Markets ascend to day’s high on sustained buying activities

Gaining from strength to strength, local equity markets were trading at day’s high point on sustained buying activities by both funds and retail investors thanks to positive global set-up. Some support came in from Finance Minister Arun Jaitley’s statement that the ongoing global slow growth presented an opportunity for the country. At day’s high, both Sensex and Nifty were trading above psychologically crucial 27,150 and 8,200 levels respectively, with massive gains of around a percent. Meanwhile, broader indices outperforming larger counterparts were trading with gains in the range of 1.50%-2.00%.

On the global front, Asian stocks gained on Thursday after upbeat US employment data and a halt to a slide in oil tempered investor risk aversion, while the euro held near a nine-year low.  Hopes that the European Central Bank will embark upon bolder stimulus after data showing the euro zone had slipped into deflation also shored up risk assets.

Closer home, sectoral indices on BSE were trading all higher, nevertheless stocks from FMCG, Realty and PSU counters were outperforming their peers. IT stocks advanced on positive jobs data from US, with Infosys dropping amid volatility ahead of its Q3 results tomorrow, January 9, 2015. United States is the world's biggest outsourcing market for Indian IT firms. Additionally, banking stocks too rallied on hopes of rate cut by RBI in its upcoming monetary policy review in February. Besides, hospitality firms advanced after latest data showed that Foreign Tourist Arrivals to India increased 6.8% to 8.77 lakh in December 2014 over December 2013.  The overall market breadth on BSE was in the favour of advances which thumped advances in the ratio of 1944:697; while 80 shares remained unchanged.

The BSE Sensex is currently trading at 27199.22, up by 290.40 points or 1.08% after trading in a range of 27101.94 and 27249.98. There were 25 stocks advancing against 5 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.64%, while Small cap index up by 1.89%.

While there were no losers on BSE, the top gaining sectoral indices were FMCG up by 1.73%, Realty up by 1.58%, PSU up by 1.55%, Power up by 1.52% and Bankex up by 1.51%

The top gainers on the Sensex were Hindustan Unilever up by 2.54%, Tata Motors up by 2.53%, Tata Power up by 2.36%, GAIL India up by 2.21% and HDFC Bank up by 2.18%. On the flip side, Reliance Industries down by 1.25%, Sesa Sterlite down by 0.60%, Hero MotoCorp down by 0.16%, Bajaj Auto down by 0.04% and Infosys down by 0.00% were the top losers.

Meanwhile, with an aim of unleashing fresh set of reforms for the sector, the Power Ministry is drafting a Cabinet Note proposing amendments to the Tariff Policy, which would enable greater competition and create feasible conditions in the sector. This cabinet note is likely to be prepared in another week i.e. January 15, 2015.

As a part of procedure, the Power minister after seeking responses from other concerned ministries on the draft note would send the final note to Cabinet for approval. Stakeholders like Central Electricity Authority (CEA), Central Electricity Regulatory Commission (CERC), principal secretaries of all the state governments and chairpersons of power generation, transmission and distribution utilities reportedly are expected to submit their feedback on the same.

Reports suggest that the ministry, as part of the amendment to the Tariff Policy, has sought extension of Section 62, under which electricity regulatory commissions posses the power to determine tariffs - beyond the financial year 2017 and keep the hydro projects under this section, enabling the continuation of the cost plus tariff structure. Under the cost plus tariff structure PSUs, like NTPC and NHPC charge cost plus tariff, a lump-sum fee as well as a per-unit charge from the distribution companies or discoms. Additionally, another suggestion is to have a formula which would ensure that variation in fuel and power purchase cost is recovered by the power generating firms. The earlier amendment to the Tariff Policy was approved in 2011.

The CNX Nifty is currently trading at 8200.20, up by 98.10 points or 1.21% after trading in a range of 8167.30 and 8209.85. There were 45 stocks advancing against 5 stocks declining on the index.

The top gainers on Nifty were BPCL up by 4.71%, Cairn India up by 3.76%, Asian Paints up by 3.17%, DLF up by 3.05% and Jindal Steel & Power up by 2.89%. On the flip side, Reliance Industries down by 1.19%, Power Grid Corpn. down by 0.80%, Sesa Sterlite down by 0.41%, Zee Entertainment down by 0.25% and Hero MotoCorp down by 0.04% were the top losers.

Asian markets were trading higher; with Jakarta Composite gaining by 11.76 points or 0.23% to 5,218.88; FTSE Bursa Malaysia KLCI rallying by 13.87 points or 0.81% to 1,723.05; KOSPI Index edging higher by 20.82 points or 1.11% to 1,904.65; Straits Times spurting by 39.37 points or 1.19% to 3,337.73; Taiwan Weighted advancing by 157.94 points or 1.74% to 9,238.03; Hang Seng rising by 159.42 points or 0.67% to 23,840.68 and Nikkei 225 ascending by 281.77 points or 1.67% to 17,167.10. On the flip side, Shanghai Composite down by 72.23 points or 2.14% to 3,301.72 was the lone loser on the index.