Post session - Quick review

The Indian equity markets after consolidating in the last session surged on Tuesday, depicting a rally that took the benchmark indices near to the crucial psychological levels of 5000 (Nifty) and 16500 (Sensex). A flat start slowly turned into a strong rally with across the board buying. The US markets were closed last night so there was not much cue from the global markets, however the Asian markets remained in optimistic mood since beginning despite the concern of mass downgrade by the S&P of many European nations. It was the better than expected Q4 GDP data from China that filled jubilation across the region. Though China's gross domestic product grew at its weakest in two and half years in the fourth quarter, slowing to an annual rate of 8.9 percent from 9.1 percent in the previous quarter, but it beat expectations for a 8.7 percent rise. The major European markets too made a euphoric start and all the major indices were up by over a percent in early trade.

The start of the day was on an optimistic note for the Indian markets with the better than expected December quarter numbers by IT major HCL Technology, the company has posted a 15.4% growth in consolidated net profit at Rs 572.7 crore, its revenue were up by 12.8% to Rs 5,425 crore. It bagged 18 deals across the sector with total contract value exceeding $1 billion this quarter that has helped in a better performance. On the global front ECB President Mario Draghi downplayed the S&P’s mass downgrades and calmed the nerves of the worried investors, however it warned that the eurozone situation remains grave. The better than expected economy growth numbers of neighboring nation China suddenly spurted the metal sector on expectation of demand revival, realty and capital goods gauges closely followed the commodities. Though there was lots of buzz in the non sectoral gauges, airlines stocks zoomed ahead of a meeting of a group of ministers to consider a proposal to allow foreign airlines to buy stake into domestic carriers. While, foreign airlines are barred from investing in Indian carriers, other foreign investors are allowed to pick up to 49% stake. The ministers will also discuss the group of secretaries' recommendation to allow domestic carriers to import fuel directly rather than buying it from oil marketing companies. On the same time one sector that turned in somber mood was the sugar pack after the Supreme Court directed the private sugar mill owners in Uttar Pradesh to clear the dues of sugarcane growers. Balrampur Chini Mills lost around 4%, while Bajaj Hindusthan lost almost 3% for the day. Though, the bluechips surged but the broader indices too contributed a lot in the day’s rally. In scrip specific movement Maruti Suzuki surged by over 10% after reportedly increasing prices of all its vehicles.

The market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 1885:989 while 111 scrips remained unchanged. (Provisional)

The BSE Sensex gained 254.25 points or 1.57% and settled at 16,443.61. The index touched a high and a low of 16,501.38 and 16,270.87 respectively. 24 stocks advanced against 6 declining ones on the index (Provisional)

The BSE Mid-cap index gained 1.29% while Small-cap index was up by 1.10%. (Provisional)

On the BSE Sectoral front, Metals up 3.46%, Capital Goods up 3.43%, Realty up 3.26%, Oil & Gas up 2.64% and Auto up 2.42% were the top gainers while there were no losers.

The top gainers on the Sensex were Maruti Suzuki up 10.49%, Hindalco up 5.55%, Tata Steel up 5.00%, L&T up 4.85% and RIL up 3.45%.

On the flip side, ICICI Bank down 0.90%, Gail India down 0.38%, Tata Power down 0.36%, HDFC down 0.35% and ITC down 0.22% were the top losers in the index. (Provisional)

Meanwhile, a Group of Ministers (GoM) is likely to meet today to consider the proposal of foreign direct investment (FDI) in aviation sector. The group, chaired by Finance Minister Pranab Mukherjee, will include the newly appointed Civil Aviation Minister Ajit Singh, Oil Minister S Jaipal Reddy, and Commerce Minister Anand Sharma. The GoM is likely to take a final call on how much equity a foreign airline would be allowed to invest in Indian carriers.

Civil aviation minister, Ajit Singh, is said to be in favour of allowing international carriers to hold a more than 26% stake. While a Committee of Secretaries has proposed a 49% cap on FDI by foreign airlines, the Civil Aviation Ministry has asked the government to allow 24% and the Department of Industrial Policy and Promotion (DIPP) has recommended 26%.

However, India at present bars foreign carriers from owning stakes in Indian airlines, though foreign investors are allowed to invest up to 49%. The higher permissible investment would come as a lifeline to India's struggling carriers, notably the heavily in debt, Kingfisher Airlines and Air India, which alone accounts for Rs 43,000 crore of the total aviation debt of Rs 70,000 crore.

The ministers will also discuss the group of secretaries' recommendation to allow domestic carriers to import fuel directly rather than buying it from oil marketing companies. This will help airlines to save at least a fourth of their expenses of Rs 10,000 crore on aviation turbine fuel. Airlines are currently paying high sales tax ranging between 4% and 28% in different states on ATF, which can be avoided by importing fuel directly.

Also with a significant rise in passenger traffic there is an urgent need to construct new airports and improve and modernize the existing ones. Opening up FDI will help bring in capital and technological expertise. It will also allow Indian carriers easier access to international routes. If these changes are allowed the ailing aviation industry can hope to see a brighter future.

India VIX, a gauge for market’s short term expectation of volatility lost 6.06% at 22.61 from its previous close of 24.07 on Monday. (Provisional)

The S&P CNX Nifty gained 87.60 points or 1.80% to settle at 4,961.50. The index touched high and low of 4,975.55 and 4,904.00 respectively. 44 stocks advanced against 6 declining ones on the index. (Provisional)

The top gainers on the Nifty were Maruti up 10.11%, Hindalco up 5.47%, JP Associates up 5.40%, L&T up 5.10% and Tata Steel up 4.98%.

On the other hand, Ranbaxy down 0.92%, ICICI Bank down 0.83%, Gail India down 0.52%, TCS down 0.37% and Dr. Reddy’s Lab down 0.19% were the top losers. (Provisional)

The European markets were trading in green, with France's CAC 40 up 2.01%, Germany's DAX up 1.51% and Britain’s FTSE 100 up 1.10%.

Asian markets ended firm on Tuesday following Chinese fourth quarter GDP data. For the Oct-Dec quarter, China's gross domestic product although at a 2.5-year low, was better-than-expected at 8.9%. This data showed the world's second largest economy grew at a faster pace than expected in the fourth quarter and helped soothe fears that Europe's debt-related problems will slow the Chinese economy. Other key Chinese data, including retail sales and industrial output, also beat estimates. Meanwhile a successful French bond sale and gains in European stocks also supported the market. However, the first major test of France's fiscal credibility comes on Thursday, when it attempts to sell between 7.5 and 9.5 billion euros' worth of longer term bonds.