Optimism extends on D-Street; benchmarks settle near seven month highs

Indian stock markets continued to rally with renewed vigor on last trading session of the week as the benchmark indices extended their northbound journey for the seventh straight week of the New Year. The frontline indices after the gap up opening managed to capitalize on the momentum and sailed beyond the psychological 5,600 (Nifty) and 18,400 (Sensex) levels. However, the key indices could not hold on to those levels for long and slipped lower after investors chose to take some profits off the table after the recent sharp upmove in domestic markets, which have skyrocketed around 18 percent in 2012, thanks to hefty buying from foreign funds who pumped in $4.4 billion so far this year. Nevertheless, the benchmark gauges closed near their seven month high levels as investors accumulated hefty positions in heavyweight stocks before going for an extended weekend owing to a public holiday on February 20. Shares of power equipment maker BHEL jumped over 6% on hopes that the public sector firm's order flows will get a big boost after Supreme Court cleared NTPC to place orders for supercritical equipment. Stocks from the power sector continued to hog the limelight with hefty gains while the Consumer Durables and Capital Goods pockets too are not far behind. Meanwhile, stocks from the shipping sector saw some action before settling on a negative note amid reports that Committee of Secretaries are likely to meet to discuss Shipping subsidy. Moreover, stocks from the information technology counters too gained traction after industry body NASSCOM opined that the industry witnessed a CAGR of 17 percent during the five-year period of 2007-12 despite turmoil in the US and in European Union. For the next eight years, it has forecasted a CAGR of 13 percent to get to the targeted $225 billion by 2020 from $101-billion achieved this year. On the global front, Asian markets settled on an optimistic note while European stocks too trended higher as sentiments remained positive on reports that ECB had agreed to exchange Greek bonds they hold for new bonds as part of a deal to help the debt-strapped country while a slew of encouraging US economic reports too boosted investors’ confidence.

Earlier on the Dalal Street, the benchmark got off to a gap-up opening as investors largely remained influenced by the encouraging sentiments prevailing in Asian markets. After the optimistic opening, the frontline indices took advantage of the initial impetus and climbed to the highest levels in nearly seven weeks. However, the psychological 5,600 (Nifty) and 18,400 (Sensex) levels proved as stern resistances as the key indices got weighed down from those levels in mid noon trades. Though the bourses were not able to stage any recovery in the end, still they ended on a positive note with notable gains.  Eventually, the NSE’s 50-share broadly followed index Nifty climbed by three fourth percent to close above the crucial 5,550 support level while Bombay Stock Exchange’s Sensitive Index or Sensex garnered over a hundred and thirty points and ended below the psychological 18,300 mark. Moreover, the broader markets failed to show resilience and settled on a weak note with marginal losses, underperforming their larger peers by a fat margin. On the BSE sectoral space, Consumer Durables counter remained the top gainer in the space with gains of over four percent followed by the Power counter which went home with close to three percent gains. On the flipside, the Auto pocket remained the top laggard with over half a percent losses. The markets gained on large volumes while the turnover for NSE F&O segment remained on the lower side as compared to that on Thursday. The market breadth was negative as there were 1,394 shares on the gaining side against 1,583 shares on the losing side while 119 shares remained unchanged.

Finally, the BSE Sensex gained 135.36 points or 0.75% to settle at 18,289.35, while the S&P CNX Nifty rose by 42.35 points or 0.77% to close at 5,564.30.

The BSE Sensex touched a high and a low of 18,423.06 and 18,234.56 respectively. The BSE Mid cap and Small cap indices down by 0.05% and 0.21% respectively.

The major gainers on the Sensex were BHEL up 6.53%, Tata Power up 4.68%, Mahindra & Mahindra up 3.29%, Sterlite Industries up 2.98% and SBI up 2.88%, while, Hero MotoCorp down 3.61%, Maruti Suzuki down 2.74%, Hindalco Industries down 2.30%, Gail India down 1.21% and Cipla down 1.20% were the major losers on the index.

The top gainers on the BSE sectoral space were Consumer Durables (CD) up 4.21%, Power up 2.92%, Capital Goods (CG) up 1.51%, IT up 1.42% and Bankex up 1.41%, while Auto down 0.53%, Metal down 0.11% and Health Care (HC) down 0.09% were the top losers on the BSE sectoral space.

Meanwhile, India set to produce record wheat output of 88.31 million tonnes in the 2011-12 crop year (July-June) against 86.87 mt in the previous year. At the current levels of production meeting the requirement of National Food Security Bill should not be a problem, as per the Agriculture Minister, Sharad Pawar.

The country’s total foodgrains production is expected to touch a record 250 mt this year due to policy initiatives adopted in the last two years especially in eastern states. However, the Minister stressed that there should be continuity in production of foodgrains at higher levels to sustain the implementation of the proposed Food Bill.

Horticulture is also expected to do well, however the domestic production of pulses is trailing behind the increasing demand. Till 2009-10, the country’s production of pulses remained at a level of 14 mt against the annual demand of about 18 mt. However in 2010-11, the domestic output improved to 18.24 mt. This year, domestic pulses output is expected to reach 16.5-17mt but still there will be a small gap and will probably be met through imports.

On sugar sector, Pawar has said that at current level of production, exports are necessary to ensure good price to the farming community. Sugar production in India, the world’s second biggest producer but the largest consumer, is pegged at 26 mt in the 2011-12 marketing year (October-September) against the annual demand of 22 mt.

The S&P CNX Nifty touched a high and low of 5,606.70 and 5,545.20 respectively.

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%.

On the flip side, Hero MotoCorp down 3.93%, Sesa Goa down 3.66%, Maruti Suzuki down 2.57%, Reliance Infra down 2.13% and Hindalco down 2.01% were the top losers on the index.

The European markets were trading in green as France's CAC 40 up 0.97%, Britain’s FTSE 100 up 0.39% and Germany's DAX up by 0.84%.

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.