Bull goes berserk with a three digit rally at Dalal Street

Indian markets went for a stupendous rally on Monday, extending the gains what they gathered ahead of the long weekend. On Friday the regional markets surged taking cues from US Federal Reserve chair nominee Janet Yellen’s indication that she will continue to support the economy with stimulus measures, but the Indian markets missed the gains due to a public holiday and today was expected to be a catch-up. However, the markets got another boost with Chinese Communist Party signaling a bigger focus on fiscal concerns that gave a fillip to the regional markets and a gap-up one to the Indian markets. The local bourses got a shot in arm with the strength in rupee which moved higher after the Reserve Bank of India announced purchasing bonds worth Rs 8,000 crore this week under the open market operations (OMO) to inject liquidity in the system.

The global markets showed an enthusiastic performance after China unveiled its most sweeping reform agenda in more than 30 years, after a meeting of key Communist Party leaders in Beijing last week, which aims to transition China to a more free-market consumer economy with fewer social controls. While, the Japanese markets after a good start ended flat with a negative bias. However, the European markets made a soft start but were unable to hinder the unabated run of the local markets.

Back home, it was a three digit rally for both the indices with remarkable thing being that at no point of time there was any selling or choppiness, instead the gains enlarged with the progress of the trade, signifying the bullish sentiments of the traders. While, gains were spread across the board, the banking sector was the most jubilant with the RBI’s announcement of OMOs and RBI governor saying that he was heartened by the outcome of core CPI inflation. Bank Nifty gained the most in a day in percentage term since October 29. Meanwhile, Economic Affairs Secretary Arvind Mayaram said that the government is taking measures to give momentum to the growth process which was affected by the global financial crisis in 2008. However, he also noted that sectors like electricity, agriculture, education, healthcare and railways still suffer from serious visible competitive distortions. Traders’ mood remained firm despite United Bank of Scotland (UBS) downgrading India’s credit rating to ‘neutral’ from ‘overweight’. On the other hand, the financial services company upgraded China’s credit worthiness to ‘overweight’ from ‘neutral’. The IT pack after initial jitters  on rupee strength, moved higher taking cues from the report that China for the first time will allow foreign It companies in BPO sector. Broader markets too performed well with gain of about a percent.

Finally, the BSE Sensex surged by 451.32 points or 2.21%, to settle at 20850.74, while the CNX Nifty gained 132.85 points or 2.19% to settle at 6,189.00.

The BSE Sensex touched a high and a low of 20868.76 and 20570.59, respectively. The BSE Mid cap index was up by 1.18%, while the Small cap index gained 0.96%.

The top gainers on the Sensex were HDFC Bank up 4.15%, L&T up 3.90%, ITC up 3.61%, Hindalco Inds up 3.34%, and ONGC up 3.22%, on the flip side SSLT down 1.36%, Coal India down 1.15%, Cipla down 0.43%, and Bajaj Auto down 0.16%, were the only losers on the index.

On the BSE Sectoral front, Capital Goods up by 3.19%, Bankex up by 3.15%, FMCG up by 2.52%, Realty up by 2.41%, and Oil & Gas up by 2.34%, were the top gainers, while there were no losers on the sectoral front.

Meanwhile, in a move to improve the quality of information to shareholders by removing large-scale discrepancies found in the mandatory financial and other corporate disclosures made by listed companies, the Securities and Exchange Board of India (SEBI) is likely to issue guidelines soon on corporate disclosure requirements, which require timely disclosure of corporate governance reports such as shareholding data and other financial information.

A majority of the firms have been found to be non- compliant on multiple fronts with around 1,150 listed companies found to be violating model regulations for disclosing key details such as quarterly and annual financial results, while over 1,000 companies failed to comply with disclosure rules related to shareholding pattern.

Meanwhile, SEBI is taking a lot of measures to develop Indian financial markets. SEBI is planning to issue new set of guidelines soon to amend the present stock exchange listing agreement, following the recent changes made to the Companies Act. It will also soon notify new regulations for listing of start-ups and small and medium enterprises (SME) on stock exchanges without making an initial public offer (IPO) to develop fund-raising capabilities of such companies by providing better visibility, wider investor base and easier exit options for entities such as Angel Investors, Venture Capital Funds and Private Equities. Furthermore, the market regulator has also relaxed the norms for primary issuance of debt securities by companies.

The CNX Nifty touched a high and low of 6,196.80 and 6,110.40 respectively.

The top gainers on the Nifty were Jaiprakash Associates up by 6.72%, Larsen & Toubro up by 4.31%, ITC up by 3.83%, HDFC Bank up by 3.78% and Axis Bank up by 3.70%. On the other hand, SSLT down by 1.55%, Coal India down by 1.40%, NMDC down by 0.42%, Lupin down by 0.40%, and Bajaj Auto down by 0.38%, were the top losers.

The European markets were trading in green, France's CAC 40 was up by 0.44%, Germany's DAX was up by 0.38%, and United Kingdom's FTSE 100 was up by 0.16%. 

The Asian markets barring Nikkei 225 concluded Monday’s trade in green after China published a broad outline for economic reform. Chinese markets had their first opportunity to react to a reform plan that was released by Beijing late Friday. Beijing’s announcement outlined a broad restructuring of the economy, saying that the government would open the financial sector and relax restrictions on investment. In addition, the government pledged to improve the country’s initial-public-offering system, adopting a more market-oriented approach to where companies can list according on their merits. Average prices of new homes in 70 Chinese cities in October rose to another fresh high, as demand for homes remains strong. For the ninth consecutive month, growth in median home prices rose in October from year-ago levels, data released by the National Bureau of Statistics showed, after a turnaround that began in January. Prices were up in 69 of the 70 cities in October, unchanged from the 69 in September.

Thailand’s gross domestic product fell unexpectedly last month to a seasonally adjusted 2.7%, from 2.8% in the preceding month. The unemployment rate in Hong Kong remained unchanged last month. The Census and statistics department stated that Hong Kong Unemployment Rate remained unchanged at a seasonally adjusted 3.3%, from 3.3% in the preceding month. Debt ratings agency Fitch affirmed Indonesia’s debt rating as investment grade, expecting the country’s economy expansion to slow next year as it struggles to narrow the current-account deficit. Fitch maintained Indonesia’s BBB- rating, or the lowest investment grade level. The rating has a stable outlook, which means a sudden downgrade or upgrade is unlikely in the next two years