CAD propels market to record highs; Nifty ends above 6,400

Investors cheer sharp decline in Current Account Deficit, which stands at 4-year low as exports picked up and gold imports came down

A sharp decline in India's current account deficit during the December quarter coupled with a sustained buying by foreign funds in the past few sessions fuelled the markets to all-time highs on Thursday.

Investors cheered a sharp decline in the Current Account Deficit (CAD), which stands at a 4 year low as exports picked up and gold imports reduced. Also, Strong FII inflows in cash market aided the sentiment. FIIs were net buyers of local stocks worth Rs 193.30 (cash segment) on Wednesday, as per provisional data.

The 30-share Bombay Stock Exchange (BSE) Sensex surged 237 points or 1.1% to close at its record high levels of 21,514 while 50 and the 50-unit Nifty index of the National Stock Exchange (NSE) jumped 73 points or 1.1% to close at its all-time high levels of 6,401.

Market men attributed the current rally to an increased participation from retail investors and an optimism that is generally witnessed ahead of the general elections. A change in the current government is largely viewed positively by brokerages.

"Market has hit a new high on the basis of strong FII flows as well as increasing retail participation. Normally it is seen that there is pre election rally and that is what is reflected in the levels. We feel strong political mandate would result into increasing level of optimism and hence new levels for the market," said Motilal Oswal, CMD, Motilal Oswal Financial Services.

It was a broad-based rally on Thursday which saw BSE mid-cap and small-cap indices ( up 1.2%) outperforming the benchmark Sensex (up 1.1%) marginally.

The rupee too strengthened to its highest in nearly three months in afternoon trades on the back of on sustained selling of dollar after a sharp decline in Current Account Deficit (CAD) in the third quarter.

It was last seen trading at Rs 61.27 compared with the previous close of Rs 61.76 per dollar. The rupee was last seen near these levels on December 11 at Rs 61.25.

Sectors and Stocks

Among blue-chips, ICICI Bank, Reliance, ONGC, Coal India, NTPC, L&T and HDFC twins added between 1-3% and were the top gainers today

Barring BSE Healthcare nearly all sectors ended the session with gains. A stronger rupee dented sentiment for pharma shares as pharma majors posted good results for the December quarter on the back of robust earnings from exports to the US.

Attractively valued real estate sector stocks got lapped up by investors who turned cautious of high valuations in the safe haven blue-chip stocks. Among top realty gainers, Prestige Estates, HDIL, DLF and Indiabulls Real Estate ended 5-12% higher. BSE Realty, up a whopping 4%, emerged the top gainer on the BSE sectoral indices which track various industrial sectors.

BSE metal, oil & gas and power indices ended over 2 per cent higher. Hindalco Inds, Jindal Steel and Tata Steel were the top gainers from the metals pack while BPCL, Indian Oil Corp and HPCL gained in the oil & gas space.

Market breath remained strong as 1701 stocks gained while 1033 declined on the BSE.

Gaurang Shah, Assistant Vice President, Geojit BNP Paribas Financial Services advices caution. He says, "Since we are trading at the higher end of the trading range we advice profit booking at current levels & wait out for dips to get back into the markets & it would be prudent to stay with defensive sectors for now till we get clarity on the election front."

Around the Globe

Japan's Nikkei 225 jumped to a five-week high on Thursday as investors sentiment got a boost from news about the world's largest pension fund's allocation plan, and as a weaker yen boosted shares of exporters.

The Nikkei ended 1.6% higher to 15,134.75, the highest close since January 29.

The Topix rose 1.3% to 1,228.36, with 32 of its 33 subsectors in positive territory.

An advisory panel to the Government Pension Investment Fund said that GPIF need not stick to a "domestic-bond-centric portfolio" when the country is moving out of deflation.

International investors now eye the European Central Bank's policy meet later in the day. Any steps the ECB takes to support the still-fragile euro zone economy are likely to boost risk assets, though gains could be limited ahead of pivotal US payrolls data on Friday.

On Wednesday, International Monetary Fund officials called on the ECB to start buying public and private assets or extend more cheap long-term loans to banks, as well as cutting interest rates to a new record low.

The US markets on Wednesday finished lower as investors reacted to somewhat disappointing data. Payroll processor ADP released a report that the private sector added 139,000 jobs in February as compared to estimated increase of about 155,000 jobs. The report also showed a downward revision to the job growth in the previous month.

The Institute for Supply Management released a separate report showing that its non-manufacturing index fell to 51.6 in February from 54.0 in January, a reading above 50 indicates continued growth in the service sector.

Other shares

Shares of cement makers ended higher by up to 7% on the Bombay Stock Exchange (BSE). At 1340 hours, Shree Cement, Ambuja Cements, ACC and UltraTech Cement ended up 1-4%, while JK Cement, Orient Cement, Ramco Cement, Birla Corporation and JK Lakshmi Cement having rallied between 5-7%.

According to market analyst the March to mid-June period is among the peak periods for cement demand before the monsoon season kicks in. Analysts say that month-on-month there has been some demand recovery in February.

Meanwhile, in past two weeks most of the frontline cement stocks like Ambuja Cements, ACC, UltraTech Cement, Shree Cement and India Cements have rallied more than 10% each on speculation about price hikes in northern India. The benchmark S&P BSE index has gained 4.2% during the same period.

"Prices are up by Rs 30-45 per bag month-on-month in February (over Jan-14 average) across all these markets (North largely Delhi, Rajasthan and Punjab)," the Reuters report suggests.

Among the individual stocks, JK Cement has surged 8%, followed Ramco Cement 5%, JK Lakshmi Cement 2.7%, Shree Cement up 3.4% while UltraTech Cement and Ambuja Cements ended up 2.7-3.4%, respectively.

IL&FS Transportation Networks ended higher by 6.3% at Rs 121, extending its previous day’s 6% rally, after the board has approved issue of debentures worth of Rs 100 crore via private placements.The company said that the Committee of Directors approved the allotment of 1,000 rated, listed, redeemable, non-convertible debentures of the face value of Rs 1 million each aggregating to Rs 100 crore. These debentures will be listed on the NSE, the company said.

Ramco Systems ended up 2% at Rs 236after the IT solutions provider signed a pact with Malaysia Airlines for providing a suite of enterprise-wide engineering solutions.

"This advanced solution, which integrates business processes and people, will serve the entire engineering functions for Malaysia Airlines group including Firefly, MASwings and MASkargo and also support its maintenance, repair and overhaul services," Ramco Systems said in a statement. "The Malaysia Airlines deal represents the largest win secured by Ramco and will bring the total number of aircraft served by Ramco to over 2,250 worldwide", the company further added.

ALSTOM India ended higher by 3% at Rs 360, extending its previous day’s 7% rally, after the company said it has won a contract worth Rs 679 crore from Bharat Heavy Electricals Limited (BHEL) to supply two 800MW supercritical boilers for Darlipalli Super Thermal Power Project (STPP) in Sundergarh, Odisha. This project forms part of NTPC Ltd's Bulk 800MW tender.

Under the scope of the contract, Alstom - the sole licensor for BHEL supercritical technology - will design the 800MW supercritical boilers and supply identified pressure parts along with windboxes, pulverizers and airpreheater components, ALSTOM India said in a statement.

AstraZeneca Pharma India has dipped 9% to end at Rs 1,064, extending its previous day’s 5.2% fall, after the company said its board has deferred delisting plan.

"The Board of Directors met on March 5, 2014 to consider the delisting proposal. After discussion, it was decided to seek additional information from the promoter - AstraZeneca Pharmaceuticals AB, Sweden,” AstraZeneca Pharma said in a statement.

Similar threads