Sensex showcase scintillating performance; market outclasses global peers

After a session of consolidation and even starting Wednesday’s session on a dull note, not many would have expected Indian stock markets to stage the kind of vivacious performance they showcased by rallying well over one and half a percentage points and re-capturing the psychological 5,350 (Nifty) and 17,600 (Sensex) levels.

The markets traded on a lackluster note in early moments as the key indices kept oscillating in a tight range around the previous closing levels. However, after breaking the psychological 5,300 (Nifty) and 17,400 (Sensex) levels in early afternoon trades, there was no turning back for the frontline indices. Benchmark equity indices kept rallying through the session and the skyward journey only halted with the close of trade, thanks to tentative improvement in market participants’ risk appetite.

The excessive liquidity in the global markets probably drove the local markets in anticipation of some major policy decisions on any of the issues which have been pending for a long time. Meanwhile, reports showed that FDI in India increased by a whopping 92% as foreign inflows were to the tune of $2 billion in January 2012 as compared to $1.04 billion in January 2011, buttressing sentiments.

Across the board buying interests was evident as investors covered hefty short positions that got build in a recent sell-off while value based buying too helped the market rally. Hefty buying was seen in the beaten down Capital Goods counter which jumped over three and half a percent after heavyweights like L&T and BHEL rallied. The IT sector stocks too kept buzzing in the session amid reports of a merger between two major companies viz. Tech Mahindra and Satyam Computer Services.

The rate sensitive Realty and Banking pockets too witnessed hefty position build up a day after RBI Deputy Governor opined that initiatives taken in the budget to improve growth in agriculture sector combined with the slow pace of growth could help inflation moderate in coming months. Though there appeared no sectoral laggard in the BSE sectoral space, some individual names like Hindalco and ONGC failed to keep their heads above water and settled with losses.

The surprising sharp upmove for Indian bourses led them to comprehensively outperform all their global peers as most Asian equity indices settled with moderate gains as market participants remained largely influenced by overnight decline on Wall Street where shares slipped lower amid growing concerns over slowing growth in world’s second largest economy - China. While, the European markets traded on a flat note with a positive bias amid reports that Greece’s prime minister won parliamentary approval for an international bailout.

Back home, the NSE’s 50-share broadly followed index Nifty, garnered close to triple digit gains to settle above the psychological 5,350 support level while Bombay Stock Exchange’s Sensitive Index - Sensex accumulated about three hundred points to finish above the psychological 17,600 mark. Moreover, the broader markets too settled on a sanguine note with the mid cap index outperforming all its peers and ending with two percent gains.

The markets jumped on extremely large volumes of over Rs 1.78 lakh crore while the turnover for NSE F&O segment too remained on the higher side as compared to that on Tuesday at over Rs 1.50 lakh crore. The market breadth remained pessimistic as there were 1758 shares on the gaining side against 1136 shares on the losing side while 130 shares remained unchanged.

Finally, the BSE Sensex surged 285.53 points or 1.65% to settle at 17,601.71, while the S&P CNX Nifty soared by 90.10 points or 1.71% to close at 5,364.95.

The BSE Sensex touched a high and a low of 17,622.87 and 17,275.88 respectively. The BSE Mid cap and Small cap index down by 1.95% and 1.23% respectively.

The major gainers on the Sensex were L&T up 4.46%, DLF up by 4.01%, Tata Steel up by 4.00%, TCS up by 3.25%, ICICI Bank up by 3.07%. While Hindalco Industries down by 1.01%, ONGC down by 0.35%, ITC down by 0.18%, Sun Pharma down by 0.17% and Hero MotoCorp down by 0.07% were the major losers on the index.

The top gainers on the BSE sectoral space were Consumer Goods up by 3.59%, Realty up by 3.54% Bankex up by 2.44%, Power up by 1.86% and TECk up by 1.82%, while there was no loser on the BSE sectoral space.

Meanwhile, foreign direct investment (FDI) has increased by a whopping 92% in January 2012 as compared to the same month last year. Foreign inflows to the Indian economy were to the tune of $2 billion in January 2012 as compared to $1.04 billion in January 2011. Cumulative inflows for the period of April-January were to the tune of $26.19 billion in the current fiscal as compared to $19.42 billion in FY’11.

Services topped the list of sectors to receive the largest FDI for the period April-January in FY’12 to the tune of $ 4.83 billion, followed by pharmaceuticals ($3.20 billion), telecommunication ($1.99 billion), construction ($2.23 billion), power ($1.56 billion) and metallurgical industries ($1.65 billion).

Mauritius remained the top source of inflows ($8.91 billion), due to the double taxation avoidance treaty. Other sources were Singapore ($4.30 billion), Japan ($2.75 billion), UK ($2.75 billion), Germany ($1.46 billion), Netherlands ($1.16 billion) and Cyprus ($1.31 billion).

Experts feel that this number of $2 billion is not big and if investor sentiment is improved by bringing in  reforms like allowing 100% FDI in multi brand retail and insurance, it could be pushed much further.

Recently, the government has liberalised the FDI regime and allowed overseas investment in bee-keeping and share-pledging for raising external debt. Besides, the conditions for FDI in construction of old-age homes and educational institutions have been eased by not subjecting them to the minimum and built-up area, capitalisation and lock-in period norms as applicable for the construction activities.  

The S&P CNX Nifty touched a high and low of 5,372.35 and 5,256.00 respectively.

The top gainers on the Nifty were JP Associate up 5.18%, Reliance Infra up by 5.13%, Ranbaxy up by 4.81%, Axis Bank up by 4.66% and L&T up by 4.42%. On the flip side, Cairn down by 1.03%, Hindalco down by 0.87%, Sun Pharma down by 0.68%, ONGC down by 0.48% and Wipro down by 0.43% were the top losers on the index.

The European markets were trading in green, as France's CAC 40 was up 0.20%, Britain’s FTSE 100 up 0.11%, while Germany's DAX was up by 0.23%.

After trading choppy most part of the day’s trade, Asian counters pared their losses in the late trade and ended mostly in the positive terrain on Wednesday following firm opening in European counterparts. Though, the sentiments in region remained dampened in the morning session as concerns about China, which has cut its growth target for the year, were raised on Tuesday when BHP Billiton said the country’s demand for iron ore looked to be flattening as its economy slows, with exports weakening.

China is Japan’s largest trading partner, with Japanese firms directly affected by slowing demand in the world’s second-biggest economy. There fore the Japanese market also succumbed by 0.6 percent, off an 8-1/2-month high of 10,172.64 marked on Monday. Tuesday was a holiday in Japan. Investors took profit in major exporters, which have logged meteoric gains this year. However, Chinese Shanghai ended the trade on a flat note, while Taiwan stocks gained by 0.12 percent with contract chipmaker TSMC and smartphone maker HTC helping the index to rise. Moreover, Straits Times, Jakarta Composite and KLSE Composite remained the other indices which ended in the green.