Indian equities sustain gaining momentum; Jan F&O series expires with 11% gains

The January series futures and options contract expiry day turned out to be steady session for the Indian benchmark indices as the session lacked the flavor of high volatility which typically surfaces on  F&O contract expiry day. Nevertheless, the frontline indices managed to extend the gaining momentum after the previous session’s over one and half a percent rally on the back of RBI’s pleasantly surprising CRR cut. The psychological 5,150 (Nifty) and 17,050 (Sensex) levels proved as strong supports as the frontline gauges got a technical bounce from those levels and headed towards the 5,200 (Nifty) and 17,150 (Sensex) resistances. Sentiments were positive a day ahead of India’s Republic day holiday as investors covered hefty short positions not only in heavyweight stocks but largely across the board a day after the RBI decision led infusion of Rs 32,000 core into the Indian banking system. However some profit booking was evident in rate sensitive Realty and Banking along with Capital Goods counters as majors like ICICI Bank and L&T shed some part of the gains they amassed on Tuesday. Meanwhile, investors commended Bank of Baroda for announcing encouraging quarterly earnings while Union Bank of India got punished for reporting a decline in profits and sharp increase in provisioning. In the global space, markets in Asia largely exhibited sanguine trends on getting support from the rally in technology shares after Apple Inc reported record-smashing quarterly earnings that saw the company double its profits and sell more products than ever before. The European markets on the other hand, slipped lower after a positive opening as corporate earnings weighed on the market and investors continued to worry over the Greek woes ahead of US Federal Reserve’s monetary policy and interest rate forecasts announcement scheduled later in the global day.

The NSE’s 50-share broadly followed index Nifty, climbed around half a percent and settled just above the psychological  5,150 support level while Bombay Stock Exchange’s Sensitive Index - Sensex rose over fifty points to close above the psychological 17,150 mark. The broader markets showed resilience held on to the over 1% gains and outclassed their larger peers by a fat margin. On the BSE sectoral front, hefty across the board buying was evident with the Metal counter leading the space with 1.79% gains. The PSU, technology and Automobiles counters too went home with over 1% gains each. On the flipside Capital Goods pocket remained the only laggard which settled with moderate losses. The markets advanced on good volumes of over Rs 2 lakh core but the turnover remained on the lower side as compared to that on Tuesday on the January series futures and options contract expiry day. The contract expired a day earlier from its usual closing owing to a national holiday on the last Thursday of the month. The market breadth remained optimistic as there were 1808 shares on the gaining side against 1040 shares on the losing side while 126 shares remained unchanged.

On the F&O front, January series Nifty and Sensex staged a spectacular performance by skyrocketing over 10% each, the highest since March 2011. While the broader markets managed to outperform their larger peers by a fat margin as by the end of January series the mid cap and small cap rallied around 15%. Capital Goods, Bank Nifty and Metal sectors remained top sectoral performers during the series with handsome gains of about 27%, 23% and 20% respectively while IT index was the only laggard with 2% losses on NSE. Among individual gainers, Rel Infra, R Com and L&T garnered whopping around 45%, 40% and 35% gains respectively. From the expiry perspective, market wide rollover of 62.19% was observed which was higher than the three month average of 61.96% while Nifty rollovers were at 62.27%, higher than 3 months average of 52.27%. Sectorally, the Capital Goods, Auto and Oil & Gas counters witnessed high rollovers while sectors like Realty, FMCG and Technology pockets observed relatively low rolls. Among individual stocks, vast rollovers were witnessed in heavyweights including GMR Infra (82%), Cairn (80%), JSW Steel (79%), Fortis (79%) and Welspun Corp (76%) while low rollovers were seen in stocks like Tech Mahindra (27%), Chambal Fertilizer (30%), Crompton Greaves (36%), RECL (38%) and Jet Airways (42%).

Finally, the BSE Sensex rose 81.41 points or 0.48% to settle at 17,077.18, while the S&P CNX Nifty up by 30.95 points or 0.60% to close at 5,158.30.

The BSE Sensex touched a high and a low of 17,130.24 and 17,016.69 respectively. The BSE Mid cap and Small cap indices were up by 1.25% and 1.11% respectively.

The major gainers on the Sensex were Coal India up 3.90%, Tata Motors up 3.78%, Tata Steel up 2.97%, Sterlite Industries up 2.47% and Maruti Suzuki up 2.44%. While, Tata Power down 2.09%, Jindal Steel down 1.67%, Hero MotoCorp down 1.43%, L&T down 1.35% and Hindalco Industries down 1.08%, were the major losers on the index.

On the BSE sectoral space, Metal up 1.79%, PSU up 1.24%, TECk up 1.20%, Auto up 1.15% and Consumer Durables (CD) up 1.12% were the top gainers, while Capital Goods (CG) down 0.33% was the only loser on the sectoral space.

Meanwhile, the Coal Ministry has said that coal prices under CIL's new pricing mechanism will be revised downward by the end of the current month. Coal Minister Sriprakash Jaiswal was coted saying that Coal India (CIL) had made some mistake in the system adopted for pricing of coal (as per the new formula) and in his opinion the price fixed was more than required. A lowering of prices could be expected by 30 January. He however clarified the GCV-based pricing for coal will not annulled.

Earlier this month, the state-run miner decided to benchmark the pricing for non-coking coal to gross calorific value (GCV) from the current useful heat value (UHV) based gradation. GCV pricing mechanism came into force on January 1. Inspite of the fact that the Coal Ministry had indicated the new formula would be revenue-neutral, it had led to an increase in rates of the fossil fuel. Till December 31, 2011, CIL had followed a pricing mechanism based on the Useful Heat Value (UHV) of coal, which deducted ash and moisture content from the standard formula. However, from January 1, it shifted to a new pricing mechanism based on the GCV of coal. Under this system, coal prices have been linked to the actual calorific value or quality of coal.   

The new GCV mechanism has been opposed by consumers across sectors, including power, cement, aluminium and steel, as they feel that prices have risen substantially and this will necessitate in a price increase in their own respective commodities.

The S&P CNX Nifty touched a high and low of 5,174.15 and 5,130.25 respectively.

The top gainers on the Nifty were Reliance Infra up 6.89%, Sesa Goa up 5.78%, BPCL up 4.97%, Tata Motors up 3.83% and SAIL up 3.10%.

On the flip side, Hero MotoCorp down 2.48%, Jindal Steel down 2.02%, Tata Power down 2.00%, L&T down 1.95% and HCL Tech down 1.88% were the top losers on the index.

The European markets were trading in red. France's CAC 40 down 0.66%, Britain’s FTSE 100 down 0.51% and Germany's DAX down by 0.32%.

Sentiments remain jubilant for yet another day in the Asian region wherein most of the indices ended the trade in green on Wednesday, underpinned by strong earnings from US technology giant Apple, stabilizing European money markets and falling euro zone debt yields, with investors shifting their focus from Europe to the US Federal Reserve. The Nikkei average climbed to a fresh three-month high on Wednesday, boosted by gains in blue-chip exporters such as Toyota Motor, while market attention turned to a Federal Reserve meeting later in the day from stalled talks on Greek debt.

Nikkei 225 was up 98.36 points or 1.12% to 8,883.69, Straits Times was up 42.26 points or 1.48% to 2,891.64 and Seoul Composite was up by 2.34 points or 0.12% to 1,952.23.

On the flip side, Jakarta Composite was down by 30.98 points or 0.78% to 3,963.60.

Stock markets in China, Hong Kong and Taiwan remained closed on Wednesday in observance of Lunar New Year holiday.