Benchmarks extend winning streak to sixth straight session

Extending their winning streak to sixth straight session, Indian equity benchmarks staged an enthusiastic performance on Friday, by rallying around one and a half percentage points and breaking lots of psychological levels in their northward rally. Sentiments remained positive since beginning of the trade and there appeared not even an iota of profit booking in the session as the benchmarks managed to fervently gain from strength to strength as investors continued hunt for fundamentally strong but oversold stocks. Sentiments also remained up-beat on reports that foreign institutional investors were net buyers in Indian equities worth Rs 18.20 crore January 1, 2015, as per provisional stock exchange data.

Some support came in as the Finance Ministry is expecting an improvement in the fiscal position in January-March quarter on a likely pick up in tax revenue realisation, receipts from spectrum auction and stake sale of PSUs. Sentiment got a boost after 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.

On the global front, European counters made somber start and fell into negative territory in early deals after data revealed that the euro zone manufacturing sector ended 2014 on a subdued note. Markit’s PMI for the region came in at 50.6 in December, slightly below a flash estimate. Asian stock markets concluded 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 shut for the extended New Year's holiday.

Back home, there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too equally participated in the rally. Frontline indices managed to settle near intraday high levels with Sensex and Nifty ending near their crucial 27,900 (Sensex) and 8,400 (Nifty) levels. Recovery in Indian rupee too supported the sentiments. The rupee firmed up against the US dollar and was trading at 63.28 at the time of equity markets closing as compared to Thursday’s close of 63.35, tracking gains in domestic equity markets.

Meanwhile, PSU banks such as SBI, PNB, Canara Bank, Bank of Baroda and Bank ended in the green ahead of the two-day bankers’ retreat in Pune where consolidation among the PSBs is to be discussed among other financial matters. Infra stocks remained on buyers’ radar 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. Additionally, stocks related to auto space edged higher after the release of monthly sales numbers.

The NSE’s 50-share broadly followed index Nifty rose by over one hundred and ten points to end near the psychological 8,400 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex -- rose by over three hundred and eighty points to finish near the psychological 27,900 mark. Broader markets too traded with traction and ended the session with a gain of around a percent. The market breadth remained in favour of advances, as there were 1,787 shares on the gaining side against 1,149 shares on the losing side while 106 shares remain unchanged.

Finally, the BSE Sensex surged by 380.36 points or 1.38%, to 27887.90, while the CNX Nifty soared by 111.45 points or 1.35% to 8,395.45.

The BSE Sensex touched a high and a low of 27937.47 and 27519.26, respectively. The BSE Mid cap index was up by 0.86%, while the Small cap index was up by 0.74%.

The top gainers on the Sensex were HDFC up by 4.30%, ICICI Bank up by 2.81%, Tata Motors up by 2.70%, BHEL up by 2.65% and Axis Bank up by 2.44%. On the flip side, Mahindra & Mahindra down by 0.92%, Hero MotoCorp down by 0.31%, Reliance Industries down by 0.28%, Hindustan Unilever down by 0.27% and Bajaj Auto down by 0.02% were the top losers.

On the BSE Sectoral front Capital Goods up by 1.67%, Bankex up by 1.66%, IT up by 1.20%, Power up by 1.17% and TECK up by 0.98% were the top gainers, while there were no losers in the space. 

Meanwhile, in possibly the sharpest-ever cut in rates ever since aviation turbine fuel (ATF) pricing was de-regulated in April 2012, oil companies slashed ATF prices by steep 12.5% as international oil prices slumped to five-year low levels. This marks a sixth straight month reduction in ATF prices, which sums up to 34% till January 2015. The price was last cut by 4.1%, or Rs 2,594.93 per kl, on December 1.

ATF price was down Rs 7861, or 11.3%, to Rs 61525 per kilolitre (kl) in Kolkata. Meanwhile, it dropped by Rs 8099, or 12.4%, to Rs 57457 per kl in Chennai, and cut by Rs 7833, or 12.7%, to Rs 53862 per kl in Mumbai. Rates at different airports vary because of differential in local sales tax or value-added tax (VAT).

This four-year low in ATF prices is expected to ease financial burden of the airlines as jet fuel accounts for 40-50% of an airline's operating cost in the country, but is unlikely to bring cheer to flyers as airlines are unlikely to cut fares proportionately given their liquidity woes.

Besides, the price of 14.2-kg non- subsidized LPG cylinder has been cut to Rs 708.50 from Rs 752 previously in Delhi. This marks fifth straight reduction in rates of non- subsidized or market-priced LPG, which the customers buy after exhausting their quota of 12 cylinders at subsidised rates, since August. A subsidised LPG refill currently costs Rs 417 in Delhi. In six monthly reductions, non-domestic LPG rates have been slashed by Rs 214 per cylinder, bringing the price to a three-year low.

The CNX Nifty touched a high and low of 8,410.60 and 8,288.70 respectively.

The top gainers on Nifty were HDFC up by 4.19%, Jindal Steel & Power up by 3.70%, Asian Paints up by 3.59%, ICICI Bank up by 3.04% and Tata Motors up by 3.02%. On the flip side, BPCL down by 1.14%, Mahindra & Mahindra down by 1.10%, NMDC down by 0.57%, Reliance Industries down by 0.33% and Bajaj Auto down by 0.25% were the top losers.

European Markets were trading in the red; UK’s FTSE 100 was down by 0.17%, France's CAC was down by 0.21% and Germany's DAX was down by 0.63%.

The Asian equity benchmarks ended mostly in green on Friday, as Chinese shares in Hong Kong jumped amid speculation that government will relax monetary policy to boost growth. Shanghai, Nikkei and Taiwan Weighted stock exchange were closed on account of holiday. China’s growth engine looks to have ended last year on a flat note as its massive factory sector sputtered in December, though ebbing price pressures also offered scope for more policy stimulus from Beijing and across much of Asia. The tale was similar from Singapore to South Korea to Indonesia as manufacturers struggled with weak demand, both at home and abroad. Chinese Manufacturing PMI fell to an annual rate of 50.1, from 50.3 in the preceding month. Singapore’s economic growth slowed more than expected in the fourth quarter as the manufacturing sector contracted in the face of erratic global demand, raising concerns about the outlook for 2015. Singaporean GDP fell to a seasonally adjusted 1.5%, from 2.8% in the preceding quarter. Indonesian Trade Balance fell to a seasonally adjusted -0.42B, from 0.02B in the preceding month while Indonesian Inflation rose to a seasonally adjusted 8.36%, from 6.23% in the preceding month.