Benchmarks extend previous session jubilation

Friday’s session turned out to be a fabulous day of trade for the Indian equity markets, where frontline gauges garnered gains of over half a percent. Hectic buying activity which took place during last leg of trade mainly drove the markets higher, with frontline gauges ending near intraday high levels, recapturing their crucial 27,450 (Sensex) and 8,250 (Nifty) bastions. Earlier, markets made gap-up opening as sentiments remained up-beat with Finance Minister Arun Jaitley’s statement that significant downward trend in inflation has been recorded in the second and third quarter of 2014-15. The external environment has also largely turned in India’s favour. But, markets entered into red terrain as investors turned nervous ahead of Infosys Q3 numbers. Meanwhile, selling by foreign institutional investors continued and they were net sellers in Indian equities worth Rs 477 crore on January 8, 2014, as per provisional stock exchange data.

In last hour of trade, domestic sentiment was propped up as Infosys, the country’s largest software services exporter, reported a 13 per cent rise in its quarterly net profit, beating estimates, as it won more outsourcing contracts from Western clients. Some support also came after the company retained its revenue guidance for the fiscal year ending March 2015. The company has maintained its guidance of 7%-9% growth in revenue in dollar terms for the year ending March 2015 (FY 2015) based on exchange rates as on September 30, 2014

On the global front, European shares snapped a two-day winning streak on Friday, ahead of key US non-farm payrolls data, with Spain’s Banco Santander sliding over 10 per cent after unveiling a capital hike and dividend cut. Asian markets ended mostly in the green with strong cues overnight from Wall Street as well as steady oil prices boosting investor sentiment.

Back home, appreciation in Indian rupee supported the sentiments. The partially convertible rupee was trading at 62.37 per dollar at the time of equity market closing against the Tuesday’s close of 62.67 on the Interbank Foreign Exchange. Meanwhile, shares of pharmaceutical companies remained on buyers’ radar on reports that the Indian and global companies are looking to invest over Rs 1,000 crore in Gujarat’s pharma sector. Software and technology stocks also edged higher after Infosys’ consolidated net profit surged 13.04 per cent to Rs 3250 crore for the Q3 FY15 as compared to Rs 2875 crore in Q3 FY14. Moreover, the consolidated total income gained around 6.39 per cent to Rs 14636 crore in the quarter under review as compared to Rs 13757 crore in the corresponding quarter previous year.

The NSE’s 50-share broadly followed index Nifty rose by over fifty points and ended above the psychological 8,250 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged by over one hundred and eighty points to finish above the psychological 28,450 mark. Broader markets too traded with traction throughout the trade and ended the session slightly in the green. The market breadth remained in favor of decliners, as there were 1,352 shares on the gaining side against 1,541 shares on the losing side while 116 shares remain unchanged.

Finally, the BSE Sensex surged by 183.67 points or 0.67%, to 27458.38, while the CNX Nifty gained 49.90 points or 0.61% to 8,284.50.

The BSE Sensex touched a high and a low of 27507.67 and 27119.63, respectively. The BSE Mid cap index was up by 0.05%, while the Small cap index was up by 0.11%.

The top gainers on the Sensex were Hindustan Unilever up by 5.94%, Infosys up by 5.02%, Dr. Reddys Lab up by 3.21%, TCS up by 2.80% and ONGC up by 2.77%. On the flip side, NTPC down by 3.31%, Bajaj Auto down by 2.80%, ITC down by 1.59%, ICICI Bank down by 1.48% and Sesa Sterlite down by 1.36% were the top losers.

On the BSE Sectoral front IT up by 3.51%, TECK up by 2.44%, Healthcare up by 1.78%, Oil & Gas up by 1.59% and Consumer Durables up by 0.83% were the top gainers, while Realty down by 1.39%, INFRA down by 1.10%, Power down by 0.92%, Capital Goods down by 0.41%, Metal down by 0.32% were top losers in the space. 

Meanwhile, Industry body PHDCCI, in its latest report, has highlighted that Indian Government will have to undertake a massive provisioning of Rs 26 lakh crore for the next five years beginning 2015 to finance infrastructure projects to provide a fillip to 'Make in India' campaign and help the economy attain 7-8 percent growth. Investment norms for pension funds and for insurance companies will have to be liberalised further to utilise their corpus to part finance infrastructure projects.

The report further added that out of the estimated Rs 26 lakh crore almost 80 percent of the amount will be needed for infrastructure projects such as power, roads and urban infrastructure. In roads, investments would be driven towards building national highways and state roads, whereas in power, generation will continue to account for the largest share of investments. Referring to urban infrastructure, municipal bodies are likely to require significant investments for constructing urban roads, expanding its transport and revamping water supply and sewerage infrastructure.

On the source of funding, PHDCCI stressed that 70 percent of the projected Rs 26 lakh crore investment financing will have to be funded through debt, with banks remaining the largest source of finance. External commercial borrowings (ECBs) may provide funds to the extent of 14 percent and the remaining amount is expected to come through bonds issuance. However, the report also raised concern over the asset-liability mismatch for banks, underscoring that it would be difficult for banks alone to finance infrastructure projects as infrastructure project loans have long tenures of 10 to 15 years while bank deposits, the main source of funds, typically have a maturity of less than three years.

The CNX Nifty touched a high and low of 8,303.30 and 8,190.80 respectively.

The top gainers on Nifty were Hindustan Unilever up by 5.85%, Infosys up by 5.16%, Tech Mahindra up by 4.54%, Dr. Reddy's Laboratories up by 3.02% and Tata Consultancy Services up by 2.71%. On the flip side, DLF down by 3.61%, NTPC down by 3.24%, Bajaj Auto down by 3.08%, Jindal Steel & Power down by 2.85% and Bank of Baroda down by 2.03% were the top losers.

European Markets were trading in the red; UK's FTSE 100 was down by 0.34%, France's CAC was down by 0.29% and Germany's DAX was down by 0.25%.

The Asian equity benchmarks ended mostly in green on Friday, with Japanese stocks rising for a second day on speculation that central banks will support growth. China’s annual consumer inflation hovered at a near five-year low of 1.5% in December, signaling persistent weakness in the economy but giving policymakers more room to ease policy to support growth. The world’s second-largest economy still faces formidable headwinds this year as a property market downturn persists and local governments and companies are struggling to repay debt. The consumer price index rose 0.3% in December from November while, the producer price index in December declined 3.3% from a year earlier, its 34th consecutive monthly decline and the biggest decline since September 2012, as sluggish demand curbed the pricing power of companies. Japan’s index of leading economic indicators rose to a seasonally adjusted 103.8, from 104.5 in the preceding month whose figure was revised up from 104.0.