Benchmarks manage to keep head above water

Tuesday’s trading session turned out to be a choppy day of trade for Indian equity benchmarks where key indices managed to keep their head above water with Sensex recapturing its crucial 27,400 mark, while Nifty ended tad below its crucial 8,250 mark. Buying in last leg of trade mainly prevented a down day of trade at Dalal Street as markets for couple of times surrendered to selling pressure, though only to bounce back in green. Overall, sentiments remained up-beat as investors got some confidence from Finance Minister Arun Jaitley’s statement where he pitched for a rate cut by the RBI, saying that the credit offtake is slow, infrastructure creation becomes slower, and the manufacturers find it difficult to afford costly capital, because it is going to add to each one of their costs. Sentiments also got some boost, as the Union Cabinet cleared ordinance on Land Acquisition Act including removal of consent clause for acquiring land for five areas of industrial corridors, PPP projects, rural infrastructure, affordable housing and defence.

However, gains remained capped as traders remained concerned with the Reserve Bank of India’s (RBI) Financial Stability Report (FSR), stating that risks to India’s banking system continue to remain at elevated levels on concerns of further deterioration in the asset quality. The central bank has warned that banks’ bad loans will worsen if economy falters further. Sentiments also got hurt on reports that, foreign portfolio investors (FPIs) sold shares worth a net Rs 204.22 crore on December 29, 2014, as per provisional data.

Weak global cues too dampened the sentiments with European markets making a negative start, led by energy companies as Brent oil fell to a fresh 5-1/2-year low on persistent worries about a global supply glut. Asian markets ended mostly in the red as a sharp sell-off in commodities and political uncertainty in Greece made investors less willing to take positions in riskier assets.

Back home, appreciation in Indian rupee supported the sentiments. The partially convertible rupee was trading at 63.44 per dollar at the time of equity market closing against the Monday’s close of 63.66 on the Interbank Foreign Exchange. Meanwhile, Infrastructure stocks extended their jubilation for second straight day after the Cabinet approved ordinance on amendments to Land Acquisition Act. Additionally, public sector oil marketing companies (OMCs) edged higher as brent oil extended losses into a fourth session, with prices hovering close to a more than five-year low above $57 per barrel, as persistent worries about a global supply glut offset concerns about output disruptions in Libyan.

The NSE’s 50-share broadly followed index Nifty rose marginally to end near the psychological 8,250 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged by around ten points to finish above its psychological 27,400 mark. Broader markets, however, outperformed benchmarks and ended the session with a gain of around half a percent. The market breadth remained in favor of advances, as there were 1,438 shares on the gaining side against 1,423 shares on the losing side while 136 shares remain unchanged.

Finally, the BSE Sensex gained 7.81 points or 0.03%, to 27403.54, while the CNX Nifty added 1.95 points or 0.02% to 8,248.25.

The BSE Sensex touched a high and a low of 27478.30 and 27312.29, respectively. The BSE Mid cap index was up by 0.54%, while the Small cap index was up by 0.17%.

The top gainers on the Sensex were BHEL up by 1.51%, NTPC up by 1.25%, Dr. Reddys Lab up by 1.24%, Axis Bank up by 0.99% and SBI up by 0.78%. On the flip side, Hero MotoCorp down by 2.09%, Tata Steel down by 1.94%, Reliance Industries down by 1.83%, ONGC down by 1.46% and Bajaj Auto down by 1.36% were the top losers.

On the BSE Sectoral front Consumer Durables up by 1.38%, Power up by 1.14%, Capital Goods up by 1.03%, INFRA up by 0.69% and Bankex up by 0.68% were the top gainers, while Oil & Gas down by 1.22%, Metal down by 1.09%, Auto down by 0.27%, Realty down by 0.24% and FMCG down by 0.04% were the top losers in the space. 

Meanwhile, with an aim to boost domestic manufacturing, Prime Minister Narendra Modi has promised to change laws and style of government functioning to create jobs and bring the derailed economy back on track. After launching the 'Make in India' campaign three months ago, Prime Minister has recently heard industry leaders and government officials on impediments hindering the manufacturing sector and promised collective and transparent decision-making.

Unveiling his vision for making India a manufacturing hub, Prime Minister stressed that government is adding a new paradigm to the public private partnership (PPP) model by involving all stakeholders in key decision-making processes. Further, he added that the government is taking measures to change ABCD culture of government - ‘avoid, bypass, confuse and delay’ to ROAD which stands for ‘responsibility, ownership, accountability, discipline’.

By adding further, Narendra Modi emphasized that growth should be balanced across India and special efforts should be made to ensure that the east, which is rich in natural resources, should be as developed as the western part of the country. Prime Minister also called for making a globally recognized 'Brand India' famous for ‘zero defect, zero effect’ manufacturing -- free from defects and with no adverse impact on the environment. 

The CNX Nifty touched a high and low of 8,268.25 and 8,220.55 respectively.

The top gainers on Nifty were BHEL up by 1.77%, Dr. Reddy's Laboratories up by 1.52 %, Bank of Baroda up by 1.46%, NTPC up by 1.43% and IndusInd Bank up by 1.32%. On the flip side, Hero MotoCorp down by 1.90%, Tata Steel down by 1.88%, Cairn India down by 1.78%, Jindal Steel & Power down by 1.75% and Reliance Industries down by 1.65% were the top losers.

European Markets were trading in red; UK’s FTSE 100 was down by 0.57%, France’s CAC was down by 0.69% and DAX was down by 0.59%.

The Asian equity benchmarks ended mostly in red on Tuesday, with Japanese shares slipping on their final trading day of the year. Japan’s ruling coalition has approved a tax reform plan that will cut corporate taxes from April and pledges further reductions in coming years in a bid by Prime Minister Shinzo Abe to boost profitability and bolster economic growth. The plan approved would cut the overall effective corporate tax rate by 2.51% points to 32.1% from April and then to 31.3% the following year.  South Korea’s current account surplus rose to a monthly record in November as slumping oil prices slashed the value of imports.  The preliminary figure of $11.4 billion shattered the previous monthly record of $11.1 billion set in October 2013. The current account - the broadest measure of foreign trade in goods and services - has been in the black for two years and nine months - the longest streak of surplus since 1989. South Korean Industrial Production fell to a seasonally adjusted annual rate of -3.4%, from -3.2% in the preceding month.