New Year cheer leads Indian equities to a positive close on first trading day

The domestic benchmark equity indices managed to gather some impetus in final hours of the session to snap the first trading day of 2012 on an optimistic note with moderate gains of under half a percent. At one point in time frontline indices drifted below the psychological 4,600 (Nifty) and 15,400 (Sensex) levels for a brief period as the initial optimism fizzled out after investors morale got dampened on getting a mixed bag of monthly sales numbers from major Automobile companies. However optimism sustained in the session as reports showed that the government took a bold step to allow foreign individual investors, pension funds and trusts to directly invest in Indian equities. Sentiments also got support from reports that showed that despite uncertainty looming over global economic outlook, India registered a 36 percent increase in foreign direct investment (FDI) inflow during the January-October period of 2011. Besides, the upside for domestic bourses was also capped as the defensive-FMCG pocket plunged by around a percent as a survey conducted by ASSOCHAM opined that the increase in cost burden might be shifted to the consumers which will dampen sales by about 10-15%. The depreciating rupee and increasing input costs are putting additional pressure on margins of FMCG companies which is likely to compel the FMCG companies to hike prices of their products in 2012. On the global front, majority of Asian markets remained closed for extended New Year holiday while the markets that were open, exhibited pessimistic trends. However, the positive leads from European markets too lifted domestic sentiments after a measure of German manufacturing showed unexpectedly higher growth.

Earlier on Dalal Street, the benchmark got off to a promising start after four straight sessions sell-off as government’s decision to allow QFIs to directly invest in the local markets boosted sentiments. After trading in the positive terrain for some time the indices lost steam and went ahead to touch the lowest point in the session in early noon trades. However, the psychological 4,600 and 15,400 levels proved as strong supports for the key gauges as they rebounded from the intraday lows. Thereafter the frontline indices gathered momentum following optimistic leads from European markets which helped the bourses to snap four session downtrend and settle around high point of the day. Eventually, the NSE’s 50-share broadly followed index - Nifty gained over a quarter percent to close above the crucial 4,600 levels while Bombay Stock Exchange’s Sensitive Index - Sensex added sixty three points and closed above the psychological 15,500 mark. Moreover, the broader markets failed to show any fervor and settled on a flat note, underperforming their larger peers. On the BSE sectoral space, the Consumer Durable counter remained the top gainer in the space with over a percent gains followed by the Oil & Gas index which too ended with similar gains. On the flipside, the defensive FMCG pocket got punished in the session and closed with over a percent cuts while rate sensitive counters like Automobile counter too was not spared by investors. The markets gained on extremely low volumes of over Rs 0.74 lakh core while the turnover for NSE F&O segment also remained on the lower side at over 0.64 lakh crore considering this was the second day of a new futures and options series. The market breadth too remained optimistic as there were 1408 shares on the gaining side against 1259 shares on the losing side while 124 shares remained unchanged.

Finally, the BSE Sensex gained 63.00 points or 0.41% to settle at 15,517.92, while the S&P CNX Nifty rose by 12.45 points or 0.27% to close at 4,636.75.

The BSE Sensex touched a high and a low of 15,542.85 and 15,358.02 respectively. The BSE Mid cap index was down by 0.07% and Small cap index was up by 0.11%.

The major gainers on the Sensex were Coal India up 3.61%, Tata Motors up 3.03%, Reliance up 2.03%, Maruti Suzuki up 1.82% and ICICI Bank up 1.73%. While, Bajaj Auto down 7.40%, Hero MotoCorp down 3.50%, Hindalco down 3.02%, DLF down 2.13% and NTPC down 1.53%, were the major loser on the index.

On the BSE sectoral space, Consumer Durables (CD) up 1.35%, Oil & Gas up 1.31%, IT up 1.23%, TECk up 1.08% and Metal up 0.64% were the top gainers while FMCG down 1.31%, Auto down 1.20%, Power down 0.44%, realty down 0.39% and Health Care (HC) down 0.16% were the top losers on the BSE sectoral space.

Meanwhile, despite the fact that uncertainty continues to loom over global economic outlook, yet India registered a 36 percent increase in foreign direct investment (FDI) inflow to $ 23.68 billion during the January-October period of 2011 as compared to FDI worth $ 17.36 billion during the same period in 2010. However, the FDI inflows in the financial year 2010-11 were at $ 19.42 billion, down from $ 25.83 billion in 2009-10.

As per the data released by ministry of commerce and industry, Financial and non- financial, telecom, housing and real estate, and construction and power remained the most lucrative sectors that attracted maximum investments.  The nations from where major part of investments were routed into India were Mauritius, Singapore, the US, the UK, the Netherlands, Japan, Germany and the UAE.

In its bid to raise external debt, the government has gone on to further liberalize the FDI regime and allowed overseas investment in bee-keeping and share-pledging. Moreover, the government has also eased certain conditions for FDI in construction of old-age homes and educational institutions which will not be subject to the minimum and built-up area, capitalization and lock-in period norms as applicable for the construction activities. But still more need to be done by the government to further streamline policies and make the environment more conducive to FDI.

The S&P CNX Nifty touched a high and low of 4,645.95 and 4,588.05, respectively.

The top gainers on the Nifty were Coal India up 4.04%, Tata Motors up 3.25%, RCOM up 3.07%, Maruti up 2.15% and Reliance up 2.08%. On the flip side, Bajaj Auto down 7.57%, Sesa Goa down 4.28%, Hero MotoCorp down 3.52%, Grasim down 3.45% and Hindalco down 2.85% were the top losers on the index.

The European markets were trading mixed. France's CAC 40 advanced by 0.80%, Britain’s FTSE 100 up by 0.10% and Germany's DAX up by 1.36%.

The few equity markets in Asia which were opened on Monday ended lower, while South Korea’s benchmark index ended the day flat, as hopes for signs of an economic recovery ahead of a set of key US data releases were tempered by persistent euro zone worries and sluggish domestic manufacturing activity. Meanwhile, data released early on Monday showed South Korea's manufacturing activity for December dipped to a fresh three-year low, underscoring concerns about slowing global demand in the face of an unresolved debt crisis in Europe.

Markets in Taiwan and Indonesia snapped the day’s trade in the red on Monday, while several others in the region including China, Hong Kong, Japan and Singapore remained closed in observance of new year’s day,

Jakarta Composite declined 12.85 points or 0.34% to 3,809.14 and Taiwan Weighted was down by 119.87 points or 1.69% to 6,952.21.

On the flip side, Seoul Composite was up 0.63 points or 0.03% to 1,826.37.