Post Session: Quick Review

Friday’s session turned out to be fabulous one for the Indian equity markets, which scaled fresh highs for yet another session, as key benchmark stock indices hit record levels. Benchmark indices extended their winning streak and hit fresh record high as pre-election rally dubbed as a 'hope rally' continued amid mostly positive Asian counterparts and sustained foreign fund inflow.  Overseas investors, the main market driver, extended their buying streak to a 15th straight day and bought Indian shares worth Rs 1273 crore on Thursday, their biggest daily purchase since December 19,2013. Both Sensex and Nifty, logging triple digit gains or gaining close to two percent ended past the all time high 21,900 and 6,500 levels respectively. However, the session that turned out to be sparkling for frontline indices, turned out to be inopportune for broader indices, which witnessing selling pressure, ended lower with cut of close to two tenths of a percent.

On the global front, Asian markets moved higher on Friday at the end of a positive week for the region, ahead of the US monthly labor report. Street widely expects labor report to show employers added 152,000 jobs to their payrolls in February, compared with 113,000 in January. The unemployment rate is expected to have fallen by 0.1 percentage point to 6.5%. On the flip side, European shares slipped in early trade on Friday as investors were wary of the risks of another escalation in tensions between Russia and Ukraine over the weekend.

Closer home, almost all the sectoral indices on BSE ended in green, barring Information Technology, Technology and defensive Healthcare counter. While, Rupee’s three months high level pressurized IT stocks, risk-on sentiment worked against defensives. Additionally, shares of Bajaj Hindusthan , Balrampur Chini  , Sakthi Sugar , Shree Renuka Sugars ,  Simbhaoli Sugar  and  Triveni Engineering  ended weak after Indian Sugar Mills Association (ISMA), the apex representative body of sugar industry, scaled down the estimates for sugar production for the current 2013-14 season by close to five per cent to 23.8 million tonnes (MT), which is just tad higher to meet the country’s consumption of the sweetener. On the flip side, Banking, Realty and Capital Goods counters were the shining stars of the session.  Banking shares edged higher for fourth straight trading session, with the Bank Nifty gaining over 1,000 points during the period. Besides, most of jewellery stocks, viz Gitanjali Gems, Shree Ganesh Jewellery House, Thangamayil Jewellery and  Titan Company ended in green even after government, seeking to check gold smuggling in the country, tightened norms for Indians bringing gold into the country as overseas workers now prefer to bring their savings in gold. The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 1368: 1455, while 157 scrips remained unchanged. (Provisional)

The BSE Sensex gained 401.27 points or 1.87% to settle at 21915.14. The index touched a high and a low of 21960.89 and 21539.44 respectively. Among the 30-share Sensex, 21 stocks gained, while 9 stocks declined. (Provisional)

The BSE Mid cap and Small cap indices ended lower by 0.18% and 0.16% respectively. (Provisional)

On the BSE Sectoral front, Bankex up by 5.59%, Realty up by 5.40%, Capital Goods up by 4.17%, Oil & Gas up by 3.57% and PSU up by 2.23% were the top gainers, while IT down by 2.08%, Healthcare down by 1.89% and Teck down by 1.28% were the top losers in the space. (Provisional)

The top gainers on the Sensex were BHEL up by 6.83%, ICICI Bank up by 6.50%, Axis Bank up by 6.28%, RIL up by 5.60% and HDFC Bank up by 5.41%. On the other hand, Dr Reddys Lab down by 3.57%, Wipro down by 3.16%, Infosys down by 2.52%, Sun Pharma down by 1.26% and TCS down by 0.94% were the top losers in the index. (Provisional)

Meanwhile, upholding its decision over increased net worth requirement for mutual funds companies, the Securities and Exchange Board of India (SEBI) has stated that it is imperative to raise net worth requirement for asset management companies as industry players need strong financial base for better penetration as well as to boost growth. SEBI has recently raised the minimum capital requirement for setting up a mutual fund house to Rs 50 crore from the existing Rs 10 crore.

The recent SEBI’s move has become an issue for small mutual fund houses which now have to raise their capital to comply with the new rule. On the other hand, SEBI member S Raman has asserted that there is less scope for the market regulator to have a rethink on this issue. Highlighting sound financial strength a necessary requirement for mutual fund industry, S Raman asserted that around 87 percent of mutual fund AUM is concentrated in top 15 centres and there is a need to go beyond T-15 cities to increase mutual funds penetration. Referring to the issue of declining retail investors investment in mutual fund products, Raman emphasized that SEBI is planning to give more additional tax concession of Rs 50,000 for investors who invest in pension products through mutual fund route and also demanded the government for higher income tax cap to facilitate more savings into MF products.

SEBI has been taking measures over the past few months to revive the growth of Indian mutual funds industry. The regulator has also planned to come out with a long-term policy soon for mutual funds to help the industry create more understanding and better positioning of products amongst investors. It expects its new long-term policy for mutual funds to help their total asset base grow to Rs 20 lakh crore within five years, from about Rs 9 lakh crore currently. Furthermore, SEBI and the government are also making changes in some policies of mutual funds so that industry could get access to a substantial amount of money from the state-administered provident fund and other retirement programmes.

India VIX, a gauge for markets short-term expectation of volatility gained 15.50% at 16.72 from its previous close of 14.48 on Thursday. (Provisional)

The CNX Nifty gained 124.45 points or 1.94% to settle at 6,525.60. The index touched high and low of 6,537.80 and 6,413.55 respectively. Out of the 50 stocks on the Nifty, 36 ended in the green, while 14 ended in the red and one stock remained unchanged. 

The major gainers of the Nifty were DLF up 10.35%, JP Associate up by 9.63%, BHEL up by 6.98%, Bank of Baroda up by 6.57% and ICICI Bank up by 6.19%. The key losers were Dr. Reddy's Laboratories down by 3.40%, Wipro down by 3.31%, Infosys down by 2.40%, Sun Pharma down by 1.43% and Lupin down by 0.79%. (Provisional)

The European markets were trading in red; France’s CAC 40 was down 0.38%, Germany’s DAX was down 0.95% and UK’s FTSE 100 down 0.42%.

The Asian markets concluded Friday’s trade mostly in red with Hang Sang Index, giving up gains, ahead of a key US jobs report later in the day. While the crisis in Ukraine is still to be resolved, investors are focused on economic fundamentals. The rupiah rose for a fifth week, the longest winning streak since April 2011, as Indonesia’s improving economy lured foreign funds to the nation’s assets. The Shanghai Commission of Commerce stated that Shanghai hosted 271 international events among the 793 fairs held in the city last year. Japan’s index of leading economic indicators rose less-than-expected last month. The indicators rose to a seasonally adjusted 112.2, from 111.7 in the preceding month whose figure was revised down from 112.1.

Japan is expected to log a record current account deficit in January and any rebound in core machinery orders is thought likely to be modest. The economic growth for October-December is expected to remain unchanged from an initial estimate of 0.3%, but poll respondents believe capital spending may be revised down slightly, with firms apprehensive about the impact of a sales tax hike on April 1.