Benchmarks end with modest gains; Nifty recaptures 8,500 mark

Indian equity benchmarks ended the volatile day of trade slightly in the green on Friday. Buying activity which took place during second half of trade mainly drove the markets higher and key domestic benchmarks managed to keep their head above water with Sensex and Nifty recapturing their crucial 28,100 and 8,500 levels respectively. Sentiments remained up-beat after trade deficit for December 2014 stood at 10-month low with further hope that imports will continue to decline. Trade deficit during December fell sharply to $9 billion from $16.8 billion in November 2014. While exports for the month came in at $25.40 billion from $25.96 billion in November, imports declined to $34.83 billion from $42.82 billion in the previous month. Some support also came after India Ratings has expected that Indian economy to grow at 6.5% in the next fiscal from 5.6% this fiscal.

The rating agency has also estimated the industry to grow at 6.5% in FY16 against the projected 3.6% in the current fiscal. On inflation front, it highlighted that wholesale price index (WPI) and consumer price index (CPI) based inflation to moderate to 2.8% and 6.0%, respectively, in FY16. However, gains remained capped as investors remained on sidelines ahead of Reliance Industries’ (RIL) Q3 numbers, to be announced later in the day. The company is expected to post its first drop in net profit in six quarters as inventory losses due to a fall in crude oil prices weigh on profitability and take away the benefits of higher gross refining margins (GRMs) in the fiscal third quarter.

Global cues remained somber with European markets fell from a one month high and were trading in the red in early deals, trimming a weekly advance as a slump in Swiss shares deepened. Most of the Asian equity indices ended in the red terrain after Switzerland’s unexpected move to abandon its currency cap jolted markets already roiled by plunging commodities prices.

Back home, foreign institutional investors were net buyers in Indian equities worth Rs 1,738.24 crore on Thursday, as per provisional stock exchange data. Appreciation in Indian rupee too supported the sentiments. The partially convertible rupee was trading at 61.97 per dollar at the time of equity market closing against the Thursday’s close of 62.05 on the Interbank Foreign Exchange on the back of heavy dollar-selling by custodian banks. Meanwhile, consumer goods stocks gained as easing inflation would increase the purchasing power of consumers while consumer loans would become cheaper on the back of lower interest rates. Additionally, shares of housing finance companies such LIC Housing, Repco Home Finance, Indiabulls Housing Finance, Dewan Housing edged higher each on expectation that lower interest rates would help revive demand for home loans.

The NSE’s 50-share broadly followed index Nifty ended higher by around twenty points to end above below its psychological 8,500 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex edged higher by over forty points to regain the psychological 28,100 mark. The broader markets were struggled to get any traction and ended the session mixed. The market breadth remained in favour of decliners, as there were 1378 shares on the gaining side against 1543 shares on the losing side while 106 shares remain unchanged.

Finally, the BSE Sensex surged by 46.34 points or 0.17%, to 28121.89, while the CNX Nifty gained 19.65 points or 0.23% to 8,513.80.

The BSE Sensex touched a high and a low of 28176.10 and 27945.31, respectively. The BSE Mid cap index was up by 0.32%, while the Small cap index was down by 0.04%.

The top gainers on the Sensex were Sun Pharma up by 2.88%, Coal India up by 2.55%, Hindustan Unilever up by 2.28%, Mahindra & Mahindra up by 2.10% and BHEL up by 2.05%. On the flip side, Hindalco down by 2.40%, Bharti Airtel down by 1.89%, Hero MotoCorp down by 1.81%, SBI down by 1.39% and Tata Motors down by 1.29% were the top losers.

On the BSE Sectoral front Consumer Durables up by 1.98%, Healthcare up by 1.41%, Power up by 1.36%, Capital Goods up by 1.23% and FMCG up by 1.17% were the top gainers, while IT down by 0.24%, TECK down by 0.07% and Bankex down by 0.01% were the losing indices on BSE.

Meanwhile, a leading rating agency India Ratings has expected that Indian economy to grow at 6.5% in the next fiscal from 5.6% this fiscal. The rating agency is of the view that a number of announcements made in the last Budget to address the structural issues plaguing industrial and infrastructure sectors could gather pace in the next fiscal, besides the government will announce few more initiative in the new Budget to boost the economic growth.

Moreover, the government's push for 'Make in India' which focuses on select 26 sectors and improving the 'ease of doing business will aid the manufacturing and industrial growth. India Ratings also estimated the industry to grow at 6.5% in FY16 against the projected 3.6% in the current fiscal. On inflation front, it highlighted that wholesale price index (WPI) and consumer price index (CPI) based inflation to moderate to 2.8% and 6.0%, respectively, in FY16. Further, it hopes that the RBI to cut the repo rate by another 75bps by FY16, after 25 basis points cut January 15.

On declining crude oil prices, the agency noted that declining crude prices is a windfall gain for the Indian economy. It has improved both the inflation and fiscal outlook.  Referring to fiscal deficit, it noted that measures such as dramatic fall in global crude prices, an increase in excise on petrol and diesel, cancellation of coal block allocations and penalties imposed, higher surplus transferred by RBI to the government and the announced 10% cut in the non-Plan expenditures, are all likely to help the government balance its revenue and expenditure better in FY15. However, these measures will still not be enough to bridge the gap arising out of the shortfall in tax and non-tax revenue and the fiscal deficit in FY15 will be 4.2% of GDP. Meanwhile, the fiscal deficit could fall to 3.9% in FY16 with higher growth, expected tax reforms and expenditure rationalisation.

The CNX Nifty touched a high and low of 8,530.75 and 8,452.25 respectively.

The top gainers on Nifty were ZEEL up by 4.63%, Sun Pharmaceuticals Industries up by 3.22%, Coal India up by 3.04%, Power Grid Corporation of India up by 2.97% and HCL Technologies up by 2.81%. On the flip side, PNB down by 2.38%, Hindalco Industries down by 2.11%, Cairn India down by 2.11%, Bharti Airtel down by 1.93% and Hero MotoCorp down by 1.88% were the top losers.

European Markets were trading in the red; UK's FTSE 100 was down by 0.62%, France's CAC was down by 0.41% and Germany's DAX was down by 0.60%.

The Asian equity benchmarks ended mostly in red on Friday, while Chinese stocks rose, sending the benchmark index to its longest weekly winning streak in almost eight years, amid speculation the government will take more steps to boost economic growth. China announced fresh support measures for its slowing economy after data showed a worrying drop in bank lending and foreign investment growth falling to a two-year low. The central bank stated that it would lend 50 billion yuan ($8.1 billion) to banks at discounted rates to allow them to re-lend the money to farmers and small businesses - areas of the economy that are usually short of cash. China’s foreign direct investment (FDI) rose at its slowest pace in two years in 2014, underscoring a cooling economy which is spurring more Chinese businesses to plough money overseas in a trend that is soon set to overtake inbound investment. The shifts were evident in China’s foreign direct investment (FDI) for 2014, which rose an annual 1.7% to a record $119.56 billion, while outbound direct investment (ODI) surged 14.1% to a new high of $102.9 billion. Japanese tertiary industry activity index rose to a seasonally adjusted 0.2%, from -0.1% in the preceding month whose figure was revised up from -0.2%.