Anna impact along with Bernanke speech re-energize bulls; benchmarks surmount crucial levels

After weeks of horrendous feat, Indian benchmark staged a blockbuster performance on the first day of a new week by vehemently rallying close to a whopping over three and half a percent in the session and re-conquering the psychological 16,400 levels (Sensex) and 4900 (Nifty). The frontline indices took a quantum leap, registering the best gains in this calendar year. Sentiments across the globe remained highly sanguine in the session as Fed Chairman Bernanke gave his much anticipated speech in Jackson Hole, Wyoming, expressing mild optimism for the US economy but did not explicitly announced a third round of quantitative easing. Marketmen cheered Fed Chairman Bernanke's optimistic view of the US economy as he was hopeful that the world's largest economy will gradually get better and that the Fed has more options to prop up growth. The onus now has shifted to the 2-day Fed FOMC meeting on September 21 where the central bank is expected to announce fresh policy measures. Meanwhile, the Hurricane Irene which pounded the New York metropolitan area with furious winds and lashing rain overnight on Sunday, resulting in flooding, downed trees and power outages in some areas, did not have any effect on the US futures which exhibited optimistic trends. The European and Asian counterparts too displayed energetic performances in the session. On the domestic front, local investors also cheered the government's decision to give into anti-corruption crusader Anna Hazare's demands on the Jan Lokpal bill, as it is perceived that decisions on key economic reforms were held back. The Indian central bank too spent a day full of activity as they released one report after another. Earlier in the day the RBI released report on the issues and concerns in the NBFC Sector in which the RBI panel advocated for tough new norms for non-banking financial companies (NBFCs) with the aim of strengthening the regulatory and supervisory framework for such lenders. Latter the Reserve Bank released draft guidelines for licensing of New Banks in the Private Sector. In another development, the government is likely to announce a duty drawback scheme soon to replace the Duty Entitlement Passbook (DEPB) scheme that expires on September 30. Reports suggest that the government's new duty drawback rates may be 1-3% lower than DEPB rates.

Earlier on Dalal Street, the benchmark got off to a gap up opening in tandem with the optimistic sentiments prevailing in Asian markets post the Fed Chairman's enthralling speech. The frontline indices gathered momentum and commenced the northbound journey with great conviction. There appeared no resistance what so ever throughout the session as the indices kept conquering one psychological level after another. The indices surged from strength to strength and the journey halted only with the end of session around the highest point of the day. Finally the NSE's 50-share broadly followed index Nifty, accumulated over one hundred fifty points to settle a below the crucial 4,900 support level while Bombay Stock Exchange's Sensitive Index Sensex garnered a gargantuan over five hundred fifty points and ended above the psychological 16,400 mark. The broader markets traded on an optimistic note through the session, but failed to match the fervor displayed by their larger peers and settled with gains of over two percent. On the BSE sectoral space, the information technology and rate sensitives' which went through turbulent times in recent days saw huge position build-up in the session while the defensives' like Heathcare and FMCG were not amongst the swiftest of gainers yet traded with around a percent gain. Barring the two heavyweights, ONGC and Maruti Suzuki, all the components of the Sensex settled in the green territory. The markets bounced on good volumes of over Rs 1.01 lakh crore while the turnover for NSE F&O segment too remained reasonable compared to Friday at over 0.90 lakh crore. The market breadth remained extremely optimistic as there were 2121 shares on the gaining side against 716 shares on the losing side while 103 shares remained unchanged.

Finally, the BSE Sensex climbed 567.50 points or 3.58% to settle at 16,416.33, while the S&P CNX Nifty Jumped 171.80 points or 3.62% to close at 4,919.60.

The BSE Sensex touched a high and a low of 16,462.03 and 16,068.73 respectively. The BSE Mid cap and Small cap indices were up by 2.48% and 2.06% respectively.

The top gainers on the Sensex were TCS up 7.32%, Jaiprakash Associate up by 6.92%, Jindal Steel up by 6.75%, Tata Steel up by 5.90% and L&T up by 5.45%.

On the flip side, ONGC down 1.10% and Maruti Suzuki down 0.02% were the top losers on the index.

