Benchmarks extend gains; nifty above 8,400 levels

Indian equity benchmarks continued to firm trade in late morning session on continued buying activities by both funds and retail investors. At present, Sensex and Nifty were trading above the crucial 28,000 and 8,400 levels respectively, with gains of over 0.50%.  Apart from blue chips, broader indices too equally participated in the rally with both mid cap and small cap indices trading up by over 0.80%.

Sentiments got a boosted after encouraging manufacturing output data for December and hopes of further push to economic reforms. The HSBC Manufacturing Purchasing Managers' Index (PMI), compiled by Markit, rose to 54.5 in December from 53.3, its highest since end-2012 and its 14th straight month above the 50-mark that separates growth from contraction. Some support also came in from reports that foreign institutional investors (FIIs) bought shares worth a net 260 crore on January 02, 2015. However, despite stringent controls like the 80:20 scheme on gold imports for most parts of 2014, imports of the precious metal are projected to have increased 8.5% to 849 tonne in the year compared to 2013, weighed on the sentiment.

Back on street, all the sectoral indices were in the green with BSE Auto index emerging as the top gainer up 1.48% followed by Consumer Durables, Capital Goods and FMCG indices among others. In scrip specific development, Shares of Ashok Leyland have surged after the company has reported 48% year-on-year jump in total sales at 9,290 units in December 2014. Moreover, Larsen and Toubro (L&T) rose after the company has won orders worth of Rs 4,006 crore in the month of December 2014.

On global front, Asian stocks declined as a weaker U.S. dollar pinched Japanese exporters, and signals of China's slowdown continue to pressure shares. Beside, Oil extended its losses to sit at five-and-a-half-year lows due to signs of further weakening in the eurozone economy, with both contracts falling towards $50 a barrel. Back home, Indian rupee lost 21 paise to Rs 63.50 against the US dollar in early trade due to rise in the greenback’s value against other currencies overseas.

The market breadth on BSE was positive, out of 2363 stocks traded, 1584 stocks advanced, while 703 stocks declined on the BSE. 

The BSE Sensex is currently trading at 28038.29 up by 150.39 points or 0.54% after trading in a range of 28064.49 and 27919.04. There were 20 stocks advancing against 10 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.81%, while Small cap index gained 0.97%

The gaining sectoral indices on the BSE were Auto up by 1.48%, Consumer Durables up by 1.46%, Capital Goods up by 1.36%, FMCG up by 0.70% and Metal up by 0.53%, while there were no losers on the BSE sectoral index.

The top gainers on the Sensex were Maruti Suzuki up by 2.87%, Larsen & Toubro up by 1.93%, Tata Motors up by 1.66%, Mahindra & Mahindra up by 1.61% and Tata Steel up by 1.61%. On the flip side, Dr. Reddys Lab down by 1.09%, Bharti Airtel down by 0.78%, NTPC down by 0.76%, HDFC down by 0.39% and BHEL down by 0.33% were the top losers.

Meanwhile, in order to push domestic manufacturing growth under 'Make in India' programme, industry leaders and top government officials have suggested easier land acquisition norms, duty cuts and fiscal incentives for research and development especially in sectors like defence. A high-level meeting was recently held where industry leaders and government officials collectively made presentations before Prime Minister Narendra Modi on sector-specific strategies to push manufacturing as part of the 'Make in India' programme.

Besides, they have also suggested a comprehensive gold policy including mining, gold metal loans and setting up of special economic zones for sale of rough diamonds by mining firms. Further, the import duty on gold and silver must be reduced to 2% from the current 10%. In order to boost exports, it was suggested that import duties should be reduced on processed pearls to 2.5% from 10% and tax on cut and polished coloured gemstones be removed.

Sector front, industry and government officials recommended financial incentives like tax holidays and incentivisation for R&D activities for defence and aerospace sectors. For basic metals, it was suggested that the customs duty on steel products be increased, while import duty be removed on raw materials or ores to boost manufacturing and attract investments. 

During April to October period of this fiscal, Indian industrial output grew by 1.9% as compared to 0.2% in the same period of previous fiscal. The manufacturing output which accounts for around 75% of the IIP index, grew by 0.7% in the reported period as against -0.1% contraction in year ago period. 

The CNX Nifty is currently trading at 8440.75 up by 45.30 points or 0.54% after trading in a range of 8445.60 and 8401.25. There were 35 stocks advancing against 15 declining on the index.

The top gainers on Nifty were Maruti Suzuki up by 2.97%, Jindal Steel & Power up by 2.13%, Larsen & Toubro up by 2.09%, Tata Steel up by 1.80% and Mahindra & Mahindra up by 1.78%. On the flip side, DLF down by 2.23%, Dr. Reddys Lab down by 1.25%, Bharti Airtel down by 0.73%, Cairn India down by 0.64% and NTPC down by 0.62% were the top losers.

Asian markets were trading mostly in the red; Taiwan Weighted decreased 0.50%, Straits Times declined 1.02%, Jakarta Composite slipped 0.59%, FTSE Bursa Malaysia KLCI dipped 0.74% and KOSPI Index was down by 0.43%. On the flip side, Nikkei 225 rose 0.15%, Shanghai Composite soared 2.42% and Hang Seng was up by 0.5%.