Late spurt bolsters benchmarks to snap June F&O series on a high note

The June series Futures and Options contract settlement turned out to be an encouraging event for the Indian markets as bulls showed strong buying interests in majority of the blue chip stocks. Hefty short covering in the dying hours ahead of the series expiry further stoked the benchmarks to settle around the high point of the day. The resilient markets seldom shown any signs of capitulation in last six sessions, as they vivaciously rallied over 1,250 (Sensex) and 350 (Nifty) points during the period. Sentiments remained upbeat across the globe as investors continued to capitalize on the positive momentum from the previous session after the Greek government successfully voted in favor of stringent austerity measures. A second vote for the implementation of the measures is expected in Greece later in the day. Majority of the Asian equity indices settled in the green zone with smart gains while the European counterparts too exhibited mixed trends ahead of a second vote for the implementation of the measures scheduled later in the day. In the meantime domestic sentiments also got buoyed by encouraging food inflation numbers which drifted sharply to one and a half month low levels, a week after convalescing over 9% levels. The moderation in inflation numbers came a day after Prime Minister Manmohan Singh said that inflation will come down to 6.5% by March-end if international oil prices soften and commodity prices do not  rise further. The numbers indicate that RBI, which has hiked its key interest rate by 2.75% points since March 2010, may not resort to rate resort to further hikes and soften its hawkish stance against inflation. However, Indian fuel price inflation accelerated to an eight-week high in mid-June and the government's recent move to hike diesel and other fuel prices is expected to put upward pressure on prices in coming weeks and push headline inflation towards double digits. Local sentiments also remained optimistic as FIIs have turned net buyers since Thursday, indicating that interest of foreign funds are not fading any time soon.

Back on Dalal Street, the benchmark began the expiry session on an optimistic note and oscillated above the neutral line in a narrow range through most part of the session, lacking any kind of volatility which is typically evident on F&O settlement days. After registering losses in the two previous F&O series, the June series F&O showed a swashbuckling performance adding over four percent from the last series. The NSE's 50-share broadly followed index Nifty, settled close to a percent gains just below the crucial 5,650 support level while Bombay Stock Exchange's Sensitive Index, Sensex amassed over one hundred and fifty points to close below the important psychological 18,850 level. However, the broader markets failed to mirror the performance showcased by their larger peers and negotiated only moderate gains. The midcap index added 0.32% points while the smallcap index rose 0.57% point. On the sectoral front, it was the defensive - FMCG pocket which once again outperformed not only its sectoral peers but also the benchmarks and surged by close to 2%. The high beta - Realty counter, which off late witnessed heavy selling pressure, too remained amid the thick of things and gained 1.19% as majors like Unitech and HDIL gained 2.73% and 0.92% respectively. The fertilizer stocks too gained a lot of traction on hopes that the government would consider giving freedom to fertilizers companies to fix maximum retail price of di-ammonium phosphate (DAP) in a cabinet meet scheduled for later today. On the other hand, the Healthcare pack remained the only laggard that languished in the negative terrain with marginal losses. The markets surged on strong volumes of over Rs 1.99 lakh crore while the turnover for NSE F&O segment also remained on the higher side compared to Wednesday at over 1.81 lakh crore. Market breadth remained extremely positive as there were 1507 shares on the gaining side against 1337 shares on the losing side while 144 shares remained unchanged.

Finally, the BSE Sensex gained 152.01 points or 0.81% to settle at 18,845.87, while the S&P CNX Nifty rose 46.95 points or 0.884% to settle at 5,647.40.

The BSE Sensex touched a high and a low of 18,873.39 and 18,723.14, respectively. The BSE Mid cap and Small cap index were up by 0.32% and 0.57% respectively.

The top gainers on the Sensex were Jaiprakash Associate up 3.79%, Hindustan Unilever up 3.18%, Jindal Steel up 3.13%, Tata Power up 1.68% and Hero Honda up 1.63%.

On the flip side, ONGC down 1.62%, Maruti Suzuki down 1.54%, Bharti Airtel down 1.52%, Wipro down 0.61% and Hindalco Inds down 0.58% were the top losers on the index.

Meanwhile, the government is going to withdraw the unspent funds from its flagship Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), this withdrawal of money from the flagship MGNREGS scheme is expected to provide some relief to government which is facing financial crunches.

