Post session - Quick review

Barometer gauges after taking a breather in the previous session resumed their northbound journey, thereby logging its seventh weekly gain on Friday. Mounting optimism over euro zone officials soon approving a long-awaited bailout for Greece, mainly boosted risk appetite of investor’s, thereby prompting a puff up of around 3% for the bourses for the week ended on Friday.

However, what could have been magnificent, turned out nothing short of customary in today’s trading session as the benchmark equity indices after momentarily touching their 7 months level, i.e. 18400 (Sensex) and 5600 (Nifty) respectively, retreated on profit booking.  Some of the investor’s showcasing cautious sentiment, winded up their position ahead of the F&O expiry week.

The optimism followed acrimony between Athens and northern states in the 17-member currency union, led by Germany, and came only after a proposal to withhold part of the bailout until after Greek elections expected in April was dropped.

Sentiment across Asian pacific region improved after US stocks stroked the highest level in nearly four years with a string of US housing, jobless and manufacturing data showing strength in the world’s biggest economy. The number of Americans filing for new unemployment benefits unexpectedly fell to a near four-year low last week, suggesting the labor market recovery was quickening. Meanwhile, other data on Thursday, showing solid expansion in factory activity in the Mid-Atlantic area this month and builders breaking more ground on new residential projects in January, offered more evidence of a sustained momentum in the economy.

The opening of European stocks too provided some additional vigor to the bourses. European shares rose on Friday to hit a six and a half month high as investors bet that Greece would sign a deal to secure a second bailout by Monday and thus avoid a messy default, which could have rippling effect in the financial markets. Investor’s sentiment improved after euro zone officials said the finishing touches were being put on the bailout package, which would include a debt swap deal whereby the real value of bonds held by financial firms would fall by about 70%.

Back home, profit booking in the last leg of trade, yanked the 30 share barometer index lower below its long held psychological level of 18300. Stocks from Auto, Metal and Health Care counters mainly ate into the gains of the bourses. However, stocks from Consumer Durable, Power and Capital goods counters took the glory of leftover gains. Thus, by the end of the trade, Sensex spurted over a century of points, while Nifty gained close to 50 points to finish above the 5500 mark.  However, the broader indices exhibited mixed trend, as midcap-index ended flat, while SmallCap index ended with apparent loss of over 0.15%. The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 1411:1562 while 123 scrips remained unchanged. (Provisional)

The BSE Sensex gained 137.33 points or 0.76% and settled at 18,291.32. The index touched a high and a low of 18,423.06 and 18,234.56 respectively. 19 stocks advanced against 11 declining ones on the index (Provisional)

The BSE Mid-cap index lost 0.04% while Small-cap index was down by 0.18%. (Provisional)

On the BSE Sectoral front, Consumer Durables up 4.50%, Power up 3.03%, Capital Goods up 1.94%, Bankex up 1.63% and IT up 1.57% were the top gainer while Auto down 0.60%, Metal down 0.15% and Health Care down 0.04% were the only losers. (Provisional)

The top gainers on the Sensex were BHEL up 6.25%, Tata Power up 4.98%, SBI up 3.11%, Sterlite Industries up 2.86% and M&M up 2.69%. (Provisional)

On the flip side, Hero MotoCorp down 3.87%, Maruti Suzuki down 2.74%, Hindalco Industries down 2.17%, Cipla down 1.17% and Gail India down 1.10% were the top losers in the index. (Provisional)

Meanwhile, moving a step further towards implementing its decision to allow Indian airlines to import aviation turbine fuel directly, the Civil Aviation Ministry has written to the Commerce Ministry to take necessary steps to make the proposal feasible.

The government in a meeting of a Group of Ministers on aviation, headed by finance minister Pranab Mukherjee, recently took a decision to allow national carriers to import ATF directly rather than having to buy it from the state governments. Fuel comprises of 40% of an airlines’ operating cost and the cash stripped airlines had been demanding that they be allowed to import fuel directly as the heavy taxes imposed by the states were making fuel costs unbearable.

Currently as per policy the Indian carriers have to purchase fuel locally from the state owned oil companies. Additionally the states also levy a sales tax varying from 4% to 30%, which makes the price of aviation turbine fuel 30% to 40% higher as compared to countries like Singapore, Japan, and those in the Gulf and in Europe. Hence cash-strapped Indian carriers, particularly Kingfisher, have been demanding allowing of direct imports.

Most of the Indian airlines owe substantial amounts to oil companies on account of jet fuel. Air India owes over Rs 4,170 crore to public sector oil companies in unpaid jet fuel bills, according to figures tabled in Parliament, while all other private carriers together have dues worth over Rs 2,000 crore. Flight schedules of airlines like Air India and Kingfisher have been disrupted on several occasions in the past few months due to these oil firms stopping ATF supplies due to non-payment of dues.

Since the days of Praful Patel, successive civil aviation minister, including incumbent Ajit Singh, have written to the chief ministers of all states to bring down the rate of sales tax on ATF in order to make ATF cheaper for the Indian carriers. However, most of the states have not responded favourably. Revenue from sales tax on ATF contributes only 0.5% to 2% of the total sales tax collection of the states. But for the airlines, it is almost 40% of the total operational cost, imposing a heavy burden on the beleaguered companies.

The decision is also likely to bring down the cost of working capital to the airlines, as suppliers’ credit on lower interest rates would become feasible.

India VIX, a gauge for market’s short term expectation of volatility gained 3.64% at 24.18 from its previous close of 23.33 on Thursday. (Provisional)

The S&P CNX Nifty gained 46.40 points or 0.84% to settle at 5,568.35. The index touched high and low of 5,606.70 and 5,545.20 respectively. 32 stocks advanced against 17 declining ones while 1 stock remained unchanged on the index. (Provisional)

The top gainers on the Nifty were BHEL up 6.48%, Tata Power up 4.39%, Axis Bank up 4.35%, Siemens up 3.95% and M&M up 3.56%. (Provisional)

On the other hand, Hero MotoCorp down 3.93%, Sesa Goa down 3.66%, Maruti Suzuki down 2.57%, Reliance Infrastructure down 2.13% and Hindalco Industries down 2.01% were the top losers. (Provisional)

The European markets were trading in green, with France's CAC 40 up 1.08%, Germany's DAX up 0.92% and Britain’s FTSE 100 up 0.40%.

Asian shares rebounded on Friday, as sentiment turned positive on firmer signs euro zone officials would soon approve a long-awaited bailout for Greece to reduce the risk of a disorderly default, while solid US economic data also aided the sentiments. Euro zone officials said on Thursday they are putting the finishing touches to a second bailout deal for Greece for approval on Monday, with the focus on how Greece can priorities debt repayment and ways to ensure Athens commits to reforms.

Meanwhile, Seoul index rallied 1.30 percent to round off a seventh-consecutive week of gains, as US data and Greece bailout prompted hopes foreign investors to resume buying. While, Chinese Shanghai ended flat with resource shares sagging after reports that Beijing had raised a resources tax. The resources sector was broadly weaker on Friday on report that Beijing had raised a resources tax on iron, tin, molybdenum, magnesium, talc and boron to conserve resources and curb pollution, sparking fears among investors of its impact on earnings.