Benchmarks extend winning streak for fifth straight day; Nifty surpasses 8,700 mark

Extending their northward journey for fifth day in a row, Indian equity benchmarks logged record high and ended the choppy day of trade with a gain of over one third of a percent with frontline gauges surpassing their crucial 28,850 (Sensex)and 8,700 (Nifty) levels on Wednesday. Sentiments remained up-beat after the International Monetary Fund (IMF) in its latest report namely ‘World Economic Report update’ has highlighted that Indian economic growth at 6.5% in 2016 will surpass China’s projected growth rate of 6.3%. Sentiments also got some boost as Commerce and Industry Minister Nirmala Sitharaman has asserted that India will continue to introduce reforms through the use of ordinances to make it easier for companies to do business in India. Some support also came in from report that foreign institutional investors were net buyers in equities to the tune of Rs 1,276 crore on January 20, 2015, as per provisional stock exchange data.

On the global front, European shares were trading lower as investors opted to book profit after a four-day rally driven by expectations the European Central Bank is about to launch quantitative easing had taken them to seven-year highs. Asian markets ended mostly in the green, 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.

Back home, appreciation in Indian rupee too supported the sentiments. The partially convertible rupee was trading at 61.61 per dollar at the time of equity market closing against the Tuesday’s close of 61.69 on the Interbank Foreign Exchange. Meanwhile, interest rate-sensitive stocks extended their recent rally on hopes of additional monetary policy easing. Moreover, improvement in the country’s macro economic factors and possibility of further cuts in interest rates pulled the Capital Goods stocks higher.

On the flip side, stocks related to FMCG space  edged lower 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 bottom-line in Q3.

The NSE’s 50-share broadly followed index Nifty rose by over thirty points and ended above the psychological 8,700 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex rose by over hundred points to finish above the psychological 28,850 mark. Broader markets, however, struggled to get any traction and ended the session in red. The market breadth remained in favour of decliners, as there were 1225 shares on the gaining side against 1717 shares on the losing side while 95 shares remain unchanged.

Finally, the BSE Sensex surged by 104.19 points or 0.36%, to 28888.86, while the CNX Nifty gained 33.90 points or 0.39% to 8,729.50.

The BSE Sensex touched a high and a low of 28958.10 and 28792.57, respectively. The BSE Mid cap index was down by 0.24%, while the Small cap index was down by 0.20%.

The top gainers on the Sensex were Hindustan Unilever up by 4.99%, Bharti Airtel up by 3.96%, HDFC up by 2.71%, SBI up by 2.45% and Coal India up by 2.33%. On the flip side, ITC down by 5.01%, Cipla down by 2.37%, Sesa Sterlite down by 2.01%, Tata Motors down by 1.38% and Tata Steel down by 1.28% were the top losers.

On the BSE Sectoral front Consumer Durables up by 1.41%, TECK up by 1.17%, IT up by 0.96%, Capital Goods up by 0.87%, Infrastructure up by 0.68% were the top gainers, 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 only losing indices on BSE.

Meanwhile, amidst lot of expectation, Finance minister Arun jaitley will be presenting NDA government's first full year budget on February 28, 2015. Also, the budget session of Parliament would commence from February 23 and would continue till March 20. While, the first part of the session would be between February 23 and March 20, the second part would be conducted between April 20 and May 8.

As per schedule, Railway Budget will be presented on February 26, Economic Survey on February 27 and the General Budget will be presented on February 28. Notably, all eight ordinances, including one on raising the FDI limit in the insurance sector from 26% to 49% and e-auctioning of coal mines will be taken up for ratification in the Budget session. However, atleast six of these ordinances will lapse if they are not passed in the first part of the Budget Session.

Besides these, issues like environment, land, power, coal, mining are likely to be effectively addressed through administrative and clearance process. This will manifest the impact of relaxed FDI limits in defence, railways and planned increase in insurance. With Finance Minister Arun Jaitley indicating start of second-generation reforms going forward, upcoming budget would be widely eyed by market-participants across the globe.

The CNX Nifty touched a high and low of 8,741.85 and 8,689.60 respectively.

The top gainers on Nifty were Hindustan Unilever up by 5.35%, Bank of Baroda up by 3.77%, Bharti Airtel up by 3.76%, PNB up by 3.35% and HDFC up by 3.08%. On the flip side, ITC down by 5.21%, Cipla down by 2.93%, ZEEL down by 2.30%, SSLT down by 2.25% and NMDC down by 1.92% were the top losers.

Most of European Markets were trading in the red; France's CAC was down by 0.39% and Germany's DAX was down by 0.27%, while UK's FTSE 100 was up by 0.62%.

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.