Banking, metal and power sector stocks led rally for key benchmark indices. The barometer index, the S&P BSE Sensex, jumped 424.06 points or 1.70% to settle at 25,317.87. The 50-unit CNX Nifty rose 129.45 points or 1.71% to settle at 7,688.25. The Sensex reclaimed the psychological 25,000 level after falling below that level during the previous trading session. A firm trend in global markets aided the upmove on the domestic bourses. The sentiment on the domestic bourses was also boosted by the recommendation of a committee set up by the previous government to assess international competitiveness of Indian financial sector that the levy of Securities Transaction Tax (STT) in the futures & options be abolished.
In overseas markets, Chinese stocks jumped on speculation that the weak trade data for August 2015 may prompt the Chinese central bank to announce more stimulus for the economy. European stocks surged after after the latest data showed German exports and imports rose to their highest level on record in July. Trading in US index futures indicated that the Dow could gain close to 300 points at the opening bell.
The Sensex and the Nifty snapped two-day losing streak.
The Sensex rose 424.06 points or 1.70% to settle at 25,317.87, its highest closing level since 3 September 2015. The index jumped 517.19 points at the day's high of 25,411 in intraday trade. The index fell 60.27 points at the day's low of 24,833.54 in intraday trade.
The Nifty rose 129.45 points or 1.71% to settle at 7,688.25, its highest closing level since 3 September 2015. The index hit a high of 7,720.90 in intraday trade. The index hit a low of 7,539.50 in intraday trade.
The BSE Mid-Cap index rose 1.02%. The BSE Small-Cap index rose 0.60%. Both these indices underperformed the Sensex.
The market breadth indicating the overall health of the market was positive. On BSE, 1,459 shares rose and 1,190 shares rose. A total of 127 shares were unchanged.
The total turnover on BSE amounted to Rs 2654 crore, higher than turnover of Rs 2042.20 crore registered during the previous trading session.
Among the sectoral indices on BSE, the S&P BSE Bankex (up 3.61%), the S&P BSE Power index (up 3.17%), the S&P BSE Capital Goods index (up 3.16%), the S&P BSE Realty index (up 2.63%), the S&P BSE Metal index (up 2.33%) and the S&P BSE Auto index (up 1.73%), outperformed the Sensex. The S&P BSE Oil & Gas index (up 1.04%), the S&P BSE Healthcare index (up 0.76%), the S&P BSE IT index (up 0.42%), the S&P BSE Teck index (up 0.38%), the S&P BSE FMCG index (down 0.85%) and the S&P BSE Consumer Durables index (down 1.20%) underperformed the Sensex.
Index heavyweight HDFC rose 2.16% to Rs 1,174.25. The stock hit high of Rs 1,178.85 and low of Rs 1,151.05.
Index heavyweight Reliance Industries (RIL) gained 1.91% to Rs 848.95. The stock hit high of Rs 853.20 and low of Rs 826.
Index heavyweight and engineering and construction major L&T advanced 3.79% to Rs 1,567.30. The stock hit high of Rs 1,569 and low of Rs 1,493.
FMCG major Hindustan Unilever (HUL) dropped 2.08%. HUL after market hours today, 8 September 2015, said that the company has today, 8 September 2015 signed an agreement for the sale and transfer of its bread and bakery business under the "Modern" brand to Nimman Foods, an investee company of the Everstone Group, for an undisclosed consideration. The decision is in line with the company's strategy to exit non-core businesses, while continuing to drive its growth agenda in the core packaged foods business.
HUL's bread and bakery business consists of a full range of white and sweet breads, health and wellness breads and value added bakery products such as cakes, muffins, buns, pavs, cream rolls under the "Modern" brand name. The business currently has six own operating manufacturing units and a network of franchisees across India.
Shares of state-run gas transmission and distribution firm GAIL (India) jumped 6.44% to Rs 294.95.
Power generation stocks were in demand on renewed buying. CESC (up 2.21%), Reliance Power (up 3.83%), NHPC (up 1.56%), Adani Power (up 5.07%) and Reliance Infrastructure (up 0.26%) edged higher.
Tata Power Company rose 4.26% after the company announced that the foundation stone laying ceremony for a greenfield defence production facility was held at Vemagal in Karnataka today, 8 September 2015. Over the next one year, Tata Power will make an investment of Rs 450 crore in this unit.
NTPC gained 1.64%. NTPC clarified during market hours today, 8 September 2015, that its 2,340 megawatts power generation station at Kahalgaon in Bihar is functioning as per schedule. The company said that the management remains committed to maintain power generation at the thermal power station.
