Indian equities edge higher extending euphoric trade

Indian equities continued its rally to edge higher in the late afternoon session on back of buying visible across the sectors. Investors bought stocks across the board on the back of positive cues from Asian peers and on expectations of rate cut by the Reserve Bank of India. Traders were seen piling up the position in Realty, Bankex and Metal sector. Interest rate sensitive realty and banking stocks were in limelight on expectations that the RBI will start cutting interest rates in the coming months to prop up slowing economy. Investors are also setting their eyes on a handful of economic readings coupled with third quarter earnings of domestic companies like Infosys and HDFC, which will further determine the direction of stock markets. Infosys will kick off the earning season for the December quarter on Thursday January 12, 2012. Data on industrial production for November 2011 will be released on January 12, 2012, and data on inflation for December 2011 will be released on January 14, 2012, could provide cues for the central bank's likely policy stance at the third quarter review of Monetary Policy 2011-12 scheduled on January 24, 2012.

Industry heavyweights RIL was trading firm in green with gain of around more than three percent giving the much needed support for the market. Axis Bank, SBI, ICICI Bank, PNB, Kotak Bank and HDFC Bank from Banking counters were trading firm in green pulling the markets higher. Hindalco, Jindal Steel, Sesa Goa, SAIL, Tata Steel and Sterlite from Metal pack were seen trading in green driving the markets higher. However, TCS, Tata Power, Ranbaxy and Grasim were trading in red exerting pressure on the market. In the scrip specific development, Alfa Laval India jumped after its parent company had offered to delist the stock at a price of Rs 2,850 per share. GeeCee Ventures rose after the company's board approved buyback of up to 16 lakh shares at a price not exceeding Rs 65 per share. On the global front, all Asian markets traded in green while the European markets were too trading in green on optimistic note. Germany and France warned Greece yesterday that it will get no more bailout funds until it agrees with creditor banks on a bond swap and pressed for an early deal to avert a potential default in the euro zone's most debt-stricken nation. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 4,800 and 16,100 levels, respectively.

The BSE Sensex is currently trading at 16,103.43 up by 288.71 points or 1.83% after trading as high as 16,122.41 and as low as 15,898.32. There were 28 stocks advancing against 2 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap index surged 2.01% while Small cap soared 2.48%.

On the BSE sectoral space, Realty up 3.63%, Bankex up 2.94%, Metals up 2.68%, Capital Goods up 2.51% and Auto up 2.30% were the major gainers while there were no losers in the space.

Mahindra & Mahindra up 4.62%, ICICI Bank up 4.10%, SBI up 3.76%, Jindal Steel up 3.69% and Hindalco up 3.65% were the major gainers on the Sensex, while Tata Power down 1.28% and TCS down 0.40% were the only losers in the index.

Meanwhile, in order to get the natural gas, currently supplied to non-core users like refineries and steel plants, re-allocated to core sectors, the Association of Power Producers (APP) have requested the Ministry of Petroleum & Natural Gas to consider discontinuing gas to non-core sectors and utilize the same for core sectors like power and fertilizer. Private power producers informed that over 18 million standard cubic metres per day (mmscmd) of natural gas is presently being supplied to non-priority sectors.

The private electricity generators are awaiting gas allocation by the Empowered Group of Ministers (EGOM) as gas-based power projects with a generation capacity of about 4,000 MW are ready to commence power generation before March 31, 2012. The association also underscored the fact that public money in the form of debt provided by various Indian banks and financial institutions is at a grave risk unless these projects start commercial operation by March 31, 2012. Private power producers’ association is also of the belief that around 80 mmscmd of gas can be released for allocating to upcoming projects provided the capacity utilization of all power plants is rationalized at around 60 percent.

At a time when India’s power industry is going through a challenging period and availability of gas is also becoming scant due to the sharp and constant reduction in gas throughout from refining major Reliance Industries, there is urgent need of government interventions and swift decision making in order to avoid idling of capacity. With the country’s overall gas based power capacity amounting to 16,600 MW, the total consumption of gas by these plants currently stands at 66 mmscmd with an average capacity utilization of around 70 percent.

The S&P CNX Nifty is currently trading at 4,832.85, higher by 90.05 points or 1.90% after trading as high as 4,837.20 and as low as 4,768.25. There were 45 stocks advancing against 4 declines while 1 stock remained unchanged on the index.

The top gainers on the Nifty were Reliance Power up 5.53%, Reliance Infra up 5.13%, M&M up 4.69%, Axis Bank up 4.07% and ICICI Bank up 3.96%.

TCS down 1.03%, Tata Power down 0.96%, Ranbaxy down 0.87% and Grasim down 0.29% were the only losers on the index.

Asian markets traded on an optimistic note; Shanghai Composite surged 2.69%, Hang Seng climbed 0.73%, Jakarta Composite gained 0.83%, Nikkei 225 added 0.38%, Straits Times soared 1.04%, Seoul Composite jumped 1.46% and Taiwan Weighted amassed 1.21%.

The European markets were trading in green with, France’s CAC 40 advanced 0.90%, Germany’s DAX climbed 1.26% and Britain’s FTSE 100 advanced 0.92%.