Nifty surges 2% on F&O expiry, cracks 5.6% in August series

Moneycontrol Bureau

Bulls gained complete control over bears on Thursday, the last day of August series, as equity benchmarks climbed 2 percent, taking cues from the Wall Street post temporary easing of China-led turmoil. Short covering and value buying in major heavyweights like HDFC, ITC and Infosys helped the Nifty close August expiry above 7900-mark.

The 30-share BSE Sensex surged 516.53 points to 26231.19 and the 50-share NSE Nifty rallied 157.10 points to 7948.95. The broader markets outperformed benchmarks with the BSE Midcap and Smallcap indices rising around 2.5 percent each, largely driven by short covering. The market breadth remained strong as about 1993 shares advanced against 686 shares declined on the Bombay Stock Exchange.

Experts are not sure that the market has bottomed out after around 1600 points fall on the Sensex in previous three consecutive sessions. According to them, global factors (especially China-led) may play key role in near term, though India's fundamentals remain strong.

Nitin Jain of Kotak UK MF said India remained a bright spot among peers. According to him, this is the time to increase allocation to markets.

"There has been monetary prudence after Raghuram Rajan took over, there has been political ability [after the government change] and oil is now a semi-permanent gain for consumers," he reasoned.

August was the worst series for market in the last two years. The Nifty crashed 5.3 percent (from 8421.80 on July 30), the biggest fall in absolute terms since August 2013 due to global factors, especially China-led. The Sensex lost 5.6 percent. Bank Nifty shed 6.6 percent while CNX Midcap lost 3.4 percent and BSE Smallcap fell 6.3 percent.

Traders said the rollover has picked up on short side, which indicated that there may be one big fall in September series.

Sahaj Agrawal, associate vice president- derivatives, Kotak Securities expects Nifty to find support at 7750 level and buying support if lower levels are tested.Foreign institutional investors have been net sellers for the seventh consecutive session today. They have sold Rs 3,347.35 crore worth of equity shares while domestic institutional investors bought Rs 2,577.06 crore worth of shares, as per provisional data available with NSE. FIIs sold more than Rs 16,000 crore worth of shares in seven days.

Asian as well as European markets rallied smartly today following a massive 4 percent upside on Wall Street Wednesday, the biggest since October 2008. The rally in US markets was especially after comments from William Dudley, president of the New York Federal Reserve Bank, that the prospects of September rate hike seem "less compelling to me than it was a few weeks ago," given China's worries and lower oil prices.

The Shanghai Composite Index climbed 5.4 percent after losing 25 percent in previous five sessions. Nikkei was up 1 percent and Hang Seng rose 3.6 percent. European markets like France's CAC, Germany's DAX and Britain's FTSE gained 2-3 percent (at 16 hourst IST). In commodities, Brent crude and NYMEX oil jumped 4 percent each while gold was flat at USD 1126 an ounce.

Back home, banking & financials, healthcare, oil and metals stocks drove the market higher. HDFC, after 8 days of losses, spiked 8.4 percent, the biggest contributor in gains of benchmark indices. Cairn India climbed 7.6 percent on rising crude oil prices.

Shares like ITC, Lupin, Sun Pharma, Axis Bank, Cipla, ONGC, Vedanta and Tata Steel were up 2.6-6.6 percent. Bank of Baroda rose 6 percent after Morgan Stanley added the stock to its focus list with a target of Rs 240 apiece.

However, auto stocks lost ground; Bajaj Auto declined 2.4 percent followed by Tata Motors, Hero Motocorp and Maruti with modest losses. BHEL topped the selling list, down 3.5 percent.

In the broader space, Hathway Cable was up 8.4 percent after the Reserve Bank of India has lifted ban for FII investment.

Meanwhile, parliamentary affairs minister Venkaiah Naidu announced nominations of 98 cities for its ambitious Smart Cities project today. As per the five-year plan, the government will allocate Rs 200 crore this year and follow up with Rs 100 crore every year for remaining four years. UP, Tamil Nadu and Maharashtra states have got maximum nominations. NBCC, D Link, Smartlink Network, HCC and HDIL rallied 2-9 percent.