Post Session: Quick Review

Local equity markets scaled fresh life-time high for second consecutive session on Wednesday, which lifted Sensex and Nifty above psychologically crucial 28,850 and 8,700 levels respectively, with gains of around four tenths of a percent. Sustained buying activities by both funds and retail investors amidst positive global cues on hopes of better than expected earnings by corporates and further rates by RBI in its upcoming monetary policy review on February 3, 2014, mainly got the bulls going for yet another session of trade. However, the session turned to be daunting for broader indices, which went home with losses in the range of 0.20%-0.25%.

Sentiments were also buttressed at Dalal Street after International Monetary Fund (IMF) in its World Economic Report, while terming the new government's reforms as 'promising', underscored that it expected India’s growth rate was expected to surpass that of China’s in 2016. The IMF said that India is projected to grow at 6.3% in 2015 and 6.5% in 2016, when it is likely to cross China's projected growth rate of 6.3%.

On the global front, most of the equity markets in Asia raked in gains on Wednesday, bolstered by hopes that the European Central Bank, may unveil stimulus measures in the form of sovereign bond purchases to boost growth. Meanwhile, the Bank of Japan (BOJ) maintained its massive monetary stimulus and expanded a loan program aimed at encouraging banks to boost lending, signaling its resolve to achieve its ambitious 2 percent inflation target. Meanwhile, European shares inched higher in early trade on Wednesday, gaining ground for the fifth session in a row, lifted by expectations the European Central Bank (ECB) is about to launch a quantitative easing programme to boost the region's economy.

Closer home, while most of the sectoral indices on BSE concluded into positive territory, those from Fast Moving Consumer Goods (FMCG), Metal and Realty counters begged to differ. On the flip side, maximum demand was witnessed by stocks from Consumer Durables, TECK up by 1.17%, IT counters, which topped the gainers list on BSE. FMCG counter  succumbed to selling pressure after Cigarette-hotel-to-FMCG major  ITC missed street expectations on top-line as well as bottom-line front in the third quarter. The company's profit grew 10.5% to Rs 2,635 crore, while its other income surged 48.85% on yearly basis to Rs 582 crore, supported the bottomline in Q3. The overall market breadth on BSE was in the favour of decliners, which thumped advances in the ratio of 1228:1709, while 100 shares remained unchanged (Provisional).

The BSE Sensex ended at 28888.86, up by 104.19 points or 0.36% after trading in a range of 28792.57 and 28958.10. There were 17 stocks advancing against 13 stocks declining on the index. (Provisional)

The broader indices ended in the red; the BSE Mid cap index was down by 0.24%, while Small cap index down by 0.20%. (Provisional)

The gaining sectoral indices on the BSE were Consumer Durables up by 1.41%, TECK up by 1.17%, IT up by 0.96%, Capital Goods up by 0.87% and Infrastructure up by 0.68% while, FMCG down by 1.89%, Metal down by 0.56%, Realty down by 0.22% and Oil & Gas down by 0.10% were the few losing indices on BSE. (Provisional)

The top gainers on the Sensex were Hindustan Unilever up by 5.09%, Bharti Airtel up by 3.77%, HDFC up by 2.95%, Coal India up by 2.55% and SBI up by 2.37%. On the flip side, ITC down by 5.17%, Cipla down by 2.82%, Sesa Sterlite down by 2.01%, Tata Steel down by 1.52% and ONGC down by 1.24% were the top losers. (Provisional)

Meanwhile, with an aim to boost the infrastructure development in the country, the Ministry of Road Transport and Highways is persuading the Employees' Provident Fund Organisation (EPFO) to lend its support by investing in an upcoming issue of infrastructure bonds by the National Highways Authority of India. However, the EPFO has sought government guarantee before committing any funds for investment as NHAI does not have net worth. The EPFO had about Rs 2,95,095 crore accumulated in the accounts of its members at the end of March 2014.  

The government requires at least Rs 1,80,000 crore to finance highway projects in the next financial year. The sector requires long term funding and EPFO's fund tenure adequately match with the investment period required to finance highway projects. On the other hand, banks have become wary of lending to road projects because of delays in approvals and land acquisition. 

The NHAI is likely to issue bonds of AAA rating, which are considered to have the highest degree of safety. The government could also use a cess on petrol as a predictable revenue source to assure the EPFO.

The government has identified the development of infrastructure a most critical prerequisite for sustaining the present growth momentum of the economy. India would require around $1 trillion in the 12th five year plan (2012-2017) to overhaul its infrastructure sector such as ports, airports and highways to boost growth.

India VIX, a gauge for markets short term expectation of volatility surged 2.54% at 17.71 from its previous close of 18.15 on Tuesday. (Provisional)

The CNX Nifty ended at 8729.50, up by 33.90 points or 0.39% after trading in a range of 8689.60 and 8741.85. There were 28 stocks advancing against 22 stocks declining on the index. (Provisional)

The top gainers on Nifty were Hindustan Unilever up by 5.19%, Bharti Airtel up by 3.97%, Bank Of Baroda up by 3.78%, PNB up by 3.23% and HDFC up by 2.85%. On the flip side, ITC down by 4.96%, Cipla down by 2.77%, Zee Entertainment down by 2.34%, Sesa Sterlite down by 2.20% and NMDC down by 1.78% were the top losers. (Provisional)

European Markets were trading mostly in the red; France's CAC was down by 0.33% and Germany's DAX was down by 0.32%, while UK's FTSE 100 was up by 0.61%.

The Asian equity benchmarks ended mostly in green on Wednesday, ahead of a European Central Bank meeting. The Bank of Japan cut next fiscal year's inflation forecast and expanded a loan scheme aimed at boosting lending, hoping to deflect criticism it is sitting idly by as a slump in oil prices pushes inflation further away from its target. As widely expected, the BOJ held off on expanding its massive stimulus program and maintained its pledge to increase base money at an annual pace of 80 trillion yen ($678 billion) through buying government bonds and risk assets. In a review of its long-term estimates, the BOJ cut its core consumer inflation forecast for the year beginning in April to 1% from 1.7% projected three months ago. Japan’s All Industries Activity Index rose to a seasonally adjusted 0.1%, whose figure was revised up from -0.1%.

Malaysia cut its economic growth forecast for this year and announced a slew of austerity measures as tumbling oil prices force the government to slash spending. Prime Minister Najib Razak stated that the government’s 2015 budget, announced in October, was based on oil prices averaging $100 a barrel but this projection was no longer realistic as global crude prices have dropped by over 50%. State oil company Petronas contributes about a third of Malaysian government revenue.