Markets climb to day’s high on sustained buying activities

Local equity markets, heading for their sixth straight session of gains, were trading at day’s high point, helped by banking stocks ahead of an industry meet. Additionally, sentiment also got a boost from HSBC PMI manufacturing data showed that Indian manufacturing activity expanded at its fastest pace in two years in December as new orders, both from home and from abroad, flooded in and as factories kept price increases to a minimum. The HSBC India Purchasing Managers' Index (PMI), a headline index designed to measure the overall health of the manufacturing sector, climbed to two year high at 54.5 in December, up from 53.3 in the prior month. At day’s high, both Sensex and Nifty were trading above crucial 27,850 and 8,350 levels respectively, with gains of over 1.25%. Meanwhile, broader indices also were trading higher with gains of over a percent.

On the global front, Asian stock markets were trading marginally higher on Friday in the absence of firm global cues, amid thin volumes following the New Year's Day holiday. Some of the markets in the region, including Japan, continue to remain closed for the extended New Year's holiday.

Closer home, amidst across the board buying activities while there were no losers, stocks from Capital Goods, banking and Power counters were the top gainers of the session. Meanwhile, PSU bank stocks will be in focus as the two-day brainstorming session of the finance minister, the Reserve Bank of India (RBI) governor and chiefs of state-owned banks begins on January 2, 2015. The meeting's agenda includes universal financial inclusion, leveraging technology, improving risk management, recovery and asset quality, talent management in PSU banks, and consolidation & restructuring of PSU banks for better efficiency, governance and capital efficiency. Meanwhile, infra stocks were trading higher after government in order to fund the ambitious infrastructure development programme of the Government, particularly the building of 15000 kms of roads, during current and next financial year decided to increase basic excise duty on petrol and diesel (both branded and unbranded) by Rs 2 per litre. The overall market breadth on BSE was in the favour of advances which thumped declines in the ratio of 1696:336; while 15 shares remained unchanged.

The BSE Sensex is currently trading at 27867.58, up by 360.04 points or 1.31% after trading in a range of 27519.26 and 27882.22. There were 27 stocks advancing against 3 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.30%, while Small cap index up by 1.24%.

The gaining sectoral indices on the BSE were Capital Goods up by 1.72%, Bankex up by 1.64%, Power up by 1.38%, Consumer Durables up by 1.37% and Realty up by 1.32%.

The top gainers on the Sensex were HDFC up by 3.79%, BHEL up by 2.72%, ICICI Bank up by 2.35%, Axis Bank up by 2.12% and Larsen & Toubro up by 2.09%. On the flip side, Hero MotoCorp down by 0.26%, Mahindra & Mahindra down by 0.25% and Bajaj Auto down by 0.01% were the top losers.

Meanwhile, in a bid to take advantage of a slump in global oil prices to five-year low to shore up revenue without stoking inflation, the government raised excise duty on petrol and diesel by Rs 2 per litre . Excise duty on normal or unbranded petrol has been hiked from Rs 4.95 per litre to Rs 6.95 a litre and on unbranded diesel from Rs 3.96 to Rs 5.96 a litre. Similarly, excise duty on branded petrol has been raised from Rs 6.10 to Rs 8.10 a litre and on branded diesel from Rs 6.25 to Rs 8.25 per litre.

The move to hike excise duty by third time since November will help raise additional Rs 6,000 crore during remaining three months of the current fiscal. The excise duty hike has offset the reduction that has become necessary as international oil rates plunged to their lowest level since May 2009 owing to the oversupply in international markets. The government’s notification highlighted that in order to fund the ambitious infrastructure development programme of the government, particularly the building of 15,000-km of roads, during current and next financial year, it has decided to increase basic excise duty on petrol and diesel by Rs 2 per litre. Allocation of these resources to the road sector will also spur economic activity and employment generation arising from the road construction sector, the notification added.  With three excise duty hikes since November, the government will mop up about Rs 17,000 crore this fiscal to contain fiscal deficit.

The CNX Nifty is currently trading at 8391.95, up by 107.95 points or 1.30% after trading in a range of 8288.70 and 8394.80. There were 46 stocks advancing against 4 stocks declining on the index.

The top gainers on Nifty were HDFC up by 3.96%, Asian Paints up by 3.79%, Jindal Steel & Power up by 3.48%, BHEL up by 2.68% and Ultratech Cement up by 2.61%. On the flip side, BPCL down by 0.82%, Mahindra & Mahindra down by 0.30%, Hero MotoCorp down by 0.27% and NMDC down by 0.20% were the top losers.

Asian markets were mostly trading higher; Straits Times trading higher by 3.54 points or 0.11% to 3,368.69; KOSPI Index trading higher by 10.85 points or 0.57% to 1,926.44; Jakarta Composite trading higher by 10.88 points or 0.21% to 5,237.82 and Hang Seng trading higher by 161.57 points or 0.68% to 23,766.61. On the flip side, and  FTSE Bursa Malaysia KLCI slid by 9.89 points or 0.56% to 1,751.36