Markets snaps the February F&O series on positive note

Wednesday turned out to be a remarkable day of trade for Indian equity markets with both the frontline indices snapping the Futures & Options series of February month near their psychological 21,000 (Sensex) and 6,250 (Nifty) levels. Boisterous benchmarks once again showcased an enthusiastic performance, extending their northward journey for fourth straight session with investors getting support from report that overseas investors have been net buyers over the last ten sessions. Foreign institutional investors (FIIs) bought shares worth a net Rs 423.41 crore on February 25, 2014, as per provisional data from the stock exchanges. After a steady opening, there appeared not even an iota of profit booking in the session as the benchmarks managed to fervently gain from strength to strength as investors continued hunt for fundamentally strong but oversold stocks.

However, global cues remained sluggish with European markets trading lower in early deals, weighed by weakness in Credit Suisse that helped stall the advance of a leading regional index to a fresh near 6-year high. The Asian markets ended mixed on concern that the world’s second-largest economy China is slowing as financial stresses increase.

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. Stocks related to NBFC counter remained on buyers radar as the Reserve Bank of India moved closer to granting new banking licences as a panel headed by former RBI governor Bimal Jalan finalized a list of firms for the central bank to consider. Buying in software and technology counters too aided the sentiments on optimism over US business outlook.

However, Metal counter continued witnessing selling, tailing the weakness in the Chinese market where the currency tumbled the most in more than a year on speculation the central bank wants an end to the currency’s steady appreciation. Meanwhile, fertilizer stocks ended mixed ahead of CCEA meet on Friday. The Cabinet Committee on Economic Affairs (CCEA) in its meeting is expected to consider increasing the fixed cost for urea plants and amend the new investment policy (NIP 2012) soon. The proposal to increase fixed cost although would not entail any increase in the retail prices of urea. However, this would increase government’s subsidy burden by around Rs 900 crore.

The NSE’s 50-share broadly followed index Nifty rose by around forty points and ended near the psychological 6,250 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex rose by over one hundred and thirty points to finish near the psychological 21,000 mark. Broader markets too were traded with traction and ended the session with a gain of around quarter a percent. The market breadth remained in favor of advances, as there were 1,357 shares on the gaining side against 1,339 shares on the losing side while 145 shares remain unchanged.

Finally, the BSE Sensex surged by 134.52 points or 0.65%, to settle at 20986.99, while the CNX Nifty gained 38.75 points or 0.62% to settle at 6,238.80.

The BSE Sensex touched a high and a low of 21005.04 and 20860.02, respectively. The BSE Mid cap index was up by 0.10%, while the Small cap index gained 0.23%.

The top gainers on the Sensex were Gail India up by 2.97%, ITC up by 2.07%, Mahindra & Mahindra up by 2.00%, Dr Reddys Lab up by 1.77% and BHEL up by 1.63%, while Tata Steel down by 3.23%, SSLT down by 2.62%, Tata Power down by 1.85%, Coal India down by 1.12% and Maruti Suzuki down by 0.85% were the top losers in the index.

On the BSE Sectoral front, FMCG up by 0.99%, Capital Goods up by 0.94%, Auto up by 0.86%, Healthcare up by 0.82% and Power up by 0.57% were the top gainers, while Metal down by 1.80% and Realty down by 0.52% were the only losers in the space.

Meanwhile, the commodity market regulator Forward Markets Commission (FMC) is likely to allow higher quantity futures in gold, silver, as well as farm products such as soyabean and wheat. The FMC has discussed with leading bourses like MCX and NCDEX a doubling of exposure limits in these commodities.

The regulator, in order to increase the trade volume on bourses and has been tinkering with norms as giving exchanges the freedom to fix turnover charges for brokers, from the floor of Rs 1 per lakh earlier. During the first 10 months of current fiscal, the trade volume on exchanges has declined by 40 percent to Rs 80 lakh crore from a year earlier after the government introduced a Rs 10 per lakh transaction tax on sellers of non-farm and processed farm futures contracts.

Moreover, Rs 5,600 crore scam on commodity spot exchange NSEL eroded the investors’ confidence further. Furthermore, liquidity in gold on metals and energy bourse MCX has declined after government raised import duty on the metal to 10 per cent in a year to contain the widening India’s current account deficit (CAD).

Meanwhile, with the FMC's latest move, hedgers and large speculators in commodity futures contracts would get to trade greater quantities of gold, silver, soyabean and wheat. However, it is expected that the move alone may not help deepen the market due to the absence of substantial two-way liquidity (both buy and sell sides) in many contracts, restricting participants to raise their stakes on leading bourses like MCX and NCDEX exchanges.

The CNX Nifty touched a high and low of 6,245.95 and 6,202.10 respectively.

The top gainers of the Nifty were GAIL (India) up by 3.63%, Mahindra & Mahindra up by 2.26%, Grasim Industries up by 2.08%, ITC up by 2.00% and Sun Pharmaceuticals Industries up by 1.87%. On the other hand, NMDC down by 3.61%, Tata Steel down by 3.15%, SSLT down by 2.23%, Tata Power Company down by 2.04% and IndusInd Bank down by 1.40% were the top losers.

The European markets were trading in red, France's CAC 40 was down by 0.20%, Germany's DAX was down by 0.10% and United Kingdom's FTSE 100 was down by 0.31%.

The Asian markets concluded Wednesday’s trade on a mixed note, with Japan’s Nikkei average closing in red after hitting a four-week closing high the previous day, as investors took profits after weak US economic data soured sentiment. China’s credit-market gauges are triggering alarm bells, as banks grow cautious in lending to each other while investors prefer the safest government bonds. Foreign Direct Investment in Shanghai rose 10.5% in January from a year earlier to $1.093 billion, consistent with last year’s annual pace but slower than the national average of 16% for the month.

In Hong Kong, the Financial Secretary John Tsang has predicted GDP growth of 3% to 4%, and headline and underlying inflation of 4.6% and 3.7%. The country’s economy grew 2.9% last year, a marked improvement over the 1.5% growth seen in 2012. Hong Kong GDP rose to a seasonally adjusted annual rate of 1.1%, from 0.5% in the preceding quarter. Singaporean Industrial Production fell to an annual rate of 3.9%, from 6.2% in the preceding month while South Korean Consumer Confidence fell to 108, from 109 in the preceding month.