Alleviating Euro-zone woes help Indian benchmarks convalesce by over 2%

A session after being pulverized by over two percent, Indian frontline equity indices staged a smart bounce back thanks to rebound in investors’ risk appetite across the globe amid renewed hopes that the long-awaited bond swap between Greece and its private sector creditors will almost be concluded this week. The benchmarks completely regained all the ground lost in the previous session and settled just a kissing distance away from the psychological 5,200 (Nifty) and 17,200 (Sensex) levels. Encouraging global leads along with supportive domestic tidings persuaded investors to build up positions in Indian equities through the first month of the New Year which helped the frontline gauges to accumulate a gargantuan 11.3 percent gains in January and register its first monthly rise in three. The surge in the month of January was not only the biggest since September 2010 but also the best January rise for the benchmark since a 19.4 percent rise in 1994. Sentiments in Tuesday’s session were upbeat as apart from hopes that deal would soon be struck between Greece and private investors, leaders from European Union agreed upon employing stricter measures aimed at making it harder for violators to escape sanctions and to restore confidence in their single currency. On the domestic front, reports of capital infusion in country’s major banks like SBI and PNB kept the rate sensitive counter buzzing through the session while sentiments also got a boost after ICICI Bank, India’s largest private sector bank announced its third quarter earnings in the session which were better than the street’s expectations. Meanwhile, the government only slightly lowered India’s economic growth forecast to 8.4 percent from the earlier estimate of 8.5 percent for financial year 2010-11. On the global front, stronger than predicted industrial production reading from world’s third largest economy - Japan too spurred hopes of recovery in global economic situation. Asian markets largely exhibited optimistic trends in the session while the European markets too gained momentum and traded with notable gains.

Earlier on Dalal Street, the benchmark got off to a promising start after investors largely remained influenced by encouraging global developments and upmove in Asian markets. After the sanguine opening there was no turning back for the frontline indices as they vivaciously rallied with great enthusiasm amid supporting global cues. The markets got underpinned further in the dying hours of trade and the northbound journey only halted with the session’s close, erasing almost all the losses suffered in the previous session. Eventually, the NSE’s 50-share broadly followed index Nifty, surged with triple digit gains and settled a tad below the psychological 5,200 support level while Bombay Stock Exchange’s Sensitive Index - Sensex slammed a triple hundred to close below the psychological 17,200 mark. The broader markets too showed resilience and settled on a sanguine note with hefty gains of around two percent, in tandem with their larger peers. On the BSE sectoral front, across the board position build up was evident with the Banking counter leading the space with close to 4% gains. The high beta Realty and Auto pockets too went home with over strong gains of 3.51% and 2.37% respectively. Though there appeared no sectoral laggard, however some individual names like Coal India settled in the red with close to three percent cuts after the coal ministry rolled back its proposal to hike prices under a new pricing policy. The markets rebounded on weak volumes of over Rs 1.07 lakh core while the turnover for NSE F&O segment remained on the higher side as compared to that on Monday at over Rs 0.87 lakh crore. The market breadth remained optimistic as there were 1804 shares on the gaining side against 1034 shares on the losing side while 108 shares remained unchanged.

Finally, the BSE Sensex climbed by 330.25 points or 1.96% to settle at 17,193.55, while the S&P CNX Nifty surged 111.95 points or 2.20% to close at 5,199.25.

The BSE Sensex touched a high and a low of 17,238.99 and 16,965.58 respectively. The BSE Mid cap and Small cap indices were up by 1.99% and 1.41% respectively.

The major gainers on the Sensex were Hindalco Industries up 6.65%, ICICI Bank up 5.87%, DLF up 5.29%, Tata Motors up 4.06% and Bajaj Auto up 3.58%. While, Coal India down 2.99%, Maruti Suzuki down 1.10%, Hindustan Unilever down 0.76%, NTPC down 0.09% and ONGC down 0.05%, were the major losers on the index.

The top gainers on the BSE sectoral space were Bankex up 3.84%, Realty up 3.51%, Auto up 2.37%, Metal up 2.24% and TECk up 1.85%, while there was no loser on the sectoral space.

Meanwhile, the government has revised the economic growth rate for 2010-11 financial year to 8.4% from the earlier estimate of 8.5%, mainly on the back of uncertain global economic conditions, high interest rates and other domestic factors. As per the quick estimates released by the Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation, estimates of GDP growth for the year 2010-11 have been revised to 8.4% from the earlier 8.5%. 

The ministry stated that the revision has been done on account of using the new series of the Index of Industrial Production (IIP) with base 2004-05 and also subsequent revision in Wholesale Price Index (WPI). Further, the revision in estimates is also done based on the availability of latest data on agricultural production, industrial production, government expenditure and also detailed and more comprehensive data available from various source agencies.

The growth rate of 8.4% in the GDP has been achieved due to high growth in transport, storage and communication (14.7%), financing, insurance, real estate & business services (10.4%), trade, hotels & restaurants (9.0%), and construction (8.0%). Further, the primary sector (agriculture, forestry & fishing) has shown an impressive growth of 7.0% during 2010-11 as against 1.0% during the year 2009-10. The growth of secondary sector (manufacturing and construction) was 7.2% and that of service sector was 9.3% during 2010-11.

The per capita income, in real terms, has gone up to Rs 35,993 for 2010-11, registering a growth of 6.4% as compared to 2009-10. Gross domestic savings (GDS) as percentage of GDP declined to 32.3% of GDP at market prices as against 33.8% in the 2009-2010. The decrease in the rate of GDS has been mainly due to the decrease in the rates of financial savings of household sector and private corporate sector.

The rate of Gross Capital Formation, at constant (2004-05) prices, has dropped to 37.7% in 2010-11 as against 38.5% in 2009-10. As per the data, the GDP at constant prices at market prices during the year 2010-11 has grown at 9.6%. In addition, the GDP growth estimate for FY09-10 has been revised upward to 8.4% from the previous estimate of 8%. Furthermore, electricity, gas and water production recorded 3% growth in FY11, compared to 6.3% expansion in FY10.

The S&P CNX Nifty touched a high and low of 5,215.40 and 5,120.15 respectively.

The top gainers on the Nifty were Hindalco up 8.07%, RCOM up 7.31%, Sesa Goa up 7.12%, IDFC up 6.39% and Axis Bank up 6.02%.

On the flip side, Coal India down 2.31%, Siemens down 1.86%, PNB down 1.19%, Cairn down 1.08% and Maruti Suzuki down 0.98% were the top losers on the index.

The European markets were trading in green as France's CAC 40 was up 1.15%, Britain’s FTSE 100 up 0.85% and Germany's DAX up by 0.99%.

Sentiments remained buoyed in the Asian region with all the major index in the region ended the trade with good gains on Tuesday after European leaders agreed on a treaty aimed at ending huge deficits, but traders remained cautious as Greece continued talks to slash its debt mountain. Leaders of 25 European Union governments agreed on Monday night to move to closer fiscal union and to sign off on the details of a $660 billion permanent bailout fund for the euro zone. In addition, Greek Prime Minister Lucas Papademos said his country has made significant progress in talks with private-sector creditors. Still, some investors remain on edge as a deal remains elusive.

Moreover, stronger-than-expected Japanese industrial-production data supported the Tokyo market, though the yen’s strength continued to hobble exporter stocks. Industrial production rose 4% on month in December, above expectations for a 2.9% rise. The data indicated the effects of Japan’s March 11 earthquake and Thailand’s floods are wearing off.