Markets end higher on lower CAD, rupee gains

The markets ended nearly 2% higher on Thursday, amid firm global cues, after lower-than-expected current account deficit eased worries about deficit funding and the strengthening rupee against the US dollar also boosted market sentiment. Further, the June derivative contracts expired today.

"Rollover to the July series remains on the weak side. Short aggression is not being carried forward to the July series indicating possibility of a bounce back. Open interest concentration in the Nifty options segment is seen at 5500-5600 put and 5800-5900 call options.We expect the index to find support at 5550 levels and bounce back to 5750-5800 in the near term," said Sahaj Agrawal, Deputy Vice President-Derivatives Research at Kotak Securities.

The 30-share Sensex ended at 18,876 up 324 points or 1.75% and the 50-share Nifty ended at 5,682 up by 94 points or 1.68%. The Sensex and the Nifty reached an intra-day high of 18,926 levels and 5,699 mark, respectively.

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The Indian rupee gained on Thursday, backing off from a record low hit in the previous session, as the country's current account deficit (CAD) narrowed in the January-March quarter, easing some concerns about the funding of the deficit.

The rupee was up at 60.21 to the dollar, recovering from a record low of 60.76 hit on Wednesday. The currency closed at 60.7150/7250 in the previous session. 

India's current account deficit hit a record high 4.8% of gross domestic product in the fiscal year that ended in March, fuelled by rising imports of oil and gold, but was lower than an expected gap of 5%, giving a boost to the battered rupee. India's current account deficit may widen because of money outflows, Finance Minister P. Chidambaram said on Thursday.

On the global front, Japan's Nikkei share average climbed 3% on Thursday, bouncing back from a three-day losing streak, as fears of a US stimulus pullback and a Chinese credit crunch eased.  

The benchmark posted its biggest one-day percentage gain in 13 sessions as regional markets firmed. The Nikkei advanced 379.54 points to close at 13,213.55. It had dropped 3% over the past three days.

Back home, BSE Oil & Gas, Healthcare and IT indices surged 2.5-3% each followed by counters like Realty, Banks and PSU, all gaining between 1-2%. However, BSE Consumer Durable indices declined by nearly 2%.

Shares of oil and gas companies were in limelight ahead of Cabinet Committee on Economic Affairs (CCEA) meeting today to decide on raising natural gas prices for the first time in three years. ONGC and Reliance Industries have surged between 3.5-4%.

Software exporters ended higher on the back of a weakening rupee. Infosys and TCS have gained between 3-4%.

Financial shares were also up on short covering and bargain hunting after the recent correction. HDFC Bank, HDFC, ICICI Bank and SBI increased 1-3% each.

From the healthcare space, Sun Pharma, Dr Reddy’s Lab and Cipla gained between 2-4%.

Dr Reddy’s Laboratories (DRL) surged on the back of increased traction in approvals from the US Food and Drug Administration (US FDA) for new product launches. This, in turn, has improved the earnings outlook for FY14.

On the losing side, Maruti Suzuki was the top Sensex loser, down nearly 2%. JSPL, Tata Motors, NTPC and Coal India declined by 1% each.

The broader markets underperformed the benchmark indices- BSE Midcap and Smallcap indices gained by 0.3%.

The market breadth in BSE ended marginally positive with 1,210 shares advancing and 1,111 shares declining.

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SMART MOVERS

Shares of Gitanjali Gems were locked lower circuit for forth day in a row, eroding over Rs 2,000 crore to its market value, on concerns that the recent drop in gold prices coupled with the Reserve Bank of India and restrictions by the government would hurt company's growth and earnings going forward.

The stock almost halved to Rs 263 from Rs 507 at the beginning of current week, have seen erosion of market capitalization of Rs 2,246 crore at Rs 2,418 crore on BSE. The company had m-cap of Rs 4,664 crore on June 21.

Crompton Greaves ended higher by nearly 2% after the company said it bagged three contracts from Power Grid Corporation of India (PGCIL), valued at Rs 232 crore for its Thiruvelum, Kurnool, Raipur and Wardha substations.

Hanung Toys and Textiles plunged by 20% after reporting a net loss of Rs 33 crore for the quarter ended March 2013, due to higher depreciation and other expenditure. The company had net profit of Rs 44 crore in a year ago quarter.

Shares of Tech Mahindra and Mahindra Satyam surged, extending their past few days gains, on back of heavy volumes ahead of merger.

Steel Authority of India (SAIL) ended lower by over 2% in otherwise strong market on reports that a government panel recommended an increase in royalty fees for iron ore, a key raw material, which may lead erosion in earnings.