Post session - Quick review

The Indian equity markets despite last hour extreme volatility managed to extend the gains for yet another day and closed higher by over half a percent on the last trading day of the week. The early enthusiasm once seemed fizzling out in the last leg of the trade when profit booking took the markets in negative terrain but there was sudden dramatic recovery and the benchmarks shoot up to their intraday highs, some profit booking re-emerged in the last and cut some gains of the benchmarks but they still managed to snap the week on a jubilant note with decent gains. Earlier the markets got a gap-up start as the US markets closed higher on getting good earnings and economic reports, while the Asian markets followed the trend and surged for yet another week, after steady Chinese manufacturing raised the hopes of government to further loosening credit controls. However,  the European stocks dropped from a five- month high and the euro weakened as talks between Greek officials and private creditors entered a third day.

Indian markets snapped another day of rally with benchmark indices posting around 4 percent of gains for the week. The major indices looked in a boisterous mood since morning, extending their last sessions' rally, initially the trade remained choppy but slowly it started gathering momentum with benchmark indices continuously trading above crucial levels of 5050 (Nifty) and 16700 (Sensex). It was the gains in the banking sector that lifted the markets higher for the day as continuous decline in food inflation numbers are likely to put pressure on RBI for a rate cut in its upcoming policy review. However, rating firm ICRA has opined that the apex bank may not cut key policy rates due to moderating demand-side pressure. Meanwhile, in their pre-budget demand banks and financial institutions have sought more tax sops from the finance ministry, arguing that the greater deposit mobilisation through incentives will help them lend more when the economy recovers. The top bankers suggested that the government should increase the limit on tax deducted at source (TDS) on interest from bank deposits to Rs 50,000, from Rs 10,000 at present. The other sector that gained on expectation of rate cuts was consumer durables, while the rebound in Reliance Industries share after initial fall, ahead of its quarterly results led the oil & gas sector higher in the last. Auto sector too advanced on getting good results from the two wheeler majors Bajaj Auto and Hero MotoCorp. Though, the day was not for the defensive sector, FMCG lost over two percent on profit booking. From the result section, India Inc. continued reporting encouraging numbers, IT major Wipro reported 10.43% rise in consolidated profit for December quarter, while ITC’s Q3 profit were up by over 22%.

The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 1353:1467 while 135 scrips remained unchanged. (Provisional)

The BSE Sensex gained 87.95 points or 0.53% and settled at 16,731.69. The index touched a high and a low of 16,788.48 and 16,611.71 respectively. 17stocks advanced against 13 declining ones on the index (Provisional)

The BSE Mid-cap index gained 0.20% while Small-cap index was up by 0.10%. (Provisional)

On the BSE Sectoral front, Bankex up 3.68%, Consumer Durables up 2.11%, Power up 1.20%, Oil & Gas up 1.03% and Auto up 0.92% were the top gainers while FMCG down 2.35%, Metal down 0.38%, TECk down 0.26%, Health Care down 0.20% and IT down 0.15% were the only losers.

The top gainers on the Sensex were Bajaj Auto up 6.54%, ICICI Bank up 6.35%, BHEL up 3.63%, Jindal Steel up 3.32% and SBI up 2.67%.

On the flip side, ITC down 4.09%, Maruti Suzuki down 2.53%, M&M down 2.43%, Coal India down 2.08% and Hindalco Industries down 1.88% were the top losers in the index. (Provisional)

Finance Minister Pranab Mukherjee, addressing the FICCI's 84th Annual General Meeting, urged India Inc. to help build consensus on economic reforms. While, agreeing to the fact that the efforts made by the government to bring about economic reforms had not yielded fruits on some fronts, he could not be blamed for not trying. Commenting on his government’s failure to push through reforms like FDI in multi brand retail and other legislative amendments he said that this was the nature of democracy and at times reforms get overtaken by political events. He agreed that there was a need to rebuild trust especially after the unearthing of alleged scams in telecom and Commonwealth Games. There was also a perception that economic growth was faltering on account of ‘policy paralyses and lack of legislative changes to push reforms.

Mukherjee further said that global uncertainty too did not help. But on the governments part there had been a host of policy measures which lent credence to the government’s commitment to economic reforms. He asked corporate to demonstrate willingness to support reforms and marry their economic interests with larger social responsibilities. On its part, corporate India urged the Government not to judge industry by “deviants”. They also called for change in the relationship between Government and industry. They felt that there was an urgent need to rebuild trust and remove hurdles inhibiting growth.

On a more positive note, outgoing FICCI President, Harsh Mariwala said the India story was still alive and that “we are in a sweet spot”. He admitted that industry had to self-regulate and internalise business ethics and it was also crucial that the Government gave the private sector credit for creating wealth and value for the country.

India VIX, a gauge for market’s short term expectation of volatility gained 1.29% at 21.96 from its previous close of 21.68 on Thursday. (Provisional)

The S&P CNX Nifty gained 28.55 points or 0.57% to settle at 5,046.95. The index touched high and low of 5,064.15 and 5,004.30 respectively. 29 stocks advanced against 21 declining ones on the index. (Provisional)

The top gainers on the Nifty were Bajaj Auto up 6.63%, Axis Bank up 6.59%, ICICI Bank up 6.25%, Kotak Bank up 4.36% and BHEL up 4.18%.

On the other hand, ITC down 4.40%, Dr. Reddy’s Lab down 3.48%, Reliance Power down 2.46%, Reliance Infra down 2.40% and Maruti down 2.19% were the top losers. (Provisional)

The European markets were trading in red, with France's CAC 40 down 0.57%, Germany's DAX down 0.50% and Britain’s FTSE 100 down 0.27%.

Asian bourses ended firm on Friday as strong earnings and positive jobs data of the US added to hopes that the economic recovery in the world’s largest economy is for real. Chinese shares and commodities rose, shrugging off the HSBC flash manufacturing purchasing managers index (PMI), the earliest indicator of China's industrial activity, which stood nearly steady at 48.8 in January from 48.7 in December. Meanwhile, it’s been reported that China’s PBOC has been doing a reverse-repo operation this week, totaling $95B, equivalent to a 75bp cut in the reserve requirement ratio. However, traders expect further cuts after the Lunar New Year. IBM Corp’s fourth-quarter earnings beat Wall Street expectations, while Bank of America and Morgan Stanley both reported results that were better than analysts were expecting, which helped lift shares in Japan’s major banks.