Post session - Quick review

Indian equity markets snapped the fourth straight day in a row on a jubilant note in the week, what started on a subdued note, took a turn to rally in late trade to close with gains of around a percent. It was the recovery in the European markets after a sluggish start that prompted the Indian equity markets to gather steam in last leg of the trade. Earlier the US markets made a mixed closing overnight, while the Asian markets made a similar start and kept the domestic indices in pressure, the globe over markets are waiting for the US monthly non-farm payroll data to gauge the health of the US Economy.

The sluggish start of the day indicated that the Indian markets will consolidate after three straight days of gains, and trade remained rangebound however during the early trade benchmark indices once turned into red to their lowest point of the day, but again they stabilized and traded in a tight range through most of the day. The commodity stocks remained the laggards from the beginning, while some other defensive sectors like healthcare and FMCG recovered to snap the session in green. There was supportive news that helped the markets keep themselves in green territory; the Indian services sector grew 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. Back on street, the realty sector surged over 2 percent, closely followed by healthcare and power sector to take the markets higher, while the broader indices performed well from the beginning and outpaced their larger counterparts.

The market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 1590:1281 while 124 scrips remained unchanged. (Provisional)

The BSE Sensex gained 155.65 points or 0.89% and settled at 17,587.50. The index touched a high and a low of 17,630.53 and 17,382.70 respectively. 22 stocks advanced against 8 declining ones on the index (Provisional)

The BSE Mid-cap index gained 1.15% while Small-cap index was up by 1.06%. (Provisional)

On the BSE Sectoral front, Realty up 1.79%, Health Care up 1.66%, FMCG up 1.59%, Bankex up 1.32% and Power up 1.13% were the top gainers while Metal down 1.40% was the only losers.

The top gainers on the Sensex were HUL up 3.02%, Sun Pharma up 2.78%, NTPC up 2.36% HDFC Bank up 2.05% and BHEL up 1.74%.

On the flip side, Hindalco Industries down 3.02%, Jindal Steel down 2.91%, Tata Steel down 2.09%, Sterlite Industries down 1.53% and Hero MotoCorp down 0.99% were the top losers in the index. (Provisional)

Meanwhile, in an effort to make the country self-sufficient in the key soil nutrient, a Group of Ministers (GoM) is scheduled to meet on February 16, 2012 to review and finalize a new investment policy for the urea sector. The policy which was designed by the government’s apex economic planning body, the planning commission and approved by the Committee of Secretaries (CoS), headed by Planning Commission member Soumitra Choudhary, is aimed at stepping up the domestic production of urea, the most widely used soil nutrient in the country.

Currently, India imports about 6.5-7 million tonnes of urea. It is believed that this dependence can be brought down and India can produce an additional 6 million tonnes of urea domestically. The new urea policy aims at providing the right framework to achieve this target. As per the drafted policy, the CoS has suggested that incentives be given for setting up new plants (green-field) and expansion of the existing plants (brown-field).

The draft policy stipulates for using gas of up to $14 per million British thermal unit price (mBtu) for production of urea for being eligible for government subsidy/support.  The draft policy has suggested that the government should bear the entire cost of gas till $14 per mBtu, with gas being the main feedstock of urea and accounting 80% of the cost of manufacturing. Moreover, if gas of a higher price is used, then urea price will go up by $20 per tonnes for every dollar increase in the fuel cost.

Further, under the new urea policy, the minimum (floor price) and maximum (ceiling price) cost of production, is fixed at $290 a tonne and $320 a tonne respectively for green-fields and $310 a tonne and $340 a tonne for brown-fields. For revival of old or closed plants, the floor price is fixed between $250 and $280 a tonne and ceiling price at $410 a tonne. However, the gas price in this case will be fully subsidised between $7.5-14 per mBtu.

The idea behind fixing prices is that the floor price protects investors and the ceiling price protects the government from paying out excessively large subsidies while making the project financially a viable proposition. The floor and ceiling price is determined based on the cost of imported urea, which is known as import parity price (IPP).

India VIX, a gauge for market’s short term expectation of volatility gained 1.68% at 24.09 from its previous close of 23.69 on Thursday. (Provisional)

The S&P CNX Nifty gained 48.35 points or 0.92% to settle at 5,318.25. The index touched high and low of 5,334.85 and 5,255.55 respectively. 36 stocks advanced against 14 declining ones on the index. (Provisional)

The top gainers on the Nifty were IDFC up 5.44%, Grasim up 3.44%, HUL up 2.89%, NTPC up 2.85% and JP Associates up 2.64%.

 On the other hand, Hindalco Industries down 3.54%, Reliance Communications down 3.41%, Jindal Steel down 3.07%, Tata Steel down 2.37% and HCL Tech down 2.37% were the top losers. (Provisional)

The European markets were trading in green, with France's CAC 40 up 0.09%, Germany's DAX up 0.20% and Britain’s FTSE 100 up 0.28%.

Asian stock markets snapped the day’s on mixed note on Friday as many investors took to the sidelines ahead of crucial jobs data from the US later in the global day, with Seoul and Tokyo stocks undermined by largely weaker earnings. The regional mood was subdued after an uninspiring lead from Wall Street on Thursday and protracted Greek debt write-off talks. But, most of the indices reversed their earlier losses and ended in positive terrain. The January US payrolls report was the main focus for markets as investors digested a batch of earnings releases in the region that largely underscored a difficult global growth outlook.

Meanwhile, Hong Kong shares ended in positive territory on Friday, reversing earlier losses, ahead of the release of US jobs figures later in the day while, Shanghai Composite Index ended up 0.80 percent at 2,330.4 points, standing above the key psychological level of 2,300 points. It rose 0.5 percent for the week.