Indian equities gain strength; Nifty above 5,300 mark

Indian equities gain strength to trade higher hovering near the highest point of the day in the late afternoon session. Wary investors were seen value picking fundamental beaten down front line counters. Traders were seen piling up the positions in Realty, HealthCare and Power sector while selling was witnessed in Metal sector. The sentiments got some support from services PMI data which indicated that the sector grew at its fastest pace in six months during January as new business swelled, while the Composite Index which covers both the manufacturing and service sectors, posted the sharpest increase in activity in nine months. Power Grid, Tata Power, Reliance Power, Siemens and Reliance Infra from Power space were seen trading in green pulling the markets higher. HUL and ITC from FMCG space was seen trading in green giving the much needed support. Infosys and TCS from IT sector were trading in green pushing the markets higher. Hindalco, Tata Steel, Jindal Steel and Sterlite from Metal pack were trading in red putting pressure on the market. On the global front, the Asian markets were trading on a mix note while the European markets were trading in red on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 5,300 and 17,500 levels respectively. The market breadth on BSE was in favor of advances in the ratio of 1561:1172 while 120 scrips remained unchanged.

The BSE Sensex is currently trading at 17,522.61 up by 90.76 points or 0.52% after trading as high as 17,539.04 and as low as 17,382.70. There were 18 stocks advancing against 12 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap index rose 1.23% while Small cap also climbed 1.23%.

On the BSE sectoral space, Realty up 1.99%, Health Care up 1.45%, Power up 1.43%, TECk up 0.96% and FMCG up 0.79% were the major gainers while Metal down 0.79% was the only losers in the space.

Bharti Airtel up 2.68%, HUL up 1.95%, Coal India up 1.90%, BHEL up 1.84% and NTPC up 1.51% were the major gainers on the Sensex, while Hindalco Industries down 3.49%, Jindal Steel down 2.32%, Tata Steel down 2.03%, Sterlite Industries down 1.86% and L&T down 1.38% were the major losers in the index.

Meanwhile, the Indian services sector has grown at its fastest pace in January, as compared to the last six months. The growth has been led by financial intermediation, hotels and restaurant sub-sectors. The expansion has been due to the improvement in the global economic scenario which led to a rise in new work orders. With investor sentiment improving due to improving global growth and easing of liquidity by the central bank, the services sector is likely to benefit more in the coming months. January's jump in new orders has pushed expectations for the future to their highest level since June 2011, consistent with the double-digit output growth of the service sector. Even though input prices in the services sector rose at their slowest pace since October, firms increased their prices charged at a faster rate.

These findings were reported by the economists of HSBC. The HSBC Business Activity Index, compiled by Markit and based on a survey of around 400 firms, has bounced to 58.94 in January from 54.2 in December. This was the third month the index has been above the 50-mark separating growth from contraction. Before that, it had shrunk for six months, hitting a trough of 40.3 in February last year.

India’s manufacturing sector has also expanded despite the Eurozone crisis. December recorded India's biggest monthly factory output, resulting in the fastest growth in eight months for the manufacturing sector.

Wholesale inflation, which has remained stubbornly high in India, slowed to a two-year low in December as food price pressures decreased substantially. The Reserve Bank of India (RBI) also seems to have shifted its focus to reviving growth instead of battling inflation. The RBI in its latest monetary policy review has cut the cash reserve ratio (CRR) by 50 basis points and has left the interest rates untouched after nearly two years of successive hikes. This is expected to inject $320 billion rupees into the banking system.

The S&P CNX Nifty is currently trading at 5,305.10, higher by 35.20 points or 0.67% after trading as high as 5,305.55 and as low as 5,255.55. There were 39 stocks advancing against 11 declines on the index.

The top gainers on the Nifty were IDFC up 4.11%, Grasim up 2.80%, Bharti Airtel up 2.75%, BHEL up 2.73% and Cairn India up 2.64%.

Hindalco down 3.16%, Reliance Communications down 2.59%, Jindal Steel down 2.19%, Tata Steel down 1.66% and HCL Tech down 1.53% were the major losers on the index.

In the Asian space, Hang Seng added 0.08%, Shanghai Composite climbed 0.77%, Straits Times ascended 0.47%, and Taiwan Weighted garnered 0.29%.

On the flipside, Nikkei 225 declined 0.51%, Seoul Composite shed 0.60% and Jakarta Composite dropped by 0.15%.

The European markets were trading in red with, France’s CAC 40 descended 0.16%, Germany’s DAX dropped 0.26% and Britain’s FTSE 100 shed 0.17%.