, neither in terms of services categories nor in terms of the markets they serve. The ministry wants to enhance service exports through diversification and tapping of new markets.

Commerce Secretary S R Rao has said that besides IT and telecommunication sectors, there is a need to focus on sectors such as healthcare, tourism and financial services as well. In order to suggest steps to boost services exports, the ministry’s action plan will have some provisions, which require approval from cabinet and parliament. The commerce ministry has also organised a two day conclave during which experts have given their opinions on different sectors. The move is helping the ministry in preparing the action plan. Recently, the government has asked the service exporters to explore new markets such as Africa as the share of India's services sector in global trade is still very low.

Furthermore, the government has also taken an initiative in order to properly capture the data on the services sector, a move which will help frame policies on the sector.

Indian Services sector contributes around 60 percent to the GDP, 35 percent to employment and 40 percent to exports. During 2012-13, Indian service sector exports stood at $146 billion. Further, the sector accounted for over 50 percent of Foreign Direct Investment (FDI) into the country. Meanwhile, FDI into Indian services sector has declined by 47.5 percent to $1.19 billion during the April-August period of 2013 as compared to $2.28 billion in the same period last year amid rising concerns over the declined outsourcing business in India.

The CNX Nifty touched a high and low of 6,101.65 and 6,036.65 respectively.

The top gainers on the Nifty were Axis Bank up by 6.06%, Tata Motors up by 5.34%, Jaiprakash Associates up by 5.09%, Tata Steel up by 4.84% and Bank of Baroda up by 3.76%. On the other hand, Coal India down by 3.54%, Cipla down by 2.33%, Sun Pharmaceuticals Industries down by 1.82%, Asian Paints down by 1.62%, and TCS down by 1.11%, were the top losers.

The European markets were trading in green, France's CAC 40 was up by 0.76%, Germany's DAX was up by 0.86%, and United Kingdom's FTSE 100 was up by 0.81%. 

The Asian markets concluded Thursday’s trade in green after Federal Reserve chair nominee Janet Yellen released remarks suggesting the central bank should continue supporting the US economy with stimulus. Japan’s gross domestic product grew at an annualized rate of 1.9% in the three-month period that ended in September. Although the result represents a sharp slowdown from the second quarter, when the economy grew by 3.8%, the lower number was anticipated. The growth data is the latest check on the progress of a range of pro-growth policies in Japan, known as Abenomics. These measures include aggressive monetary easing from the Bank of Japan that has pushed down the value of the yen.

China’s fiscal revenue growth accelerated for three months in a row in October amid a rebound in the world’s second-largest economy. The revenue, comprising income of the central and local governments, climbed 16.2 percent year on year to 1.2 trillion yuan ($197 billion) last month. The revenue grew 13.4 percent in September and 9.2 percent in August. South Korea's central bank kept its benchmark interest rate steady at 2.50%, standing pat for a sixth straight month amid caution over the country’s economic recovery and benign inflation. The last rate move was a surprise quarter-percentage-point rate cut in May, when the government also introduced a $16 billion extra budget, seeking to revive an economy that grew 2.0% in 2012, the slowest in three years.