Post session - Quick review

Frontline equity indices took an astonishing U-turn from day’s low in the noon deals to snap second consecutive session on a sanguine note. Mostly positive close of Asian stocks coupled with surprising positive India manufacturing PMI data mainly buoyed the sentiment of Indian equity markets. Manufacturers in India reported a further increase in new business received during January. The rate of expansion accelerated for a second month running, and was the fastest in eight months. The seasonally adjusted HSBC Purchasing Managers Index (PMI) a headline index designed to measure the overall health of the manufacturing sector registered 57.5 in January, up from 54.2 in December. The latest reading pointed to the strongest improvement in business conditions since May 2011.

However, local equity markets tracing the moves of regional counterparts staged topsy-turvy moves in morning deals. A better-than-expected Chinese manufacturing index for January, issued by a government federation, fueled an early rally in most markets across Asia. But that evaporated after the release later in the morning as unexpected growth in Chinese manufacturing stoked speculation the mainland may not ease lending curbs. However, bout of volatility witnessed in the trade was only for the benchmark indices to end on a positive note. Meanwhile, opening of the European market too offered impetus to the equity markets across the globe. European stocks rose for a second day as Greece approached a debt-swap agreement with its private creditors. US equity futures erased losses, while oil and copper advanced.

Back home, telecom stocks descended under intense selling pressure as the telecom ministry issued show-cause notices to five private operators including, Bharti Airtel, Vodafone and RCom, for under reporting revenues, as per a special audit report, for assessment years 2006 to 2008. Stocks of Bharti Airtel, IDEA Cellular and MTNL edged lower in the trade.

Additionally, PSU OMCs fell after jet fuel prices were slashed by over 3% on an appreciating rupee, which made imports cheaper. The price of aviation turbine fuel (ATF), or jet fuel, in Delhi was cut by Rs 1,974 per kilolitre (kl), or 3.02%, to Rs 62,908 per kl with effect from midnight tonight. Reacting to this, BPCL, HPCL, Indian Oil Corporation lost in the range of 2-5%.   Conversely, three aviation shares rose between 4.25% to 4.73% after state-run oil marketing companies slashed jet fuel prices by over 3%. Kingfisher Airline, Jet Airways and Spicejet were the apparent beneficiaries.

On the flip side, auto stocks like Hero MotoCorp, Bajaj Auto led the gainers ahead of reporting monthly sales number today. Meanwhile, Maruti Suzuki gained over 2% after the company sold a total of 115433 vehicles in the month of January 2012, up by 5.2% as compared to 109743 vehicles in January 2011. This included 14,386 units of exports during the month, registering 54.3% increase. India's largest utility vehicles and tractors maker Mahindra & Mahindra (M&M) gained 1.89% after company said that its total automotive sales rose 22% at 44,717 in January 2012 over January 2011. The company's domestic sales stood at 41,369 units during January 2012, as against 34601 units during January 2011, an increase of 20%.

However, the gains were suggestively led by index heavyweight-Reliance Industries (RIL)- as the company's share buyback programme started from today, 1 February 2012. The company proposes to buy-back up to a maximum of twelve crore shares and a minimum of three crore shares. The last date for the buy-back is 19 January 2013.

The BSE benchmark 30 scrip index --Sensex-- clinching over 100 points ended above 17300 mark. Similarly,  widely followed 50 share index -Nifty- gaining over 30 points ended above 5200 mark. Additionally, the broader indices too rejoiced with substantial gains and went home with gains of over 1% each. The market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 1829:1010 while 122 scrips remained unchanged. (Provisional)

The BSE Sensex gained 120.83 points or 0.70% and settled at 17,314.38. The index touched a high and a low of 17,327.21 and 17,061.55 respectively. 19 stocks advanced against 11 declining ones on the index (Provisional)

The BSE Mid-cap index gained 1.10% while Small-cap index was up by 1.81%. (Provisional)

On the BSE Sectoral front, Metal up 3.13%, Capital Goods up 2.30%, Auto up 2.17%, Power up 1.70% and Realty up 1.12% were the top gainers while Consumer Durables down 1.35%, PSU down 0.13% and FMCG down 0.08% were the only losers.

