Benchmarks continue firm trade; Nifty surpasses 8400 mark

Indian equity markets continued their firm trade in the late afternoon session on account of buying in frontline blue chip counters. The sentiments were on optimistic note after Finance Ministry notified that fiscal position of the government is likely to improve during January-March quarter on the back of possible pick up in tax revenue realization, receipts from spectrum auction and stake sale of PSUs. Traders were seen piling positions in Bankex, Capital Goods and Power stocks. In scrip specific development, Maruti Suzuki India, country’s largest car maker, was trading in green on reporting a rise of 20.75% in its total car sales (Domestic + Export) for the month of December 2014 at 109791 units, as against 90924 units in December 2013. On the global front, the Asian markets were trading mostly in green while the European markets were trading on optimistic note. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 8,400 and 27,900 levels respectively. The market breadth on BSE was positive in the ratio of 1841:954 while 106 scrips remained unchanged.

The BSE Sensex is currently trading at 27923.85, up by 416.31 points or 1.51% after trading in a range of 27519.26 and 27925.19. 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 1.33%, while Small cap index up by 1.26%.

The gaining sectoral indices on the BSE were Bankex up by 1.93%, Capital Goods up by 1.84%, Power up by 1.43%, Realty up by 1.38%, INFRA up by 1.32%.

The top gainers on the Sensex were HDFC up by 3.89%, Tata Motors up by 3.32%, BHEL up by 3.02%, Axis Bank up by 2.88% and ICICI Bank up by 2.78%. On the flip side, Mahindra & Mahindra down by 0.55%, Bajaj Auto down by 0.17% and Hero MotoCorp down by 0.10% were the top losers.

Meanwhile, in a big sentiment boost, 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. This is for fourteen straight month that the index has stayed above the watershed 50-mark that separates growth from contraction.

Latest data reflects the improving demand in December as new orders increased for the fourteenth consecutive month. Similarly, Indian manufacturing companies registered a further rise in new export business in December. Notably, new work from abroad expanded at the quickest pace since April 2011.

Moreover, the rate of expansion was marked overall and the fastest since the end of 2012. Although, business conditions improved at a faster pace in all three market groups during the month, the sharpest expansion was seen in consumer goods.  A steep rise in new orders from the consumer sector more than offset a slowdown in new order growth from investment goods. However, rise in the latter is critical for a meaningful pick-up in economic growth.

Surprisingly, contrasting with continued growth of production and incoming new work, factories cut headcount at the steepest rate for nearly three years. An employment sub-index slipped to 49.6 from November's 50.2. Job losses were evident in two of the three surveyed sub-sectors, with the exception being intermediate goods.

On the inflation front, while higher prices of metals, chemicals and electronics placed upward pressure on input prices in December, the rate of cost inflation eased to the slowest in more than five-and-a-half years and was well below the long-run series average.

Thus, the stronger HSBC India Manufacturing PMI data reinforces Finance Minister Arun Jaitley's view that the economy will grow much better in 2015/16, while weaker inflation provides Reserve Bank of India (RBI) more space to cut interest rates as expected this year.

The CNX Nifty is currently trading at 8406.10, up by 122.10 points or 1.47% after trading in a range of 8288.70 and 8409.50. There were 45 stocks advancing against 5 stocks declining on the index.

The top gainers on Nifty were Jindal Steel & Power up by 4.18%, HDFC up by 3.81%, Asian Paints up by 3.44%, Tata Motors up by 3.36% and Ultratech Cement up by 3.06%. On the flip side, BPCL down by 1.16%, NMDC down by 0.40%, Mahindra & Mahindra down by 0.36%, Hero MotoCorp down by 0.20% and Bajaj Auto down by 0.17% were the top losers.

The Asian markets were trading mostly in green; Straits Times increased 4.5 points or 0.13% to 3,369.65, KOSPI Index increased 10.85 points or 0.57% to 1,926.44, Jakarta Composite increased 16.06 points or 0.31% to 5,243.01 and Hang Seng increased 252.78 points or 1.07% to 23,857.82.

On the other hand, FTSE Bursa Malaysia KLCI decreased 6.75 points or 0.38% to 1,754.50. Shanghai, Nikkei and Taiwan Weighted stock exchange were closed on account of holiday.

The European markets were trading in green; UK’s FTSE 100 increased 12.18 points or 0.19% to 6,578.27, France’s CAC increased 22.45 points or 0.53% to 4,295.20 and Germany’s DAX increased 27.94 points or 0.28% to 9,833.49.