Post session - Quick review

Indian markets witnessed a bright day of the New Year, extending their last sessions’ late bounce back, mainly tailing the surge in the regional markets, though the US markets were closed overnight unable to give any cue to the other global markets but good economic reports from across the region helped the domestic markets to break the jinx of last year. Markets upsurge only ended with the closing bell otherwise the bulls rampage seemed taking the markets to new high. Initially the markets moved in tandem with their regional peers as China’s manufacturing index rose in December to 50.3 percent, the Indian PMI too rose to 54.2, the most in six months, in a sign that the world’s fastest-growing major economies are withstanding Europe’s debt crisis. None of the sectoral gauges seemed faltering at any point of time.

Indian markets have been battering in last year due to slow economic growth, high inflation and continuously rising interest rate. Today’s trade came as a big relief for the ailing markets with positive economic news. According to the HSBC purchasing managers’ index (PMI), the manufacturing sector expanded to 54.2 in December, as against 51 in the previous month of 2011, a figure above 50 signals increase in production. Not only this, there was indication by the central bank that it could reverse the tight monetary stance it adopted since March 2010 to tame inflation. It soothed all the rate sensitive sectors, however the clear winner of the day was metal pack which surged by good around five percent on hopes of demand growth with economic recovery. Only the FMCG pack registered gains of less than a percent after an Assocham study had said that weak rupee and rising input costs may force FMCG companies to increase prices of their products in 2012, which in turn is likely to hit sales during the year by about 10-15 per cent. Though, there was some somberness in the PSU oil marketing companies as it was reported that the oil ministry has not allowed state-run fuel retailers to hike petrol price. The retailers wanted to raise petrol price by about Rs 2 per litre in wake of depreciating rupee and rising import cost. HPCL, BPCL and IOC were down by 0.5-1.5%. The export oriented companies too remained weak as the Exports in November grew at the slowest pace in 24-months mainly on the back of feeble demand in the traditional markets such as the European Union and the US. However, apart from the sectoral gauges some individual stocks kept buzzing for the day, TV18 Broadcast touched the upper circuit level in early trade on buzz to announce a mega deal on its efforts to raise funds to pare its debt and fund a merger with one of the country’s largest regional television networks. Later the board of directors in a meeting approved the acquisition of 100% interest in regional news channels in Hindi and an outlay of up to Rs. 2,100 crore for this acquisition. Board also approved a Rights Issue of Equity Shares to raise an amount up to Rs 2,700 crores. The other stock that remained in limelight was Coal India after the company’s board approved switching over of non-coking coal pricing from useful heat value (UHV) based grading system to gross caloric value (GCV) based classification. Finally the rally of the markets ended near the high points of the day with gains of over 2.5 percent.

The market breadth on the BSE ended in positive; advances and declining stocks were in a ratio of 1874:856 while 137 scrips remained unchanged.

The BSE Sensex gained 405.67 points or 2.61% and settled at 15,923.59. The index touched a high and a low of 15,970.31 and 15,640.56 respectively. 28 stocks advanced against 2 declining ones on the index (Provisional)

The BSE Mid-cap index lost 2.42% while Small-cap index was up by 2.28%. (Provisional)

On the BSE Sectoral front, Metal up 4.84%, Capital Goods up 4.53%, Realty up 4.32%, Bankex up 4.27% and PSU up 3.76% were the top gainers while there were no losers.

The top gainers on the Sensex were DLF up 6.48%, Tata Steel up 5.80%, BHEL up 5.58%, Tata Motors up 5.44% and Jindal Steel up 5.31%.

On the flip side, M&M down 1.16% and Hero MotoCorp down 0.19% were the only losers in the index. (Provisional)

India’s manufacturing activity showed some resilience in the month of December as it accelerated at a swift pace on the back of strong new work intakes and output growth. The expansion in manufacturing came in the face of continued contraction in most Asian nations and across the European region. However, upbeat domestic demand, new orders and increase in exports together helped in underpinning Indian PMI index to remain in the expansionary territory for 33 months in a row.

According to the HSBC purchasing managers’ index (PMI), the manufacturing sector expanded to 54.2 in December, as against 51 in the previous month of 2011. A figure above 50 signals increase in production while, a number below 50 indicates contraction. Though the factory sector growth in the month remained lower than the long-run series average, however, the PMI reading, which measures the overall health of manufacturing sector, suggested that factory activity saw strongest improvement in business conditions in last six months.

After showing signs of cooling and coming extremely close to contracting in the last few months, the manufacturing sector has bounced back on improved domestic and foreign demand, indicating that momentum in the sector is not as bad as other official manufacturing indicators pointed out recently. The month of December saw sharp rise in new order volumes while the rate of growth of manufacturing output accelerated to highest levels in four months. Besides, manufacturing sector employment rose in the month under review after four straight months of showing job losses. But, the rate of input cost inflation despite showing signs of easing in November, remained stubbornly above the long-run series average.

Meanwhile, the RBI after relentlessly hiking key interest rates thirteen times since March 2010 in its bid to rein in the inflationary pressure on the economy, showed some mercy and paused the liquidity tightening cycle in its last policy review meet in December. The RBI governor has also hinted at moving towards monetary easing as its concerns shifted from containing inflation to helping the cooling economy recuperate.

India VIX, a gauge for market’s short term expectation of volatility lost 4.97% at 26.16 from its previous close of 27.53 on Monday. (Provisional)

The S&P CNX Nifty gained 124.40 points or 2.68% to settle at 4,761.15. The index touched high and low of 4,773.10 and 4,675.80 respectively. 46 stocks advanced against 4 declining ones on the index. (Provisional)

The top gainers on the Nifty were DLF up 6.70%, Kotak Bank up 6.28%, Tata Steel up 5.73%, Axis Bank up 5.67% and BHEL up 5.64%.

On the other hand, M&M down 1.65%, BPCL down 1.62%, Ambuja Cement down 0.93% and Hero MotoCorp down 0.70% were the only losers. (Provisional)

The European markets traded on a mix note, with France's CAC 40 down 0.42%, Germany's DAX up 1.27% and Britain’s FTSE 100 up 1.18%.

Equity markets which were opened for trade in Asia, ended with a significant gains on Tuesday, with resource and financial firms among the notable gainers, as investors welcomed marginal improvement in factory activity across the globe. Chinese manufacturing unexpectedly rebounded in December on holiday shopping, as the world's number two economy showed some resilience despite strife in key export markets. The country’s purchasing managers index (PMI) reached 50.3 in December. A reading above 50 indicates the sector is expanding.

Hang Seng soared 443.02 points or 2.40% to 18,877.41, Jakarta Composite gained 48.74 points or 1.28% to 3,857.88, Straits Times was up by 42.01 points or 1.59% to 2,688.36, Seoul Composite surged 49.04 points or 2.69% to 1,875.41 and Taiwan Weighted added 101.17 points or 1.46% to 7,053.38.

Stock markets in China and Japan remained shut for extended New Year’s holiday.