Benchmarks extend five-week rally on firm global cues

Indian stocks extended their longest weekly run for fifth straight session on renewed buying interest from foreign institutional investors amid encouraging US jobs data. A fall in US unemployment rate led to bullish sentiments across global markets. The US markets staged a sharp rally on Friday while, most of the Asian equity indices were trading in the green at this point of time. Back home, sustained buying in mostly all the key heavyweights along with broader indices supported BSE’s -- Sensex -- to trade comfortably over their crucial 17,750 mark while NSE’s -- Nifty -- was trading over its crucial 5,350 mark. On the sectoral front, realty witnessed the maximum gain in trade followed by metal and banking, while there were no losers on the BSE sectoral space. In stocks moving on news flow, FMCG major HUL traded with 1% gains ahead of reporting Q3 numbers today. Piramal Healthcare (3%) traded with big gains. The stock surged nearly 8% before seeing some correction. The company will acquire a further 5.5% stake in Vodafone India for Rs 3,007 crore, taking its stake to 11%. The broader indices were outperforming benchmarks. The market breadth on the BSE was positive; there were 1,404 shares on the gaining side against 419 shares on the losing side while 66 shares remained unchanged.

The BSE Sensex opened at 17,741.91; about 137 points higher compared to its previous closing of 17,604.96, and has touched a high of 17,829.72 while low remained its opening.

The index is currently trading at 17,758.01, up by 153.05 points or 0.87%. There were 25 stocks advancing against just 5 declines on the index.

The overall market breadth has made a strong start with 74.33% stocks advancing against 22.18% declines. The broader indices were outperforming benchmarks; the BSE Mid cap and Small cap indices surged 1.21% and 1.48% respectively.

The top gaining sectoral indices on the BSE were, Realty up by 2.84%, Metal up by 1.79%, Bankex up by 1.33%, PSU up by 1.14% and HC up by 1.02%. While, there were no losers on the index.

The top gainers on the Sensex were DLF up by 4.06%, Sterlite Industries up by 2.40%, SBI up by 2.37%, Hindalco up by 2.29% and Cipla up by 1.90%.

On the flip side, GAIL India was down by 0.84%, Bharti Airtel was down by 0.57%, Tata Power was down by 0.49%, ONGC was down by 0.23% and Tata Motors was down by 0.18%, were the top losers on the Sensex.

Meanwhile, brushing aside the suspicion that the Reserve Bank of India (RBI) is trying to help the government in its borrowing by creating demand for particular securities, thus pushing down yields, Deputy Governor, Subir Gokarn, said the RBI’s choice of securities to buy in open market operations (OMOs) is not aimed at reducing the cost of borrowing for the government but to ensure an adequate supply of liquidity in the banking system.

He stated that there is not much room for aggressive interest rate cuts because of high commodity prices and sticky inflation. Also restrictions on speculative trading in foreign exchange market would stay in place for now despite the recent rise in the value of the rupee against the dollar and higher capital inflows.

Gokarn said, ‘OMO is a quick short-term, easily implementable liquidity instrument.’ ‘The CRR has monetary implication. We cannot use it in the same tactical way that we use OMOs because with every CRR action there is a communication challenge in terms of what it means for the monetary stance.’ By adding further he said, ‘(A CRR cut) is something that is best done in the cycle of policies and that is the way we have been looking at it.’

The RBI cut the CRR by 50 basis points to 5.5% on January 24 but kept its key policy rate unchanged. Separately, Gokarn said there was little room for aggressive cuts in interest rates right now, compared with 2008.

India sold $2.64 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. The cut-off price for 8.79% - 2021 bonds was Rs 104.20, yielding 8.1542%. For the 8.83% - 2041 bonds, the cut-off price was Rs 103, yielding 8.5488%.

The S&P CNX Nifty opened at 5,379.45; about 54 points higher compared to its previous closing of 5,325.85, and has touched a high and a low of 5,390.05 and 5,364.90 respectively.

The index is currently trading at 5,368.10, higher by 42.25 points or 0.79%. There were 43 stocks advancing against 7 declines on the index.

The top gainers of the Nifty were DLF up by 3.14%, JP Associates up by 2.82%, Ambuja Cement up by 2.43%, Hindalco up by 2.26% and SBI up by 2.23%.

On the flip side, GAIL India was down by 1.03%, Tata Power was down by 0.93%, IDFC was down by 0.65%, ONGC was down by 0.51% and Bharti Airtel was down by 0.35%, remained the top losers on the index.

All the Asian equity markets were trading mostly in the green; Shanghai Composite was up 9.14 points or 0.39% to 2,339.54, Hang Seng was up 105.20 points or 0.51% to 20,862.18, Nikkei 225 was up 95.30 points or 1.08% to 8,927.23, Straits Times was up 38.29 points or 1.31% to 2,956.24 and Seoul Composite was up by 1.58 points or 0.08% to 1,973.92.

On the flip side, Jakarta Composite was down by 7.27 points or 0.18% to 4,008.68, Taiwan Weighted was down by 18.46 points or 0.24% to 7,722.78.