Markets extend gains; Capital Goods sector takes the lead

The Indian markets remain to be in jubilant mood in the mid morning session, taking cues from the firmness in the global markets. None of the sectoral gauges are showing any sign of weakness, while the rate sensitives’ continue to hog the lime light on buzz that Reserve Bank of India (RBI) will bring down the cash reserve ratio (CRR) requirement for banks in its upcoming monetary policy review on January 24. A rapid slowdown in food inflation in December has raised hopes of a reversal in its monetary tightening cycle. On the same time the continued weakness in the global crude prices has given reason of cheers for the domestic oil marketing companies, while other heavyweights in the sector like Reliance industries and Cairn India too are showing upmove of over a percent. The broader indices too are showing good strength and are outperforming their peers.

The BSE Sensex is currently trading at 16,054.60, up by 239.88 points or 1.52%. The index has touched a high and a low of 16,064.33 and 15,898.32 respectively.  All the 30 stocks were trading in green on the index.

The broader indices were outperforming the benchmarks; the BSE Mid cap index was up by 1.70% while the small cap index was trading up by 1.88%.

All the sectoral indices on the BSE were in green, the top performing ones were Capital Goods (CG) up by 2.24%, Bankex up by 2.22%, Auto up by 1.97%, Realty up by 1.89% and Metal was up by 1.68%.

The complete set of 30 scrips on the Sensex was in green,  top  among them were, M&M up by 2.93%, SBI up by 2.82%, Sun Pharma up by 2.81%, ICICI Bank was up by 2.43% and L&T was up by 2.37%.

Meanwhile, there is good news for the markets, foreign institutional investors (FIIs) have invested nearly Rs 6,500 crore into the Indian market, including stocks and bonds, in the first week of the January 2012. According to information available with market regulator SEBI, FIIs have purchased equities and debt securities worth a gross amount of Rs 15,168 crore. On the other hand, they have sold shares and bonds worth Rs 8,674 crore in the same period, making a net investment of Rs 6,494 crore for the period.

Experts are of the view that optimistic global cues along with declining food inflation number have helped to enhance investor confidence in the market during the week. In the first week, FIIs were more bullish on the debt market, translating into a net investment of Rs 5,488 crore during the period, whereas their investment in stocks stood at Rs 1,006 crore.

The government on January 1 had announced a new scheme, under which qualified foreign investors (QFI), including overseas individuals were allowed to invest directly in Indian stock markets. This was done with the intention to widen the profile of investors and attract more foreign funds in the wake of FII money being taken-out from the markets.

Further, the move is also expected to trim down market volatility and deepen the Indian stock markets. Earlier, QFIs were permitted to invest only in mutual fund schemes. The foreign investors could earlier invest into Indian markets through opening accounts with SEBI registered FIIs or through participatory notes.

In 2011, FIIs purchased stocks and bonds worth Rs 8 lakh crore, but sold securities worth Rs 7.9 lakh crore, resulting into an investment of Rs 1,7480 crore for the year. On the other hand, investors have gathered towards the debt market and made an investment of Rs 20,293 in the year 2011, while at the same time they stayed away from equity market and pulled out Rs 2,812 crore.

The S&P CNX Nifty is currently trading at 4,814.95, up by 72.15 points or 1.52%. The index has touched a high and a low of 4,818.50 and 4,768.25 respectively.  There were 47 stocks advancing against 2 declines, while one stock remained unchanged on the index.

The top gainers of the Nifty were Axis Bank up by 3.54%, M&M up by 3.01%, SBI was up by 2.93%, BPCL was up by 2.87% and Sun Pharma was up by 2.68%.

On the flip side, Ranbaxy down by 1.01% and Grasim down by 0.37% were the only losers on the index.

Most of the Asian equity indices were trading with good gains, Shanghai Composite was up by 1.72%, Hang Seng gained 0.55%, Jakarta Composite was up by 0.43%, Nikkei 225 was up by 0.43%, Straits Times was trading higher by 0.87%, Seoul Composite surged by 1.64% and Taiwan Weighted was up by 1.12%.