Markets end at fresh all time closing high levels

First day of F&O expiry week turned out to be a remarkable day of trade for Indian equity markets with both the frontline indices staging a stellar run by rallying over a one and a half percentage point to end near intraday high. Sentiments remained up-beat since start, as key bourses opened with decent gains and there appeared not even an iota of profit booking in the session and the benchmarks managed to fervently gain from strength to strength as investors continued their hunt for fundamentally strong stocks. Frontline indices not only extended their rally for second straight day but also recorded their fresh all time closing high which they never witnessed before, settling comfortably above their crucial 6,550 (Nifty) and 22,050 (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.

Sentiments also remained buoyed on report that retail inflation for farm workers and rural labourers eased to 8.14 percent and 8.27 percent respectively in February from 9.08 percent and 9.21 percent in January, mainly due to decrease in prices of food items. Some support also came after Planning Commission Deputy Chairman Montek Singh Ahluwalia exuded confidence that whoever forms the next government would be in a position to implement key reforms, including the Goods and Services Tax (GST).

On the global front, all the Asian equity indices shut shop in the green after the weak preliminary purchasing managers’ index of China for March from HSBC Holdings Plc and Markit Economics raised hopes that the country will go for more stimulus to revive the economy. However, European counters after decent start turned lower despite the euro-area manufacturing and services stayed close to the fastest since 2011 in March.

Back home, markets continued their northward journey on report that foreign institutional investors (FIIs) bought shares worth a net Rs 14.79 crore on March 22, 2014, as per provisional data from the stock exchanges. Appreciation in Indian rupee against dollar too aided sentiments. The partially convertible rupee was trading at 60.70 per dollar at the time of equity market closing against the Friday’s close of 60.90 on the Interbank Foreign Exchange.

Meanwhile, banking shares remained on buyers’ radar on expectation that Reserve Bank of India (RBI) will hold key rates in its next monetary policy review as the Consumer Price Index (CPI) fell to a 25-month low in February. Stocks related to oil & gas sector too showed some resilience, led by gains in the heavy weight Reliance Industries. Meanwhile, the Petroleum Minister M Veerappa Moily has made it clear that the government will not go back on its decision to hike rates from April 1.

The NSE’s 50-share broadly followed index Nifty surged by around ninety points and ended above the psychological 6,550 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex zoomed by over three hundred points to finish above the psychological 22,050 mark. Broader markets under performed benchmarks but managed to keep their head above water. The market breadth remained in favor of decliners, as there were 1,270 shares on the gaining side against 1,527 shares on the losing side while 164 shares remain unchanged.

Finally, the BSE Sensex surged by 300.16 points or 1.38%, to settle at 22055.48, while the CNX Nifty gained 88.60 points or 1.36% to settle at 6,583.50.

The BSE Sensex touched a high and a low of 22074.34 and 21827.50, respectively. The BSE Mid cap index was up by 0.13%, while the Small cap index gained 0.15%.

The top gainers on the Sensex were Gail India up by 4.81%, ONGC up by 4.27%, ICICI Bank up by 3.71%, Coal India up by 2.81% and Hero MotoCorp up by 2.60%, while Dr Reddys Lab down by 1.34%, Wipro down by 0.98%, Cipla down by 0.80%, Sun Pharma down by 0.64% and Infosys down 0.60% were the top losers in the index.

On the BSE Sectoral front, Bankex up by 2.73%, Oil & Gas up by 2.46%, PSU up by 2.35%, Metal up by 0.97% and Auto up by 0.91% were the top gainers, while Healthcare down 0.61%, Consumer Durables down by 0.33% and IT down by 0.02% were the only losers in the space.

Meanwhile, India needs an enabling environment in order to spur the investment, besides reduction in interest rates by the Reserve Bank of India (RBI), according to the HSBC Country Head Naina Lal Kidwai.

Kidwai asserted that although high interest rates are impacting investment and consumption demand, which are needed to be reduced, there is also a need to improve the business environment in the country. Regarding the possibility of interest rate cut by the RBI, she mentioned that central bank is likely to see sustained improvement on inflation front before making an interest rate cut. However, the RBI should not increase rates amid declining industrial growth. Indian industrial output for the period April-January 2013-14 stood flat over the corresponding period of the previous year. On the other hand, CPI inflation eased to a 25-month low of 8.10% in February, as against 8.79% in January.

The central bank, which has maintained a hawkish interest rate regime in order to tame inflation, is scheduled to announce the next monetary policy on April 1. The latest decline in retail inflation is much on the expected lines of the apex bank which had hiked key interest rates by 0.25 per cent in its previous third quarter monetary policy review.

The CNX Nifty touched a high and low of 6,591.50 and 6,510.50 respectively.

The top gainers of the Nifty were GAIL up by 5.29%, ONGC up by 4.37%, IndusInd Bank up by 4.20%, Kotak Mahindra Bank up by 3.86% and ICICI Bank up by 3.57%. On the other hand, HCL Technologies down by 1.81%, Dr. Reddy's Laboratories down by 1.30%, Wipro down by 1.16%, Cipla down by 1.03% and Infosys down 0.62% were the top losers.

The European markets were trading in red, France's CAC 40 was down by 0.53%, Germany's DAX was down by 0.41% and United Kingdom's FTSE 100 was down by 0.22%.

The Asian markets concluded Monday’s trade in green with Japan’s Nikkei share bouncing off from a six-week low on the back of a tentative recovery in risk appetite, though underlying concerns about Japan’s economic outlook kept gains in check. China’s Vice Premier Zhang Gaoli stated that deepening reform will bring a new impetus for economic growth in China and provide room and opportunity for the world economy. China’s central bank hinted that it was willing to accept some debt defaults in the $1.8 trillion wealth management market, as the world’s second-largest economy struggles to curb bad debts that pose a risk to the financial system.

China HSBC flash manufacturing purchasing managers index (PMI) fell to an eight-month low in March. The preliminary reading of 48.1 fell from February’s final reading of 48.5, while the flash March index also showed new orders slid for a fourth consecutive month to 46.9 - its lowest point since July 2013, while output fell to 47.3, the lowest since September 2012.