The top gainers on the Sensex were Jindal Steel up 6.58%, Tata Power up 6.26%, Tata Steel up 4.67% Hindalco Industries up 4.33% and Hero MotoCorp up 4.19%.

On the flip side, Coal India down 2.41%, ICICI Bank down 1.66%, ONGC down 1.29%, HDFC down 1.11% and ITC down 1.03% were the top losers in the index. (Provisional)

Meanwhile, even as most developed nations continued to struggle, industrial activity in India resiliently expanded at a brisk pace in the month of January with manufacturing sector business conditions improving at fastest rate in eight months. The manufacturing sector continued to gain momentum as demand from both domestic and foreign clients increased, underscoring the fact that sentiments have improved in recent months. With the sharp increase in both new orders and output, purchasing activity too saw substantial rise during the month.

According to the HSBC purchasing managers’ index (PMI), the manufacturing sector expanded to 57.5 in January, 2012 as against 54.2 in the previous month of 2011. A figure above 50 signals increase in production while, a number below 50 indicates contraction. The factory sector growth in the month was faster than the long-run series average. The PMI reading, which measures the overall health of manufacturing sector, suggested that factory activity saw strongest improvement in business conditions since May 2011.

After expanding at a swift pace in the last month of 2011, the momentum in industrial activity has accelerated further thanks to general improvement in demand and market conditions which resulted in rise in new order volumes. The factory output sub-index soared to 62.9 in January as against 55.8 in the previous month while both the output and the new orders indexes climbed to their highest levels since May last year. Though, growth of new export business also quickened but difficult economic conditions and increased competition in some markets, capped gains in new export orders.

Besides, manufacturing sector employment remained largely unchanged around December levels when it rose after four straight months of showing job losses. However, much to the dismay of the sector, the rate of input cost inflation increased substantially during January driven up by higher raw material costs. The rate of increase was faster than in December and it remained stubbornly above the long-run series average.

Meanwhile, a month after keeping the key policy rates unchanged, the first time since March 2010, the Reserve Bank of India (RBI), has once again left the repo and reverse repo rates untouched at 8.5% and 7.5% respectively. However, the Indian central bank has pulled out a rabbit from the hat as it decided to cut the cash reserve ratio to 5.5% from 6% which underscores a cut of 50 basis points.  The RBI governor though, was of the belief that it is premature to start reducing policy rates in favor of economic growth just yet as inflation continues to hover at uncomfortable levels.

India VIX, a gauge for market’s short term expectation of volatility gained 1.01% at 22.89 from its previous close of 22.66 on Tuesday. (Provisional)

The S&P CNX Nifty gained 41.65 points or 0.80% to settle at 5,240.90. The index touched high and low of 5,244.60 and 5,159.00 respectively. 32 stocks advanced against 17 declining ones while 1 stock remained unchanged on the index. (Provisional)

The top gainers on the Nifty were Tata Power up 6.54%, Jindal Steel up 6.29%, Tata Steel up 5.12%, JP Associates up 4.65% and Hindalco Industries up 4.64%.

On the other hand, Coal India down 2.95%, BPCL down 2.07%, ICICI Bank down 1.46%, Power Grid down 1.30% and ITC down 1.27% were the top losers. (Provisional)

The European markets were trading in green, with France's CAC 40 up 1.78%, Germany's DAX up 2.00% and Britain’s FTSE 100 up 1.50%.

Most of the Asian equity indices were modestly higher on Wednesday as encouraging Chinese manufacturing data tempered concerns over downbeat US economic reports, while earnings disappointments in Japan capped stocks there. Meanwhile, Taiwan stocks ended 0.43 percent higher, lifted by HTC Corp and defensive plays such as transportation and biotech. While, the Nikkei average held on to recent gains, edging up for the second session and brushing off worse-than-expected earnings from blue chips.

However, Hong Kong shares declined, dragged by weak Chinese banks after new loan growth in January cited in mainland media lagged figures reported earlier. China shares closed down 1.1 percent on Wednesday, led by large-cap shares, with investor sentiment weak.