A rally in Chinese stocks boosted sentiment on the domestic and global markets, with key benchmark indices surging in afternoon trade. At 13:18 IST, the barometer index, the S&P BSE Sensex, was up 282.08 points or 1.13% at 25,175.89. The gains for the 50-unit CNX Nifty were higher in percentage terms compared to the gains for the Sensex. The Nifty was currently up 93.10 points or 1.23% at 7,651.90, after hitting an intraday high of 7,656.30 in afternoon trade. The Sensex was currently trading above the psychological 25,000 level, having alternatively moved above and below that level so far during the trading session. A further decline took the index below the psychological 25,000 level yesterday, 7 September 2015.
Even as key indices surged, the market breadth indicating the overall health of the market was negative. On BSE, 1,309 shares fell and 1,119 shares rose. A total of 112 shares were unchanged. The BSE Mid-Cap index was up 0.81%. The BSE Small-Cap index was up 0.2%. Both these indices underperformed the Sensex.
The Sensex and the Nifty saw volatility earlier during the trading session. The Sensex hit its lowest level in more than 15 months when it lost 60.27 points at the day's low of 24,833.54 hit in mid-morning trade. The Nifty hit its lowest level in almost 14 months when it dropped 19.30 points at the day's low of 7,539.50 in mid-morning trade.
Overseas cues were positive. European stocks surged after the latest data showed German exports and imports rose to their highest level on record in July. Chinese stocks edged higher in volatile trade after Beijing introduced fresh measures - including tax cuts and a proposed "circuit breaker" system - to discourage speculation and stem further slide in share prices. Trading in US index futures indicated that the Dow could gain 236 points at the opening bell.
Tata Steel (up 5.6%), Vedanta (up 4.22%) and Bharat Heavy Electricals (Bhel) (up 4.18%) were the top gainers from the Sensex pack.
Power generation major NTPC rose 2.22% to Rs 115.15 on bargain hunting after the stock fell 7.17% in the preceding five trading sessions to Rs 112.65 yesterday, 7 September 2015, from a recent high of Rs 121.35 on 31 August 2015.
Shares of FMCG major Hindustan Unilever dropped 3.85% to Rs 788.50.
Bank stocks surged. Among private bank stocks, HDFC Bank (up 0.45%), Kotak Mahindra Bank (up 2.78%), ICICI Bank (up 4.15%), Axis Bank (up 4.09%), IndusInd Bank (up 1.33%) and Yes Bank (up 5.74%) advanced.
Among PSU bank stocks, State Bank of India (SBI) (up 3%), Punjab National Bank (up 4.38%), Bank of Baroda (up 5.51%), Canara Bank (up 4.35%), IDBI Bank (up 2.97%), Bank of India (up 5.81%) and Union Bank of India (up 4.76%) edged higher.
Shares of state-run gas transmission and distribution firm GAIL (India) jumped 6.46%.
Shares of oil exploration and production (E&P) companies edged higher. Reliance Industries (up 2.24%), ONGC (up 0.55%) and Oil India (up 1.51%) edged higher. Cairn India fell 2.04%.
Shares of public sector oil marketing companies dropped. HPCL (down 0.66%), BPCL (down 0.93%) and Indian Oil Corporation (down 0.14%) fell.
In the global commodities market, Brent crude oil prices edged higher. Brent for October settlement was up 44 cents at $48.07 a barrel. The contract lost $1.98 a barrel or 3.99% to settle at $47.63 during the previous trading session.
Meanwhile, a Standing Council of Experts set up by the previous government to assess and make recommendations regarding 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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