The top gainers on the BSE sectoral space were, IT up 5.06%, Metal up 4.63%, Reality up 4.43%, TECk up 4.15% and Bankex up 4.10%. There was no loser on the BSE sectoral space.

Meanwhile, to enhance trade over the land routes, India and Bangladesh have taken the first major step by relaxing the present practice of unloading trucks at the zero border point. Trucks from both sides would now be allowed to enter 200 metres inside each other's territories.  To reinforce trade at the Petropole-Benapole border in Bengal's North 24 Parganas district, Union Home Minister P Chidambaram laid the foundation stone for a new road there to ensure flawless traffic flow on the route, with state-of-the-art warehouses and modern parking facilities for heavy vehicles. The Petropole border is the largest land customs station in Asia.

The total cost of the project is around Rs 125 crore and State-run RITES is the advisor. This new stretch would be a bypass road on the present congested one, connecting Benapole to NH35, bypassing Bongaon, the last town in the India-Bangladesh border that is 97 km from Kolkata. This move by the government would ease overcrowding and allow trucks to move in a smoother fashion to the Bangladesh side and also to receive the traffic coming from there. It is also reported that both the sides were also discussing a Comprehensive Motor Vehicular Agreement, to encourage seamless cross-movement of cargo.

Development of the land trading route with the installation of proper security measures was on the main agenda discussed during the visit of Bangladeshi Prime Minister, Hasina, in January 2010. Both sides had agreed to comprehensively address all land boundary issues and announced creation of a Joint Boundary Working Group. The need of sufficient infrastructure in the trading routes across borders has resulted in major delays and cost overruns. Traffic congestions, delay in handling shipments and increasing storage-dwell times have been major non-tariff barriers for trade.

Earlier last month, Commerce, Industry and Textile Minister Anand Sharma and his Bangladeshi counterpart, Muhammad Faruk Khan, inaugurated 'Border Haats' at Kalaichar in the West Garo Hill district in Meghalaya. It is estimated that bilateral trade worth $20 million will take place annually from these Haats, which would re-establish the traditional system of marketing local produce.

The bilateral trade between India and Bangladesh has increased from $2.7 billion in 2009-10 to $3.9 billion in 2010-11, an increase of 45 percent. The growth of exports from Bangladesh to India has also increased from $0.25 billion in 2009-10 to $0.39 billion in 2010-11. In 2010, India offered a $1 billion line of credit to Bangladesh, the largest ever one-time bilateral financial assistance extended to any country by India.

The S&P CNX Nifty touched high and low of 4,934.40 and 4,806.05, respectively.

The top gainers of the Nifty were Reliance Capital up 13.22%, HCL Tech up 8.19%, TCS up 7.35%, Reliance Power up 7.25% and Kotak Bank up 6.98%.

On the flip side, ONGC down 1.42% and Maruti down 0.09% were the top losers on the index.

The European markets were trading in green. France's CAC 40 surged by 1.89% and Germany's DAX soared by 1.36% while Britain's FTSE 100 was closed for a summer bank holiday.

All the Asian equity indices barring Shanghai Composite finished the day's trade in the positive terrain on Monday tracking climbs in US stock futures after US Federal Reserve Chairman Ben Bernanke raised expectations for more stimulus for the world's largest economy. Index like Straits Times, Seoul Composite, Taiwan Weighted and Hang Seng surged in the trade by 1-3 percent after Bernanke provided more hopes to investors ahead of (U.S.) President Barack Obama's September 5 speech and the next Federal Open Market Committee (FOMC) meeting on September 20. Chinese Shanghai ended with a cut of over a percent as concerns about monetary tightening returned while Tokyo pared early gains after Japan's finance minister Minister Yoshihiko Noda, a fiscal hawk, won the ruling party leadership run-off vote to become Japan's next prime minister.

Asian Indices	Last Trade	Change in Points	Change in %
Shanghai Composite	2,576.41	-35.78	-1.37
Hang Seng	19,865.11	282.23	1.44
KLSE Composite	1,447.27	2.46	0.17
Nikkei 225	8,851.35	53.57	0.61
Straits Times	2,791.89	43.71	1.59
Seoul Composite	1,829.50	50.55	2.84
Taiwan Weighted	7,578.01	132.91	1.79
Jakarta Composite	-	-	-

 

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