Exuberant benchmarks showcase a momentous performance; puff up over 2%

Indian stock markets showcased a gung ho performance this Wednesday galloping over two percentage points in the session as fervent bulls relentlessly piled up hefty positions not only in heavyweight stocks but across the broader markets. The vivacious rally in equities helped the benchmarks to re-conquer the psychological 5,500 (Nifty) and 18,200 (Sensex) levels on their northbound journey and scale the highest levels not seen since August 1, 2011. The benchmarks extended their upmove for the third straight day on large volumes as sentiments got fortified owing to persistent foreign fund inflows, an appreciating rupee and moderating inflationary pressures on the economy. Tentative improvement in investors’ risk taking ability was also  evident as reports showed that the Greek conservative party leader would deliver a letter of commitment to lenders, indicating that the debt laden country is willing to commit to spending cuts demanded by lenders in exchange for a bailout. Investors showed hefty buying interests in the rate sensitive counters like Realty, Banking and Auto on speculations that the better than expected January inflation numbers will increase the pressure on RBI to employ monetary easing measures to prop up the country's economy growth momentum. Stocks from the power counter traded on a jubilant note after the Prime Minister Manmohan Singh cleared coal supply to private sector power producers, which would help power plants with estimated capacity of more than 50,000 MW. However, index heavyweight Reliance Industries failed to sway with the sanguine momentum amid expectations that gas output from its D6 block, which currently produces about 37 mmscmd of gas, is expected to fall by about 10% to 34 million standard cubic metres a day (mmscmd) by April. Meanwhile, Telecom minister Kapil Sibal allowed mergers and acquisitions in the telecoms sector that create combined market share of up to 35%, under a quick and simple process. On the global front, Asian markets settled on sanguine note while the European counterparts too traded in the green territory after China's Premier has vowed that his country will continue to invest in European government debt to help resolve the debt crisis.

Earlier on the Dalal Street, the benchmark got off to a positive opening as investors largely remained influenced by the sanguine sentiments prevailing in Asian markets. After the promising opening, the frontline indices seldom showed signs of weakness in their northbound journey. Some profit booking in the dying hours only resulted in stronger recovery eventually, helping the key indices to snap the session around the highest point of the day. The NSE’s 50-share broadly followed index Nifty, settled with triple digit gains above the crucial 5,500 support level while Bombay Stock Exchange’s Sensitive Index or Sensex accumulated over three hundred fifty points and ended above the psychological 18,200 mark. Moreover, the broader markets too rallied with fervor and settled strong gains, performing in tandem with their larger peers. On the BSE sectoral space, high beta Realty counter remained the top gainer in the space with gains of over five percent followed by the Capital Goods counter, which went home with over four percent gains. On the flipside, the Oil & Gas pocket remained the only chink in the armor with marginal losses. The markets gained on extremely large volumes of over Rs 2.46 lakh crore while the turnover for NSE F&O segment remained on the higher side as compared to that on Tuesday at over Rs 1.71 lakh crore. The market breadth was positive as there were 1,896 shares on the gaining side against 1,081 shares on the losing side while 102 shares remained unchanged.

Finally, the BSE Sensex climbed 353.84 points or 1.98% to settle at 18,202.41, while the S&P CNX Nifty mounted by 115.90 points or 2.14% to close at 5,531.95.

The BSE Sensex touched a high and a low of 18,231.35 and 18,000.30 respectively. The BSE Mid cap and Small cap indices up by 2.10% and 1.33% respectively.

The major gainers on the Sensex were Tata Motors up 6.91%, DLF up 6.05%, Tata Power up 6.00%, L&T up 5.06% and BHEL up 4.53%, while, RIL down 1.43%, Cipla down 0.75% and Hindustan Unilever down 0.75% were the major losers on the index.

The top gainers on the BSE sectoral space were Realty up 5.01%, Capital Goods (CG) up 4.01%, Power up 3.56%, Bankex up 3.55% and Auto up 3.33%, while Oil & Gas down 0.32% was the only loser on the BSE sectoral space.

Meanwhile, India’s telecom watchdog - Telecom Regulatory Authority of India (TRAI) has suggested that foreign holding in telecom tower companies be limited to 74%. If the proposal is accepted it could discourage buyouts by foreign companies. It could also impact Indian operations of NASDAQ-listed American Towers (ATC) and Reliance Communications, which is trying to sell its tower business unit to raise funds.

Currently, 100% foreign direct investment is allowed in tower companies but TRAI is keen to lower this and bring it on a par with other telecom services to bring all forms under a unified license regime. If implemented, existing infrastructure providers will be required to take new unified licenses whose conditions shall apply to tower companies as well.

ATC, the world's largest tower company, owns 100% of its Indian subsidiary and lowering the foreign investment cap will force it to change the shareholding structure of the Indian operations. Some telecom tower companies, including Reliance Infratel, are looking at stake sales and the 74% limit could impact their fund-raising plans.

TRAI wants the new cap to be part of the revised rules for the sector - the National Telecom Policy 2012 - which will replace the existing framework that has been in place for more than a decade. But any change in foreign investment norms will require Cabinet approval. The 74% foreign investment cap for tower companies is part of the draft rules, which were shared with both the industry and the telecom department over the weekend.

The regulator has asked the industry to specify the maximum time frame that should be given to comply with the new foreign investment cap. After discussion with the industry, the regulator will send its final proposals to the government, which has to approve them before they become effective. The proposals are not binding on the government.

The S&P CNX Nifty touched a high and low of 5,542.10 and 5,460.60 respectively.

The top gainers on the Nifty were RPower up 12.85%, JP Associates up 8.11%, Tata Motors up 7.39%, Axis Bank up 7.11% and DLF up 6.46%.

On the flip side, Reliance down 1.23%, HUL down 0.96%, Cipla down 0.68%, Cairn down 0.57% and Sun Pharma down 0.24% were the top losers on the index.

The European markets were trading in green as France's CAC 40 up 0.93%, Britain’s FTSE 100 up 0.22% and Germany's DAX up by 1.02%.

Sentiments remained bullish in Asian region and all the Asian equity indices snapped the day’s trade in the green after Greece indicated a willingness to commit to spending cuts to secure its bailout while, moves by Japan’s central bank to support the economy lifted its powerhouse export sector too supported the sentiments. However, the upside remained capped due to disappointing US retail sales and a delay in a euro-zone finance ministers meeting on Greece taking a back seat.

Meanwhile, Hong Kong and China shares jumped on Wednesday, lifted by growth-sensitive sectors that helped benchmark indexes close above long-term resistance levels for the first time since mid-2011, pointing to further strength ahead. The Shanghai Composite Index ended at its highest since December 1, 2011 while the Hang Seng Index produced its best close since August 4. Gains accelerated in rising turnover after mid-morning comments by China central governor Zhou Xiaochuan that Beijing will continue to invest in euro zone government debt triggered more short covering.