Late spurt helps Indian equities to extend gaining streak for 4th straight session

Indian equity markets witnessed a marvelous session of trade as the frontline indices not only bounced strongly in the last leg of trade and broke out of the tight range but also managed to re-capture the psychological 17,600 (Sensex) and 5,300 (Nifty) levels in the session. With the help of this around a percent rally, the benchmarks quadrupled the delight of closing in the positive terrain but also registered their fifth uninterrupted weekly rise. The bourses displayed listless performance in afternoon session as the frontline indices looked to consolidate the gains amassed in the previous sessions. Just when it appeared that the gauges are heading towards snapping the session around neutral line, hefty across the board buying emerged as sentiments got a boost following the rebound in European markets. Sentiments also got some support in the session from encouraging 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. Meanwhile, in its bid to improve liquidity in the Indian financial system, India successfully sold Rs 130 billion of bonds on Friday and the RBI set a cut off price of Rs 98.29, yielding 8.1842% on 7.83% bonds maturing in 2018. On the global front, investors at large awaited the announcement of US non farms payrolls data which is scheduled later in the global day. The Asian markets snapped the last trading day of the week on a mixed note while the European markets on the other hand trended higher on the back of better than expected macroeconomic reports in the euro zone and the UK.

Earlier on Dalal Street, the benchmark got off to a quiet opening as sentiments were cautious following the mixed overnight closing on Wall Street and also as investors eagerly awaited the highly anticipated monthly US non-farm payrolls report for some near-term guidance. The aimless benchmarks appeared exhausted after the recent sharp upmoves and they gradually crawled only sideways in a tight band around the previous closing levels for most part of the day, lacking any significant upside triggers. But across the board buying in the dying moments of trade pulled the markets out of the range bound trade and helped the key gauges to settle in the positive terrain for the fourth straight session. The NSE’s 50-share broadly followed index Nifty, surged over a percent and settled a above the psychological 5,300 support level while Bombay Stock Exchange’s Sensitive Index -Sensex amassed over one hundred and fifty points to close at the psychological 17,600 mark. The broader markets too went home on positive note with over a percent gain and outclassing their larger peers. On the BSE sectoral front, barring the Metal index which plunged over a percent, all other indices settled on a positive note. The high beta - Realty and defensive Healthcare pockets remained top gainers in the session with 2.15% and 1.69% gains respectively. The markets rebounded on weak volumes of over Rs 1.15 lakh core while the turnover for NSE F&O segment remained on the lower side as compared to that on Thursday at over Rs 0.95 lakh crore. The market breadth remained optimistic as there were 1717 shares on the gaining side against 1166 shares on the losing side while 112 shares remained unchanged.

Finally, the BSE Sensex rose 173.11 points or 0.99% to settle at 17,604.96, while the S&P CNX Nifty surged by 55.95 points or 1.06% to close at 5,325.85.

The BSE Sensex touched a high and a low of 17,630.53 and 17,382.70 respectively. The BSE Mid cap and Small cap indices were up by 1.28% and 1.17% respectively.

The major gainers on the Sensex were NTPC up 2.71%, Hindustan Unilever up 2.69%, Sun Pharma up 2.38%, DLF up 1.97% and BHEL up 1.93%. While, Hindalco Inds down 3.08%, Jindal Steel down 2.66%, Tata Steel down 1.56%, Sterlite Inds down 0.97% and Hero MotoCorp down 0.69%, were the major losers on the index.

The top gainers on the BSE sectoral space were Realty up 2.15%, Health Care (HC) up 1.69%, Power up 1.49%, FMCG up 1.44% and Bankex up 1.42%, while Metal down 1.09%was the only losers on the sectoral space.

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 touched a high and low of 5,334.85 and 5,255.55 respectively.

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 flip side, Hindalco down 3.54%, RCOM down 3.41%, Jindal Steel down 3.07%, Tata Steel down 2.37% and HCL Tech down 2.37% were the top losers on the index.

The European markets were trading in red as France's CAC 40 was up 0.53%, Britain’s FTSE 100 down 0.48% and Germany's DAX up by 0.41%.

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.