Benchmarks continue to log fresh high; Sensex surpasses 22,550 mark

Wednesday’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 for sixth straight day and hit fresh record high as pre-election rally, dubbed as a ‘hope rally’, continued amid firm global cues and sustained foreign fund inflow. Domestic bourses, after a gap-up opening, traded with traction throughout the session as sentiments remained up-beat on reports that, foreign Institutional Investors (FIIs) bought local stocks worth 233.10 crore on March 28, 2014, as per provisional data from SEBI. Appreciation in Indian rupee too supported the sentiments. The partially convertible rupee continued its surge against the greenback and was trading at 59.79 a dollar at the time of equity markets closing, tracking robust foreign fund inflows.

Labour Ministry report soothed sentiments further, the retail inflation for industrial workers eased to a two year low of 6.73 percent in February due to softening of prices of food items. Also, as the corporate India believes that the country’s economy could resurge to grow 6.5% this year if a strong reform-minded government comes to power after the upcoming parliament elections.

Global cues too remained supportive with the US markets ending higher in previous session with S&P 500 closing at record high on the back of a relatively upbeat reading on US manufacturing activity in the month of March. Asian markets too ended higher, as investors chose to accentuate the positive in a mixed bag of global economic data, pressuring the safe haven yen to a 10-week trough. Also, European markets made a strong start with CAC, DAX and FTSE all edging higher in early deals.

Back home, shares of companies that have applied for a banking licence edged higher after the Election Commission allowed the Reserve Bank of India (RBI) to issue new bank licences. Stocks of public sector oil marketing companies (OMCs) like, HPCL, BPCL and IOC edged higher after the under-recovery on High Speed Diesel, PDS Kerosene and Domestic LPG declined. Lower crude oil prices and higher rupee also aided gains in shares public sector OMCs. Additionally, shares of sugar manufacturer continued to trade higher for second day in a row on expectations of higher demand during the summer season from bulk consumers such as ice-cream makers in the spot market.

The NSE’s 50-share broadly followed index Nifty rose by over thirty points to end above the psychological 6,750 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged by over hundred points to finish near its psychological 22,550 mark. Broader markets too traded with traction and ended the session in the green with a gain of over one and a half percentage points. The market breadth remained in favor of advances, as there were 1,895 shares on the gaining side against 896 shares on the losing side while 130 shares remain unchanged.

Finally, the BSE Sensex gained 105.05 points or 0.47%, to settle at 22551.49, while the CNX Nifty was up by 31.50 points or 0.47% to settle at 6,752.55.

The BSE Sensex touched a high and a low of 22592.10 and 22473.46, respectively. The BSE Mid cap index was up by 1.59%, while the Small cap index gained 1.60%.

The top gainers on the Sensex were Bharti Airtel up by 3.34%, Tata Motors up by 2.62%, SBI up by 2.06%, Cipla up by 2.00% and ONGC up by 1.96%, while ITC down by 2.31%, Hindalco Inds down by 1.45%, SSLT down by 1.41%, HDFC Bank down by 1.02% and Hindustan Unilever down by 0.99% were the top losers in the index.

On the BSE Sectoral front, Realty up by 1.89%, Healthcare up by 1.57%, Oil & Gas up by 1.43%, PSU up by 1.36% and Capital Goods up by 1.18% were the top gainers, while FMCG down by 1.50% and Metal down by 0.50% were the only losers in the space.

Meanwhile, stepping up efforts to make the Indian markets more attractive to global investors, the Reserve Bank of India (RBI) has proposed to allow overseas investors to hedge their currency risk in local exchanges, a move which will lower entry costs for foreigners and help to improve risk mitigating environment in the country. At present, the RBI is in final discussion with market regulator Securities and Exchange Board of India (Sebi) to finalise the proposal.

The central bank proposed to permit foreign investors to hedge the coupon receipts on domestic bond holdings for up to the next 12 months. Further, to flush out yield-chasing, the RBI has planned to bar short-term investors from investing in treasury bills, where most of the foreign money has rushed in recently. The RBI’s notification further stated that in order to encourage longer-term flows and reduce volatility foreign portfolio investments in government securities will henceforth be permitted only in dated securities of maturity more than one year.

The RBI further added that any investment limit for overseas investors vacated at the shorter end will be available at longer maturities, so overall foreign portfolio investor (FPI) limits will not be diminished. So far this year, foreign investors have invested up to $5.76 billion in Indian securities particularly short-term treasury bills. Foreign investors can invest up to $30 billion in government papers, out of which investment limit for treasury bills is $5.5 billion. Overseas investors have exhausted 87.16% of their treasury bills limit.

The CNX Nifty touched a high and low of 6,763.50 and 6,723.60 respectively.

The top gainers of the Nifty were Bank of Baroda up by 5.86%, IDFC up by 3.98%, PNB up by 3.27%, Bharti Airte up by 3.00% and Tata Motors up by 2.57%. On the other hand, Asian Paints down by 2.53%, Jindal Steel & Power down by 2.28%, ACC down by 2.22%, ITC down by 2.12% and SSLT down by 1.69% were the top losers.

The European markets were trading in green, France's CAC 40 was up by 0.14%, Germany's DAX was up by 0.33% and United Kingdom's FTSE 100 was up by 0.30%.

The Asian markets concluded Wednesday’s trade mostly in green tracking upbeat manufacturing data from US with Hang Seng Index closing in green for the fourth session in a row. The monetary base in Japan spiked 54.8 percent on year in March, standing at 208.592 trillion yen that follows the 55.7 percent jump in February and the 51.9 percent increase in January. Housing prices in China kept heading north in March, though at a slower pace. The average price of new homes in 100 cities climbed 0.38 percent last month from February to 11,002 yuan ($1,773) per square meter, the 22nd straight month-on-month gain.

According to the Asian Development Bank the emerging Asia’s economic growth will probably accelerate in 2015 from this year, helped by increasing momentum in developed nations and withstanding a slowdown in China’s expansion. The region will probably grow 6.4 percent next year from a 6.2 percent pace this year. China’s economy is forecast to expand 7.4 percent in 2015, slowing from 7.5 percent this year.