Post session - Quick review

Local equity markets celebrated the triumph as benchmark equity indices in the intra-day trade regained their crucial bastions which were last seen nine weeks ago. However, profit booking in the wee hours of trade took the 30 share index off its crucial psychological level i.e. off 17, 000 mark, while widely followed 50 share index ended above the 5100 level. Trading sentiment was bolstered at Dalal Street after the Reserve Bank of India (RBI) slashed cash reserve ratio (CRR) by 0.50 percentage point to 5.5 per cent for the first time since 2009 and signaled future interest-rate cuts in its monetary policy review. In it policy meet, the RBI left the policy rates unchanged, inflation forecast unchanged at 7 per cent and slashed FY12 GDP forecast to 7 per cent from 7.6 per cent earlier. RBI said, “The CRR cut reinforces guidance on future rate cuts. However, it is premature to cut rates before sustainable dip in inflation”. Further, RBI stated that it expects the economy to exhibit modest recovery in FY13.This surprisingly positive stance of central bank of India is expected to inject Rs 32000 crore in the system. Also, through the multiplier effect, additional credit to the tune of Rs 1.6 lakh crore is expected to be generated in the system over a period of time.

From the global scenario, the weak opening of European markets was discounted by the market in anticipation that beginning FY13, the central bank might start reversing the interest rate cycle. Meanwhile, Asian equity indices supported the rally of the Indian equity markets as Asian stock markets shrugging off tough negotiations between Greece and its creditors mostly rose on Tuesday amid expectations that a deal to cut the country's debt mountain will ultimately be reached.

Back on home turf, all the sectoral indices on the BSE ended in the positive zone. However, gains at Dalal Street were led by BSE banking pivotal which maintained the strong position post the announcement of the policy. SBI, ICICI Bank, HDFC and HDFC Bank surged between 1-2%. Meanwhile, in the Capital Goods space, Larsen and Toubro ranked the highest to earn the top gainer accreditation. Index heavyweight RIL gained by nearly 2% after plunging by nearly 3% yesterday on reporting disappointing numbers in the quarter ended December 2011. Among other front liners which lifted the spirit at Dalal Street were ITC, ONGC, Tata Motors, DLF, M&M, Bharti and Wipro have gained between 2-4%.

The Sensex, which commenced on a cheerful note, spurted over 200 points to end sub 17 k level after touching a high of 17,050.32, a level last seen on 14th November, last year. Similarly, the broad-based National Stock Exchange index Nifty concluded above 5,100 mark levels by adding over 75 points. The broader indices too howled over the victory as they went home with gains of over 1.25% (Midcap index) and 0.50% (Smallcap Index) respectively. The overall market breadth on BSE was in the favour of advances which thrashed declines in the ratio of 1578:1209, while 123 shares remained unchanged.

The BSE Mid-cap index gained 1.38% while Small-cap index was up by 0.70%. (Provisional)

All the gauges on the BSE Sectoral front gained, Capital Goods (CG) up by 3.30%, Bankex up by 3.21%, Metal up by 1.78%, Auto up by 1.53% and Realty up by 1.14% were the top gainers.

The top gainers on the Sensex were L&T up by 5.64%, SBI up by 5.19%, Hindalco Inds up by 4.55%, M&M up by 3.56% and ICICI Bank was up by 3.30%.

On the flip side, Coal India down by 1.35%, Sun Pharma down by 1.29%, NTPC down by 0.94%, Gail India down by 0.72% and HUL down by 0.52% were the top losers in the index. (Provisional)

Meanwhile, the Heavy Industries Ministry has come in support of the domestic power equipment producers and has advocated a 14 per cent import duty on power generation equipment for the projects above 1,000 MW. The Heavy Industries Minister, Praful Patel, said, “Such a duty will provide a level playing field to domestic companies such as BHEL and L&T, which have significant disadvantage.” The move is primarily aimed at imports from China.

At present, equipment for power projects with capacity over 1,000 MW attract marginal duty, making the import cheaper. To protect their interests and provide them level playing field, domestic players led by Bhel and L&T have been demanding imposition of 14 percent duty on import of electrical equipment as a cushion against local taxes.

If the import duty is imposed, it will provide level playing field to Indian power equipment manufacturers to take on increasing penetration of international suppliers here. “Companies such as Bhel and L&T are at a specific disadvantage. Imports should not be disallowed but there is a case for (the Indian) power industry to have a level-playing field,” Patel said. It was reported that the Power Ministry had already circulated a Cabinet note in this regard. Power generation equipment makers having a manufacturing base in India stand to benefit from such a move.

Further, the Heavy Industries Ministry is pushing hard to ensure that the award of equipment contracts by developers of large power projects is done mandatorily through a bidding process, rather than the current practice of developers placing orders directly on the vendors of their choice. The bids for equipment supply for power projects are being rejigged, which will allow domestic gear makers to participate in the procedure. The ministry has also called for procurement model for equipment for ultra mega power projects (UMPP) of 4,000 MW capacity to involve international competitive bidding (ICB).

India VIX, a gauge for market’s short term expectation of volatility gained 0.81% at 22.14 from its previous close of 21.96 on Friday. (Provisional)

The S&P CNX Nifty surged by 81.10 points or 1.61% to settle at 5,127.35. The index touched high and low of 5,141.05 and 5,049.80 respectively. 38 stocks advanced against 12 declining ones on the index. (Provisional)

The top gainers on the Nifty were L&T up by 5.93%, IDFC up by 5.53%, SBI up by 5.33%, JP Associates up by 4.68%, Hindalco 4.48%.On the other hand, Grasim down by 2.325, Coal India down by 1.57%, DLF down by 1.05%, Sun Pharma down by 0.95% and HUL down by 0.77% were the top losers. (Provisional)

Only a handful of markets remained open for trade in Asia, where Japanese Nikkei average rose to its highest closing level in nearly three months on Tuesday on expectations that a Greek debt swap deal will still be reached even after European finance ministers rejected an offer by Greece’s private creditors. Moreover, the Bank of Japan kept interest rates on hold at near-zero on Tuesday, noting that activity in the Japanese economy has been more or less flat due to a slowdown in overseas economies and appreciation of the yen.

Activity was thin, however, with many Asian markets still closed for the Lunar New Year holiday. Despite the thin trading, some notable movers emerged, with chip maker Elpida Memory Inc. jumping 4.6% after a Yomiuri Shimbun report that the firm is set to agree on an alliance with US company -- Micron Technology and Taiwan’s -- Nanya Technology Corp. Shares of Toyota Motor gained 2.7%. The auto maker announced late Monday that it would cut 350 jobs at a plant in Australia, in part due to the high Australian dollar.

Nikkei 225 was up by 19.43 points or 0.22% to 8,785.33 and Jakarta Composite was up 8.07 points or 0.20% to 3,994.58.

Stock markets in China, Hong Kong, Malaysia, South Korea, Singapore and Taiwan remained closed on Tuesday in observance of Lunar New Year holiday.