The state governments are estimated to have around Rs 15,000 crore as unspent balance under the NREGA scheme left over from last financial year. A finance ministry official has said, "We estimate that states have about Rs 15,000 crore left from 2010-11. We have written to them to let us know the exact amount of unspent money they have. Accordingly their allocation for the current fiscal will be fixed," adding further the official said that this would result in net savings for the government in 2011-12. States are expected to surrender unspent balances before getting fresh allocation.

During the last financial year, central government had allocated Rs 40, 100 crore to the MGNREGS scheme and almost the same amount in the current financial year i.e. 40,000 crore. The finance minister official said, "MGNREGS is a last resort for people when they do not get any jobs. With the economy doing largely well and better employment available, we expect that the demand for jobs under the scheme could be lower," adding that the government could save as much as Rs 18,000 crore from the scheme's allocation in 2011-12.

This would be good news for the central government, which is trying hard to meet the fiscal deficit target of 4.6% of the GDP for the present financial year. The slowdown in economic growth due to high inflation led by elevated global crude and commodity prices and increased interest rates by the central bank to curb inflation, has raised the concern of government over meeting the fiscal target for the present financial year.

The top gainers on the BSE sectoral space were FMCG up 1.83%, Realty up 1.19%, Consumer Durables (CD) up 1.19%, IT up 0.69% and Capital Goods (CG) up 0.65%. While Health Care (HC) down by 0.03% was the only loser in the BSE sectoral space.

The S&P CNX Nifty touched high and low of 5,657.90 and 5,606.10, respectively.

The top gainers of the Nifty were JP Associate up 3.85%, Kotak Bank up 3.36%, Jindal Steel up 2.51%, Cairn up 2.49% and Hindustan Unilever up 2.39%.

On the flip side, Sesa Goa down 2.67%, Bharti Airtel down 2.01%, ONGC down 1.84%, Maruti down 1.78% and ACC down 1.56% were the major losers on the index.

The food inflation numbers have shown some signs of cooling in the week ended June 18 and has drifted below the 8% levels, a week after convalescing over 9% levels. However, the Fuel & Power group index edged higher after remaining at unchanged levels in the week ended June 11. Though the inflation numbers continue to hover above the Reserve Bank of India's comfort levels, it is expected to shoot up further to double digits as the government in its recent move, to trim down the under recoveries of oil companies hiked prices of petroleum products.

According to the data released by Ministry of Commerce and Industry, the index for Food Articles group rose to 7.78 percent for the week-ended June 18, from 9.13 percent for the previous week due to lower prices of poultry chicken (4%), masur (3%), tea,  condiments & spices and jowar (2% each) and arhar, mutton and fish-inland (1% each).

The index for primary articles group which has the highest weightage of 20.12% in WPI cooled to 11.84 percent for the week from 12.62 for the previous week.

The index for 'Non-Food Articles' group eased to 17.91 percent from 18.43 percent for the previous week due to lower prices of flowers and raw cotton (3% each), cotton seed (2%) and raw jute, soyabean and raw silk (1% each).

The index for Fuel & Power group which carries a weightage of 14.91%, rose to 12.98 percent for the week against 12.84 recorded in the previous week due to higher prices of aviation turbine fuel (3%), naphtha (2%) and furnace oil (1%).

European markets were trading mixed. France's CAC 40 rose 0.08%, Britain's FTSE 100 gained 0.49% and Germany's DAX down by 0.11%.

All the Asian equity indices witnessed upswing on Thursday as investors continued their buying momentum after Greece approved a harsh austerity package to prevent the heavily indebted country from a massive default. The overnight rally on Wall Street too aided sentiments in the region. Moreover, Chinese index rose more than a percent, boosted by large cap plays with investors seen taking a cautious but an optimistic stance on the country's growth outlook while, Nikkei edged higher in the trade on hopes for the restart of Japanese mothballed nuclear plants.

Asian Indices	Last Trade	Change in Points	Change in %
Shanghai Composite	2,762.08	33.59	1.23
Hang Seng	22,398.10	336.92	1.53
Jakarta Composite	3,888.57	58.30	1.52
KLSE Composite	1,579.07	4.06	0.26
Nikkei 225	9,816.09	18.83	0.19
Straits Times	3,120.44	40.70	1.32
Seoul Composite	2,100.69	6.27	0.30
Taiwan Weighted	8,652.59	79.21	0.92

 

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