Post session - Quick review

Indian equity markets catching up with global markets, which rallied a day ago following the US Federal Reserve's announcement to keep interest rates low till late 2014, posted a fourth consecutive day and week with good gain today. Expectations that improving global risk appetite would draw more portfolio investments spurred demand for risky assets class. As, after rallying for all the 4 sessions in the holiday shortened week, local bourses managed to negotiate a close above 17200 mark (Sensex) and 5200 level (Nifty) respectively.  Hopes that Greece would soon reach an agreement on restructuring its debt, mainly contributed to the positive milieu. Positive sentiment stemming from the government's moves like allowing foreign retail investors to trade in local equities and a shift in the central bank's monetary policy stance are attracting foreign funds, also boosted investor’s morale. However, the euphoria was well stretched right from the time when the Reserve Bank of India (RBI) announced a 50 basis points cut in banks' cash reserve ratio (CRR).

On the global front, after negative close of Wall Street, stocks of Asian markets did to do a lot to emerge as defender for Indian equity markets. Although Asian stocks faced multiple headwinds on Friday after disappointing Japanese earnings, higher unemployment in Spain and weak US home sales, but the regional benchmark extending its sixth weekly gain ended higher on Friday. The markets in China and Taiwan remain closed for the Lunar New Year holidays. Meanwhile, European shares steadied in morning trade on Friday after opening lower, as investors switched to defensive stocks from cyclical ahead of the outcome of crucial Greece debt talks and the release of US GDP data.

Back home, stocks from Oil & Gas, Consumer Durable and Technology counters, mainly aided the comeback of the lost bastions of the bourses. However, the stocks from Realty and Fast Moving Consumer Durables, Bankex and  Power space emerged out as dissenter. The week which saw over 3% gains for the benchmark indices was far better for broader indices which sparkled with a profit of 4%. However, for today’s trading session, small pocket index outperformed the large caps, by sneaking out gains of over 1.25%, while the Midecap index also faired decently well.

From the result front, there were more hits than misses.  Oracle Financial Services registered gain of over 0.50% on reporting 7.27% in its consolidated net profit after tax to Rs 302.97 crore for the quarter ended December 31, 2011. While, Sesa Goa soared past 6% after the company posted a better-than-expected operational performance for the quarter ended December 31 on inventory liquidation at Karnataka and Goa. On the consolidated basis the group posted a drop of 35.09% in its net profit to Rs 691.52 crore for the quarter. Additionally, Petronet LNG too rose marginally higher by the end of the day. The company posted an increase of 72.90% in its Q3FY12’s net profit at Rs 295.38 crore as compared to Rs 170.84 crore for Q3FY11. Additionally, Bank of India rose over 3% after the PSU posted a 9.64% rise in its net profit of Rs 716.15 crore for the quarter. However, Canara Bank came as a big disappointment to the street and the stock plunged over 3% after the bank reported a fall of 20.82% in its net profit of Rs 875.56 crore for the quarter ended December 31, 2011 as compared to Rs 1,105.73 crore for the same quarter in the previous year. The bank’s net NPA also rose at 1.49% in Q3FY12 as compared to 1.05% in Q3FY11. Thus, the market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 1774:1114 while 105 scrips remained unchanged. (Provisional)

The BSE Sensex gained 150.53 points or 0.88% and settled at 17,227.71. The index touched a high and a low of 17,258.97 and 17,106.57 respectively. 16 stocks advanced against 14 declining ones on the index (Provisional)

The BSE Mid-cap index gained 0.62% while Small-cap index was up by 1.25%. (Provisional)

On the BSE Sectoral front, Consumer Durables up 2.51%, Oil & Gas up 2.48%, TECk up 2.07%, Capital Goods up 2.00% and Metal up 1.84% were the top gainers while Realty down 2.18%, FMCG down 0.80%, Bankex down 0.31% and Power down 0.24% were the only losers.

The top gainers on the Sensex were Sterlite Industries up 5.62%, Bharti Airtel up 4.54%, Tata Motors up 4.21%, L&T up 3.96% and RIL up 3.13%.

