Benchmarks log fresh record highs as pre-election rally continues

Friday’s session turned out to be a fabulous day of trade for the Indian equity markets, which scaled fresh highs for yet another session. 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. The Foreign institutional investors (FII), which comprise the largest investor group on Dalal Street, have poured close to $2.5 billion into Indian stocks over the past one month , while they withdrew $2 billion from China and $1billion from Korea.

Earlier, markets after a firm start gave-up all their gains and entered into red in afternoon trade as market-men opted to book some profit off the table, but renewed buying in last leg of trade helped markets to regain momentum. Sharp appreciation in Indian rupee mainly aided the sentiments. The partially convertible rupee was trading at 59.93 per dollar at the time of equity markets closing, marking its strongest in eight months, as hopes for continued foreign investor inflows send domestic shares to a string of record highs.

Global cues too remained up-beat with most of the Asian equity indices ending higher tracking positive data from the US. The world’s largest economy grew at 2.6%, faster than estimated earlier in the fourth quarter. European markets too aided sentiments with all CAC, DAX and FTSE trading higher in early deals, led by basic resources shares on expectations any move by China to step up infrastructure spending would boost demand for industrial metals.

Back home, there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too equally participated in the rally. Frontline indices managed to settle at their fresh all time high levels with Sensex surpassing its crucial 22,300 bastion, while Nifty ended just shy of its crucial 6,700 mark. Rally in stocks related to exports and imports too supported the sentiments with Reserve Bank of India (RBI) relaxing some of the restrictions related to hedging of currency risk of probable exposures of exporters and importers. This will give them greater operational flexibility.

Meanwhile, banking stocks traded jubilantly after the Reserve Bank of India (RBI) on March 27, 2014, extended the deadline for banks to fully implement the stringent capital requirements under Basel III by a year due to industry wide concerns over potential bad loans and its impact on profitability. Shares of software and technology counters too remained on buyers’ radar after global rival Accenture Plc raised its full-year profit forecast and the lower end of its revenue forecast. Additionally, stocks related to Aviation space extended gains for second straight session after the central bank on Wednesday extended the deadline for raising working capital via external commercial borrowings by domestic airlines to March 2015 from December 2013.

The NSE’s 50-share broadly followed index Nifty rose by over fifty points to end just shy of the psychological 6,700 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged by around one hundred and twenty points to finish above the psychological 22,300 mark. Broader markets too traded with traction and ended the session with a gain of over a percentage point. The market breadth remained in favor of advances, as there were 1,707 shares on the gaining side against 1,062 shares on the losing side while 160 shares remain unchanged.

Finally, the BSE Sensex surged by 125.60 points or 0.57% to settle at 22339.97, while the CNX Nifty gained 54.15 points or 0.82% to settle at 6,695.90.

The BSE Sensex touched a high and a low of 22363.97 and 22185.11, respectively. The BSE Mid cap index was up by 1.46%, while the Small cap index gained 1.19%.

The top gainers on the Sensex were Tata Power up by 4.54%, Hindalco Inds up by 4.07%, SBI up by 3.41%, NTPC up by 3.29% and Bharti Airtel up by 2.19%, while Bajaj Auto down by 0.50%, ONGC down by 0.35%, HDFC Bank down by 0.27%, ITC down by 0.26% and HDFC down 0.22% were the top losers in the index.

On the BSE Sectoral front, Power up by 3.02%, PSU up by 2.17%, Realty up by 1.61%, Metal up by 1.52% and Bankex up by 1.19% were the top gainers, while there were no losers in the space.

Meanwhile, in order to give more operational flexibility to country’s exporters and importers, the Reserve Bank of India (RBI) relaxed some restrictions relating to hedging of currency risk of probable exposures of exporters and importers.

The RBI notified that importers and exporters can cancel up to 75 percent of their hedged forex exposures, as against 25 percent earlier. The profit or loss from these cancellations will be borne by the importer/exporter instead of passing it on to the customers as was mandated earlier. Further, the notification added that the contracts in excess of 75 per cent of the eligible limit shall be on deliverable basis and cannot be cancelled.

Regarding the procedure for determination of eligible limit, the central bank noted that eligible limit in the case of exporters is computed as the average of the previous three financial years’ (April to March) actual export turnover or the previous year’s actual export turnover, whichever is higher. In the case of importers, the eligible limit is calculated as 25 percent of the average of the previous three financial years’ actual import turnover or the previous year’s actual import turnover, whichever is higher.

The CNX Nifty touched a high and low of 6,702.60 and 6,643.80 respectively.

The top gainers of the Nifty were PNB up by 7.80%, Bank of Baroda up by 6.38%, Tata Power Company up by 4.83%, Hindalco Industries up by 4.55% and UltraTech Cement up by 4.29%. On the other hand, Cairn India down by 1.09%, ONGC down by 1.04%, ITC down by 0.51%, Tech Mahindra down by 0.46% and Maruti Suzuki India down 0.44% were the top losers.

The European markets were trading in green, France's CAC 40 was up by 0.50%, Germany's DAX was up by 0.99% and United Kingdom's FTSE 100 was up by 0.40%.

The Asian markets barring Shanghai Composite and Taiwan Weighted concluded Friday’s trade in green. Prime Minister Shinzo Abe is set to raise the consumption tax for the second time in Japanese history in order to cut the debt and to pay for a possible easing of the corporate tax at some point down the road. Japan’s retail sales fell to a seasonally adjusted annual rate of 3.6%, from 4.4% in the preceding month while Japanese Household Spending fell to a seasonally adjusted -2.5%, from 1.1% in the preceding month. Japan’s National Core CPI remained unchanged at a seasonally adjusted 1.3%, from 1.3% in the preceding month while Tokyo’s core CPI, which excludes fresh food costs rose to at an annualized rate of 1.0%, from 0.9% in the preceding month. The total work force that is unemployed and actively seeking employment during the previous month in Japan fell to a seasonally adjusted 3.6%, from 3.7% in the preceding month. South Korean industrial production fell to a seasonally adjusted annual rate of -1.8%, from -0.1% in the preceding month whose figure was revised down from 0.1%. South Korean Retail Sales fell to a seasonally adjusted annual rate of -3.2%, from 2.4% in the preceding month.