Benchmarks log all time highs; Nifty ends near 8,700 level

Boisterous benchmarks showcased an enthusiastic performance, by rallying around two percentage points on Tuesday. Sentiments remained up-beat since start as key bourses made a gap-up opening and there appeared not even an iota of profit booking in the session as the benchmarks managed to fervently gain from strength to strength, as investors continued their hunt for fundamentally strong stocks. Frontline indices not only extended their rally for fourth straight session but also recorded their all time closing high, settling near their crucial 8,700 (Nifty) and 28,800 (Sensex) bastions as investors took to hefty across the board buying. Sentiments remained up-beat on report that foreign institutional investors were net buyers in Indian equities worth Rs 433.72 crore on January 19, as per provisional stock exchange data.

Some support also came after finance Minister Arun Jaitley has stated that the government will take special steps to boost public spending on infrastructure and initiate measures to rationalise subsidies. The Minister added that whole PPP model is still under stress and there is a need for stepping up public investments in infrastructure sector to boost economic growth. Rally got extended after United Nations, in its latest World Economic Situation and Prospects 2015 (WESP) report, has highlighted that Indian economy is likely to grow at 5.9% this year and 6.3% in 2016. Markets also drew solace from IMF’s latest World Economic Outlook report, which despite lowering global economic growth forecast in 2015, kept its growth forecast unchanged for India at 5.8% for 2014.

Firm opening in European markets too supported the sentiments with CAC, DAX and FTSE were trading in the green in early deals in anticipation of the European Central Bank launching fresh stimulus. Asian markets ended mixed as investors look for clues on how the government will balance market liberalization with steps to maintain stability.

Back home, there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too equally participated in the rally. Meanwhile, metal stocks edged higher after China’s economic growth steady at 7.3% in the fourth quarter allayed concerns over a slowdown in Chinese economy. Banking stocks remained on buyers’ radar after Reserve Bank of India (RBI) underscored that it had decided to allow commercial banks to review the base rate methodology after three years from date of its finalization instead of the current periodicity of five years.

The NSE’s 50-share broadly followed index Nifty rose by around one hundred and fifty points to end near the psychological 8,700 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex rose by over five hundred and twenty points to finish near the psychological 28,800 mark. Broader markets too traded with traction and ended the session with a gain of around half a percentage point. The market breadth remained in favour of advances, as there were 1563 shares on the gaining side against 1409 shares on the losing side while 117 shares remain unchanged.

Finally, the BSE Sensex surged by 522.66 points or 1.85%, to 28784.67, while the CNX Nifty soared by 144.90 points or 1.69% to 8,695.60.

The BSE Sensex touched a high and a low of 28829.29 and 28324.85, respectively. The BSE Mid cap index was up by 0.44%, while the Small cap index was up by 0.41%.

The top gainers on the Sensex were HDFC up by 5.84%, Sesa Sterlite up by 5.36%, Tata Steel up by 4.50%, Axis Bank up by 4.33% and Tata Motors up by 3.78%. On the flip side, GAIL India down by 1.90%, Tata Power down by 0.91%, Dr. Reddys Lab down by 0.65%, Maruti Suzuki down by 0.65% and Hero MotoCorp down by 0.49% were the top losers.

On the BSE Sectoral front Metal up by 3.03%, Bankex up by 1.84%, FMCG up by 1.69%, Oil & Gas up by 1.33% and Realty up by 1.20% were the top gainers, while Consumer Durables down by 0.07% and Power down by 0.02% were the only losing indices on BSE.

Meanwhile, the International Monetary Fund (IMF), while slashing global economic growth forecast in 2015 urged the need for all governments and central banks to pursue accommodative monetary policies and structural reforms for supporting growth. In its latest World Economic Outlook report, IMF, lowering its growth forecast by 0.3 percentage points for both the years, pegged global growth at '3.5%' for 2015 and '3.7%' for 2016.

The international organization pointed that new factors supporting growth such as lower oil prices and also depreciation of euro and yen were being more than offset by persistent negative forces, including the lingering legacies of the crisis and lower potential growth in many countries.

It advised advanced economies to maintain accommodative monetary policies to avoid increases in real interest rates as cheaper oil increases the risk of deflation. It further added that if rates couldn't be further reduced, the countries should pursue an accommodative policy 'through other means’.

However, for India, IMF kept its growth forecast unchanged at 5.8% for 2014 and further underscored that slower growth in china would impact growth in much of emerging Asia except India where weaker external demand was offset by the boost to the terms of trade from lower oil prices and a pickup in industrial and investment activity after policy reforms. It further, highlighted that the US was the only major economy for which growth projections have been raised as growth rebounded ahead of expectations after the contraction in the first quarter of 2014.

IMF projected growth in US to exceed 3% in 2015-16, with domestic demand supported by lower oil prices, more moderate fiscal adjustment, and continued support from an accommodative monetary policy stance, despite the projected gradual rise in interest rates. Meanwhile, for In emerging market and developing economies, IMF expects the growth to remain broadly stable at 4.3% in 2015 and to increase to 4.7 per cent in 2016 -a weaker pace than forecast in the October 2014 WEO.

The CNX Nifty touched a high and low of 8,707.90 and 8,574.50 respectively.

The top gainers on Nifty were SSLT up by 5.88%, HDFC up by 5.78%, Tata Steel up by 4.74%, Axis Bank up by 4.39% and Tata Motors up by 3.98%. On the flip side, GAIL down by 2.62%, Tata Power Company down by 1.15%, Dr. Reddy's Laboratories down by 0.72%, Power Grid Corporation of India down by 0.64% and Maruti Suzuki India down by 0.57% were the top losers.

European Markets were trading in the green; UK's FTSE 100 was up by 0.39%, France's CAC was up by 0.76% and Germany's DAX was up by 0.10%.

The Asian equity benchmarks ended mostly in green on Tuesday, as investors awaited the outcome of central-bank policy meetings in Japan and Europe. Japan’s inflation rate is expected to slow in the next fiscal year, which could probably force the Bank of Japan to launch more stimulus later in the year. Japan, which has been grappling with either outright deflation or very low inflation for decades, is facing an even greater challenge than some other economies given the 60 percent plunge in oil prices over the past six months. China’s economy grew at its slowest pace in 24 years in 2014 as property prices cooled and companies and local governments struggled under heavy debt burdens, keeping pressure on Beijing to take aggressive steps to avoid a sharper downturn. Chinese GDP remained unchanged at an annual rate of 7.3% while Chinese Industrial Production rose to 7.9%, from 7.2% in the preceding month. Chinese Retail Sales rose to an annual rate of 11.9%, from 11.7% in the preceding month. Chinese Fixed Asset Investment fell to a seasonally adjusted 15.7%, from 15.8% in the preceding month.