Jubilation continues on D-street for fourth day in a row; Nifty surpasses 6,500 mark

After scaling all-time closing highs in previous session, Indian equity benchmarks extended their rally on Friday with bull taking full control over the session. Sentiments remained upbeat since beginning as key bourses opened with a huge gap on upside and there appeared not even an iota of profit booking in the session with benchmarks fervently gaining from strength to strength as investors continued hunt for fundamentally strong stocks. Frontline indices not only extended their rally for fourth straight day but also recorded their fresh all time closing high which they never witnessed before, settling comfortably above their crucial 6,500 (Nifty) and 21,900 (Sensex) bastions as investors remained hopeful that the pre-election rally fuelled by foreign funds along with an increased participation from retail investors will drive markets higher in the near-term.

Meanwhile, improving macro economic data and a private survey showing BJP-led government coming to power too lifted the stock markets to fresh all-time highs. Some support also came with an HSBC survey saying that India’s manufacturing and services sectors expanded at a faster rate than China in February even as emerging market economies grew at the slowest pace since September 2013.

On the global front, European shares made a dismal opening on Friday as investors were wary of the risks of another escalation in tensions between Russia and Ukraine over the weekend. Asian markets too ended mostly lower ahead of the US monthly labor report. However, Japanese benchmark Nikkei ended at a new five-week high on Friday helped by a weakening yen and the European Central Bank’s decision to keep its rates unchanged.

Back home, markets continued their northward journey on report that foreign institutional investors remained net buyers in equities for the past 15 straight trading sessions. Since February 12 they bought Indian equities worth Rs 7,000 crore ($1.1 billion). Appreciation in Indian rupee against dollar too aided sentiments. The partially convertible rupee was trading at 61.06 per dollar at the time of equity market closing against the Thursday’s close of 61.12 on the Interbank Foreign Exchange.

Meanwhile, the improving macro-economic data boosted sentiment for banks which are a proxy to the economy. ICICI Bank, HDFC Bank, SBI and Axis Bank all edged higher in the trade. Additionally, most of the shares of jewellery stocks, viz Gitanjali Gems, Shree Ganesh Jewellery House ,  Thangamayil Jewellery and  Titan Company gained 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 NSE’s 50-share broadly followed index Nifty surged by over one hundred and twenty points and ended above the psychological 6,500 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex zoomed by over four hundred points to finish above the psychological 21,900 mark. Broader markets, however, struggled to get any traction during the trade and ended the session in the red. The market breadth remained in favor of decliners, as there were 1,372 shares on the gaining side against 1,447 shares on the losing side while 161 shares remain unchanged.

Finally, the BSE Sensex surged by 405.92 points or 1.89%, to settle at 21919.79, while the CNX Nifty gained 125.50 points or 1.96% to settle at 6,526.65.

The BSE Sensex touched a high and a low of 21960.89 and 21539.44, respectively. The BSE Mid cap index was down by 0.22%, while the Small cap index lost 0.21%.

The top gainers on the Sensex were BHEL up by 6.31%, ICICI Bank up by 5.97%, Axis Bank up by 5.92%, RIL up by 5.72% and Bharti Airtel up by 5.46%, while Dr Reddys Lab down by 3.59%, Wipro down by 3.25%, Infosys down by 2.47%, Sun Pharma down by 1.43% and TCS down 0.72% were the top losers in the index.

On the BSE Sectoral front, Realty up by 5.40%, Bankex up by 5.35%, Capital Goods up by 4.05%, Oil & Gas up by 3.65% and PSU up by 2.19% were the top gainers, while Healthcare down by 2.02%, IT down by 1.97% and Teck down by 1.16% were the only losers in the space.

Meanwhile, with an aim to strengthen India’s over-the-counter (OTC) derivatives markets, the Reserve Bank of India (RBI), in a report on 'OTC Derivatives Market Reforms’ has noted that India is fully committed to bring in reforms in the OTC derivatives markets to improve transparency, mitigate systemic risk and protect against market abuse, but its pace and nature will depend on the domestic market conditions. The roadmap for implementation of reform measures with regard to OTC derivatives has been worked out with timelines extending up to March 2015. RBI’s report added that its reform agenda consists of reporting of OTC derivatives transactions to trade repositories, standardization, central clearing, exchange or electronic platform trading, margining.

After the global financial crisis, G-20 nations had initiated a series of reforms in order to strengthen global financial system and tasked the Financial Stability Board (FSB) with coordinating the reforms and assessing their implementation. Keeping in view the hedging needs of the real sector, the OTC derivative products in India were introduced by RBI in a phased manner. The central bank also set up a group to guide the implementation process of key reform measures being undertaken by FSB.

The report prepared by an RBI-constituted implementation group further added that realistic progress has been made in enforcing the OTC derivative reform measures since RBI initiated steps for adoption of the G-20/FSB reforms. The group recommended that standardized proportion of the market should be substantially increased in order to increase central clearing and trading on organised platforms.

The CNX Nifty touched a high and low of 6,537.80 and 6,413.55 respectively.

The top gainers of the Nifty were DLF up by 10.35%, Jaiprakash Associates up by 9.63%, BHEL up by 6.98%, Bank of Baroda up by 6.57% and ICICI Bank up by 6.19%. On the other hand, Dr. Reddy's Laboratories down by 3.40%, Wipro down by 3.31%, Infosys down by 2.40%, Sun Pharmaceuticals Industries down by 1.43% and Lupin down 0.79% were the top losers.

The European markets were trading in red, France's CAC 40 was down by 0.37%, Germany's DAX was down by 0.95% and United Kingdom's FTSE 100 was down by 0.41%.

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.