Value buying buoys markets, Nifty ends above 7600 level

A session after displaying a distressing performance, Indian benchmark indices managed to pull through a scintillating performance by rallying around half a percent on the last day of the week, thanks to the hefty short covering in the beaten down Realty and high beta Power counters. Sentiments remained up-beat with Finance Minister Arun Jaitley’s statement that Indian economy has emerged as one of the fastest growing economies in the world indicating that the economy is firmly on the path of economic revival. The recovery rally in the Indian equity markets was also supported by value buying, as a sizeable number of stocks were trading at their yearly lows after four consecutive sessions of slide. Furthermore, the central government's effort to reach out to the opposition to break the impasse on the Goods and Services Tax (GST) Bill restored investors' confidence. Some support also came with the report that the World Bank expects India's growth to pick up to 7.8% in the next financial year, projecting it to be the fastest growing economy in the world for the next three years by a distance, riding on stronger domestic policy reforms. However, gains remained capped on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 1051.74 crore on January 07, 2016. Besides, caution prevailed over the upcoming domestic macro-data on industrial output, retail inflation and the third-quarter earnings results which start coming in from January 12, 2015.

On the global front, European shares inched higher on Friday, signalling a possible stabilisation from this week’s earlier sell-off as Chinese stocks rose after the country’s circuit breaker mechanism was axed to calm investor sentiment.  Asian equity indices ended mostly in green led by gains in Chinese markets. However, Japanese shares closed lower for the fifth consecutive session amid mounting worries over China's economy.  Meanwhile, Oil prices rebounded, the safe-haven yen weakened and gold gave up gains after hitting a nine-week high above $1,100 an ounce, reflecting improvement in risk appetite.

Back home, the benchmark got off to a positive start as the indices rebounded after the recent sell-offs following the strong bounce back on Asian markets after China suspended its market circuit breaker and set a firmer midpoint rate for trading of the yuan for the first time in nine days. The frontline indices soon gathered momentum and touched intraday highs in early hours but the optimism fizzled out sooner and the indices start losing steam thereafter and even drifted to the lowest point in the session in early afternoon trades. However, hefty short covering in the late hours helped the indices to bounce to higher levels but mild resistance around the 25,000 and 7,600 levels pushed the key gauges back to a small extent by the end of trade. Nevertheless, the NSE’s 50-share broadly followed index - Nifty garnered over three tens of a percent to settle above the crucial 7,600 levels while Bombay Stock Exchange’s Sensitive Index - Sensex smashed over eighty points and closed above the psychological 24,900 mark. Moreover, broader markets showed some resilience by outclassing their larger peers by a big margin as investors carried forward their value hunting in beaten down shares from the midcap and small cap space.  On the BSE sectoral space, the Realty counter remained the top gainer in the space with over two percent gains followed by the high beta- Power index which ended with similar gains. The Oil & Gas pocket too witnessed huge buying interests as it gained well over a percent after Crude oil prices gained more than 2 per cent tracking higher Asian share after it fell to 12-year lows on Thursday on China concerns. Energy shares too edged higher after the oil prices stabilized. Additionally, shares of media companies mainly those engaged in movies & entertainment business surged after global video-on-demand (VOD) player Netflix has launched services in India. On the flipside, the Capital Goods and Metal sectors languished at the bottom of the table with losses of 0.67% and 0.06% respectively, being the only laggards in the space.

The market breadth remained in favour of advance, as there were 1959 shares on the gaining side against 808 shares on the losing side, while 189 shares remained unchanged.

Finally, the BSE Sensex gained 82.50 points or 0.33% to 24934.33, while the CNX Nifty ended up by 33.05 points or 0.44% to 7,601.35.

The BSE Sensex traded in a range of 25083.55 and 24887.22. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices made a positive closing; the BSE Mid cap index ended up by 1.32%, while Small cap index ended up by 1.24%.

The top gaining sectoral indices on the BSE were Realty up by 2.31%, Power up by 2.06%, Oil & Gas up by 1.39%, IT up by 1.12% and TECK up by 0.95%, while Capital Goods down by 0.67% and Metal down by 0.06% were the losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 2.99%, Tata Steel up by 1.44%, Infosys up by 1.30%, NTPC up by 1.27% and Reliance Industries up by 1.24%. On the flip side, Cipla down by 2.61%, Larsen & Toubro down by 2.19%, Bajaj Auto down by 1.75%, Coal India down by 1.68% and Adani Ports &Special down by 1.23% were the top losers.

Meanwhile, showing the clear dismal picture of the country's outbound merchandise shipments, India’s Exports in the current financial year 2015-16 are expected to decline about 13 per cent to $270 billion due to global demand slowdown and fall in crude oil prices. The figure was mentioned by commerce secretary Rita Teaotia at a meeting with the Confederation of Indian Industry (CII) and the Federation of Indian Chambers of Commerce and Industry, (Ficci) among other groupings.

If exports of petroleum products are excluded, then the decline in exports is only 9.6 per cent in dollars. Rita Teaotia has also said that the imports during the fiscal would stand around $ 390 billion. So the trade deficit would aggregate at $120-125 billion in 2015-16. The secretary throws light on India's dismal export performance in the wake of slowing global demand. Falling imports and exports have an impact on manufacturing and this is substantiated by the manufacturing data. Further the declining exports would have implications for the job market.

According to exporters body Federation of Indian Export Organisations (FIEO), in the financial year 2008-09, the country's outbound shipments were less than $270 billion, around $210 billion. In 2014-15, India’s merchandise exports were $310.5 billion. Exports have fallen over the past one year and in November; they shrank by a quarter from a year earlier to $20 billion, while imports declined 30% to almost $30 billion.

The CNX Nifty traded in a range of 7,634.10 and 7,581.05. There were 33 stocks advancing against 17 stocks declining on the index.

The top gainers on Nifty were Tata Power up by 3.09%, Tata Motors up by 3.01%, Tech Mahindra up by 2.58%, Power Grid up by 2.53% and BPCL up by 2.45%. On the flip side, Larsen & Toubro down by 2.45%, Cipla down by 2.11%, Bajaj Auto down by 1.99%, Adani Ports &Special down by 1.39% and Hero MotoCorp down by 1.27% were the top losers.

European markets were trading in green; France’s CAC increased 16.12 points or 0.37% to 4,419.70, UK’s FTSE 100 gained 39.59 points or 0.66% to 5,993.67 and Germany’s DAX was up by 70.64 points or 0.71% to 10,050.49.

Asian equity markets ended mostly in green on Friday as China's efforts to calm investors showed early signs of success. China's securities regulator suspended the recently implemented circuit breakers, a regulatory tool designed to limit how far stocks can fall after the market shut down for a second time this week. Also helping to restore confidence among investors, the People's Bank of China raised its guidance rate for the yuan for the first time in nine trading days. However, Japanese shares closed lower as China’s decision to maintain the level of its currency for the first time in nine days failed to stop the Nikkei 225 Stock Average posting its worst first week of a year since 1997.