JSW Energy jumped 10.11%. Jaiprakash Power Ventures rose 5.21%. JSW Energy announced during trading hours today, 8 September 2015, that it has entered into a binding memorandum of understanding (MoU) with Jaiprakash Power Ventures (JPVL) to acquire 100% stake in the 500 megawatts (MW) Bina Thermal Power Plant located in the Sagar district of Madhya Pradesh. JSW Energy also announced that it has concluded the acquisition of two hydro electric projects located in Himachal Pradesh from JPVL.
Power equipment major Bharat Heavy Electricals (Bhel) jumped 6% to Rs 213.
Shares of state-run power transmission major Power Grid Corporation of India gained 3.89%.
Among power finance companies, REC (up 3.16%) and Power Finance Corporation (up 1.65%) rose.
Steel shares led rally in metal and mining stocks after media reports suggested that an Indian government body has found evidence that rising imports of hot-rolled steel products pose a threat to the domestic industry. JSW Steel (up 6.39%), Jindal Steel & Power (up 0.83%), Tata Steel (up 5.97%), and Steel Authority of India (Sail) (up 6.8%) gained. The recommendation of the committee could pave the way for imposition of import levy known as a safeguard duty.
Among metal and mining stocks, Vedanta (up 3.67%), Hindalco Industries (up 1.54%), Hindustan Zinc (up 1.19%), National Aluminum Company (up 0.6%), NMDC (up 0.95%) and Hindustan Copper (up 0.99%) gained.
Bank stocks surged. Among private sector banks, Axis Bank (up 5.39%), HDFC Bank (up 1.88%), ICICI Bank (up 5.18%), Kotak Mahindra Bank (up 3.49%), Federal Bank (up 1.57%), Yes Bank (up 7.03%), and IndusInd Bank (up 2.3%) edged higher.
Among public sector banks, Punjab National Bank (up 3.48%), UCO Bank (up 2.8%), Bank of Baroda (up 4.74%), State Bank of India (SBI) (up 2.84%), Canara Bank (up 3.1%), Bank of India (up 4.59%), Corporation Bank (up 0.68%), Syndicate Bank (up 0.26%), Allahabad Bank (up 0.46%), Union Bank of India (up 0.48%) and United Bank of India (up 0.48%) edged higher.
Mahindra and Mahindra (M&M) gained 3.4% after media reports overseas suggested that the company is set to acquire the troubled Italian car designer Pininfarina shortly.
The recovery for Indian stocks comes after a recent sharp sell-off triggered by fears of a sharp slowdown in Chinese economy and prospects of an end to the ultra-loose monetary policy in the United States. Higher US interest rates will reduce the attraction of riskier emerging-markets assets. Foreign institutional investors have pressed heavy selling of Indian stocks in the past few weeks. The Sensex plunged to its lowest level in more than 15 months yesterday, 7 September 2015.
The Sensex has lost 965.22 points or 3.67% in this month so far (till 8 September 2015). The Sensex has fallen 2,181.55 points or 7.93% in this calendar year so far (till 8 September 2015). The Sensex is off 4,706.87 points or 15.67% from a record high of 30,024.74 hit on 4 March 2015.
Meanwhile, a Standing Council of Experts set up by the previous government to assess international competitiveness of Indian financial sector has suggested removal of the Securities Transaction Tax (STT) levy in the futures & options (F&O) segment. The committee has also suggested removal of stamp duty for cash settled products such as index derivatives since there is no delivery of the underling taking place. At present, STT is pay payable on all sell transactions on F&O segment. It is 0.01% of the traded price of futures and 0.017% on options premiums. A 0.125% STT is payable on the settlement price by the buyer of an option that is exercised. Stamp duty at 0.002% is applicable on the notional amount of options expiring in-the-money and on selling futures.
The committee has also recommending expanding the list of permissible securities as collateral in the F&O segment and removal of restrictions on participation of domestic financial institutions in the F&O segment. It has also suggested setting up of a committee to rationalize position limits and margins across all financial market segments. The committee has also suggested allowing stock exchanges to take decisions about margins, position limits, trading time and product innovation in the F&O segment, with suitable monitoring by Securities & Exchange Board of India (Sebi). This will provide operational flexibility to Indian bourses and enable them to strive for competitiveness. The Singapore stock exchange is the main competitor for Nifty index derivatives. In 2013, the open interest (OI) of Nifty futures at SGX was almost twice that at NSE.
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