Christmas cheer triggers strong rally at Dalal Street; benchmarks surge 1.50%

A session after capitulating to late sell-off, Indian benchmark indices managed to pull through a scintillating performance by rallying around one and half a percentage points on the last Monday of the calendar year, thanks to the hefty short covering in the beaten down Technology and high beta Realty counters. The relentless across the board value picking ensured that the frontline indices settle closer to the psychological 4,800 (Nifty) and 16,000 (Sensex) levels amid the tentative recovery in risk appetite, amid thin trades a day after Christmas celebrations. The frontline indices hovering in a narrow range after the initial jump when the sentiments were partly lifted on hopes of strengthening US economic environment after a slew of economic reports suggested that the onerous Euro-zone debt trouble had little impact on the pace of world’s largest economy’s growth. The domestic markets outperformed their regional counterparts in the session as among the Asian markets which were open for trade, barring Japanese benchmark, all the indices settled in the negative terrain. While the Japanese benchmark managed to close with one percent gains, underperforming against the local bourses. Meanwhile investors brushed aside disappointing reports which showed that India’s foreign direct investment declined by over 50% to $1.16 billion in October for the second month in a row, reflecting economic slowdown in the world's major economies. Moreover, telecom stocks including Bharti Airtel and Idea jumped over four percent each in the session after the Telecom Disputes Settlement and Appellate Tribunal gave a temporary relief to the telecom companies by asking DoT not to take any coercive action against operators in the 3G roaming issue till the next hearing on January 3.

Earlier on Dalal Street, the benchmark got off to a flat opening with a positive bias following supportive leads from Asian markets, were sentiments remained optimistic in thin trades triggered by a slew of encouraging economic reports from the US. The frontline indices sooner than later capitalized on the momentum and crossed the psychological 15,900 and 4,750 levels. Thereafter, the indices kept oscillating in a narrow range through the day’s trade. However, hefty short covering in the late hours helped the indices to bounce to higher levels but mild resistance around the 16,000 and 4,800 levels pushed the key gauges back to a small extent by the end of trade. Nevertheless, the NSE’s 50-share broadly followed index - Nifty garnered close to one and half a percentage points to settle above the crucial 4,750 levels while Bombay Stock Exchange’s Sensitive Index - Sensex smashed a double century and closed just below the psychological 16,000 mark. Moreover, the broader markets too went home with notable gains in the session despite underperformig their larger peers. On the BSE sectoral space, the beaten down Technology counter remained the top gainer with over two and half a percent gains followed by the high beta Realty pocket which closed with over two percent gains. On the flipside, only the defensive Healthcare index failed to keep its head above the water and dipped marginally. The markets surged on weaker volumes of over Rs 1.25 lakh crore while the turnover for NSE F&O segment too remained on the lower side as compared to Friday at over 1.15 lakh core, despite this being the first day of December series F&O expiry week. The market breadth was optimistic as there were 1735 shares on the gaining side against 971 shares on the losing side while 147 shares remained unchanged.

Finally, the BSE Sensex climbed 232.05 points or 1.47% to settle at 15,970.75, while the S&P CNX Nifty surged by 65.00 points or 1.38% to close 4,779.00.

The BSE Sensex touched a high and a low of 15,998.44 and 15,761.18 respectively. The BSE Mid cap and Small cap indices were up by 0.83% and 0.98% respectively.

The major gainers on the Sensex were Hero MotoCorp up 4.75%, Bharti Airtel up 4.31%, Tata Steel up 3.01%, Infosys up 2.91% and Jaiprakash Associates up 2.89%. While, Cipla down 0.64%, Maruti Suzuki down 0.57%, and Hindalco Industries down 0.53%, were the major loser on the index.

On the BSE sectoral space, TECk up 1.65%, IT up 1.41%, Capital Goods (CG) up 1.21%, Realty up 1.12% and Auto up 1.00% were the major gainers while there was no loser on the BSE sectoral space.

Meanwhile, India’s foreign direct investment (FDI) declined by over 50% to $1.16 billion in October for the second month in a row, reflecting economic slowdown in the world's major economies. India received $2.33 billion overseas investment in the same month last year. In September, the inflows were at $1.76 billion, down by 16.5% year-on-year.

However, in April-October 2011, the FDI rose 50.3% to $20.8 billion, from $13.84 billion in the year-ago period as inflows were healthy in the initial months. Though in August FDI inflows had increased over two-fold to $2.83 billion, year-on-year, in July they declined after a significant jump for two consecutive months - May and June. 

Uncertain economic conditions in the US and Europe are one of the major reasons for the declining FDI in India. However, despite uncertainties in the global economy, FDI is likely to touch $35 billion in 2011-12, as against $19.4 billion in the last fiscal on account of major deals like RIL-BP and Posco.

Mauritius, Singapore, the US, the UK, the Netherlands, Japan, Germany and the UAE are major sources of FDI for India. In April-October 2011, the sectors that engrossed the maximum FDI include services, construction activities, power, computers and hardware, telecom and housing and real estate.

In order to attract more inflows by easing FDI procedures, the Reserve Bank of India said that transfer of shares between Indians and non-residents will not require its permission in several key areas like financial services.

During 2010-11, equity inflows through the FDI route had declined 25% to $19.43 billion, from $25.6 billion in 2009-10 compared to $27.3 billion in 2008-09.

The S&P CNX Nifty touched a high and low of 4,787.25 and 4,718.15, respectively.

The top gainers on the Nifty were Hero MotoCorp up 4.54%, Bharti Airtel up 4.45%, RCOM up 3.35%, Infosys up 3.24% and Tata steel up 3.02%. while there was no loser on the index.

Stock markets in Europe remained closed on Monday in observance of the Christmas holiday.

Shrugging off upbeat US economic data, most of the Asian equity indices snapped the day’s trade in the red on Monday amid ongoing concerns over Europe’s fiscal woes and investor caution in the last trading week of the year. Though most markets in the Asia pacific region remained closed, China stocks ended down by about 0.7 percent in thin volume amid concerns over an expected increase in supply in the coming year. The Shanghai Composite Index fell below the psychologically important 2,200 level again although trading remained light in holiday-thinned session, with turnover falling to a three-year low.

However, Japanese Nikkei rose by a percentage point as investors across the region reacted to upbeat US economic data and a move by lawmakers to extend temporary tax breaks and unemployment benefits, ending earlier Republican threats to block the moves.

Shanghai Composite was down 14.67 points or 0.67% to 2,190.11, Seoul Composite was down 10.52 points or 0.56% to 1,856.70 and Taiwan Weighted was down by 18.15 points or 0.26% to 7,092.58.

On the flip side, Nikkei 225 was up by 84.18 points or 1.00% to 8,479.34, remained the lone gainer amongst the Asian pack.

Stock markets in Hong Kong, Indonesia, Malaysia and Singapore remained closed on Monday in observance of the Christmas holiday.