On the flip side, DLF down 3.45%, Bajaj Auto down 3.27%, BHEL down 2.95%, Hero MotoCorp down 2.42% and Jindal Steel down 2.07% were the top losers in the index. (Provisional)

Meanwhile, the auto industry, since mid 2011, is witnessing a surge in the demand for diesel cars mainly due to the widening gap between petrol and diesel prices. Buyers are increasingly willing to wait for months to buy a diesel car which now constitute nearly 40% of total car sales in the country, compared with less than 20% a few years ago. Diesel is the most consumed fuel in the country and is subsidized as it is the preferred fuel for the transport sector (both trucks and passenger buses) and is also used in irrigation pumps and other agriculture equipment. It has long been argued that the rich should not get the benefit of this subsidy. 15% of diesel consumption is accounted for by personal cars and SUVs, according to oil ministry estimates.

These facts have not gone unnoticed by the finance ministry which is now considering raising the excise duty on diesel cars in Budget 2012-13. The oil ministry on its part is supporting the increase and is of the view that the additional amount garnered can be used to offset the loss that fuel retailers incur on the sale of diesel at government-controlled rates. The retailers are expected to incur a loss of about Rs 82,000 crore in 2011-12. The diesel price of Rs 40 a litre in Delhi is Rs 14.57 lower than its imported cost.

The Centre for Science and Environment (CSE) has further supported the increase in excise duty of diesel cars. It has reasoned that the higher duty will prevent 'dieselisation' of the economy and also reduce the pollution associated with the fuel. It has charged the automobile industry of fudging data to divert public attention from the environmental and public health impact of excessive use of diesel in passenger cars.'The car industry is getting desperate to prove that cars use negligible amount of diesel.

However, the auto industry body, Society of Indian Automobile Manufacturers (SIAM), has been quick to dismiss CSE's demands, and also played down concerns on emissions. 'Their (CSE) arguments do not make sense at all. Every fuel has its own emission pattern and diesel is not only more fuel efficient than petrol , even its CO2 emissions are less.

If the finance ministry agrees to hike the excise duty on diesel cars, consumers can expect to pay more for them. At the moment excise duty on small cars (under 4 meters, petrol engine below 1200cc and diesel under 1500cc) is 10%, while on bigger cars it is 22%. This is the same for petrol and diesel engine cars. In addition, petrol cars longer than 4 metres and with an engine capacity above 1,200-cc and diesel cars more than 4 metres in length and with an engine capacity above 1,500-cc attract excise duty at the rate of 22 %, plus Rs 15,000. Several companies are awaiting a clear picture on the excise duty before finalising plans to invest more in diesel capacity.

India VIX, a gauge for market’s short term expectation of volatility gained 3.23% at 21.70 from its previous close of 21.02 on Wednesday. (Provisional)

The S&P CNX Nifty gained 44.60 points or 0.86% to settle at 5,202.90. The index touched high and low of 5,217.00 and 5,162.40 respectively. 29 stocks advanced against 21 declining ones on the index. (Provisional)

The top gainers on the Nifty were Sesa Goa up 7.47%, SAIL up 6.91%, Sterlite up 6.73%, Grasim up 4.43% and L&T up 4.16%.

On the other hand, Ranbaxy down 6.82%, PNB down 3.59%, DLF down 3.56%, JP Associates down 3.23% and BHEL down 3.19% were the top losers. (Provisional)

The European markets were trading on a mix note, with France's CAC 40 down 0.13%, Germany's DAX up 0.05% and Britain’s FTSE 100 down 0.30%.

Hong Kong stocks rose for a sixth straight session day on the back of banking and telecommunication shares, while Japanese equities were weighed down by weak earnings reports from Nintendo and NEC.

Hang Seng was up 62.53 points or 0.31% to 20,501.67, Jakarta Composite was up 2.98 points or 0.07% to 3,986.41, Straits Times was up 21.83 points or 0.75% to 2,916.26 and Seoul Composite was up by 7.65 points or 0.39% to 1,964.83.

On the flip side, Nikkei 225 was down by 8.25 points or 0.09% to 8,841.22.

Stock markets in China and Taiwan remained closed on Friday in observance of Lunar New Year holiday.