Rupee, European cues help Sensex slam century; halts five day downtrend

The relief rally finally came through on Tuesday as market participants hunted for oversold but fundamentally strong bargains amid encouraging tidings from both domestic as well as global front. The bounce back came after five successive sessions of downtrend in which the BSE’s Sensex suffered a loss of around seven hundred points, while the NSE’s nifty suffered laceration of over two hundred points.

The frontline equity indices found firm support around the important psychological 4,900 (Nifty) and 16,150 (Sensex) levels as they ricocheted from those levels. The key gauges which showed side-ways movement since the start of trade and see-sawed around the previous closing levels, came out of their range bound trajectory and trended northwards led by gains in Capital Goods and Metal counters.

Though, the markets remained in a subdued mood for most part of morning trades tracking the apathetic cues from Asian peers as exacerbating concerns over the political and economic stability of the European region dampened investors’ appetite for riskier assets like equities. Investors were cautious after talks to form a new government in Greece failed and stoked fears that the debt laden nation would exit from the single currency union.

However, sentiments got a lift after the vulnerable rupee strengthened sharply from a near record low against the dollar as Reserve Bank of India stepped in with massive intervention, signaling intent to defend the beleaguered domestic currency. The rupee appreciated to 53.8 to the dollar, hitting intraday low of 54.15 after RBI reportedly sold $400- $500 million worth in spot and forward markets.

Moreover, European markets too opened on an encouraging note with gains of close to a percent and provided the much needed support to the domestic bourses. Amid the gloomy environment looming across Europe, the German GDP figures came as the silver lining as it indicated that Europe’s largest economy grew much more than expected in the first quarter, rising 0.5% q-o-q and 1.2% from the corresponding period last year.

Back home, the Capital Goods counter rallied sharply with over three percent gains largely because of bellwether L&T which spurted over five percent on the back of solid fourth quarter performance. The Metal and IT pockets too amassed significant gains and supported the frontline indices. Meanwhile, fertilizers shares shot up sharply in the session after report claimed that Fertilizer Ministry has approved hike of 10% in urea prices.

However, mild selling pressure was seen in defensive FMCG pocket which ended with just over half a percent cut, there appeared absolutely no evidence of selling pressure on BSE sectoral space but some individual heavyweights like NTPC and Maruti plunged over two and half a percent in the session.

Meanwhile, most Asian markets drifted lower on worries that the political impasse in Greece could lead the debt-stricken country to a destabilizing exit from the euro currency union. Moreover, the European markets too got off to an optimistic opening on the back of encouraging German economy growth data while the Euro-zone itself registered zero growth, narrowly avoiding recession after a 0.3% contraction in the last quarter of 2011.

The NSE’s 50-share broadly followed index Nifty advanced by about three forth of a percent to settle just below the psychological 4,950 support level while Bombay Stock Exchange’s Sensitive Index - Sensex gained a hundred and twelve points to finish above the crucial 16,300 mark. Moreover, the broader markets finished on a positive note with good gains of over half a percent, performing in tandem with their larger peers.

The markets climbed on good volumes as compared to that on Monday while the market breadth turned optimistic by the end as there were 1365 shares on the gaining side against 1329 shares on the losing side while 132 shares remained unchanged.

Finally, the BSE Sensex gained 112.41 points or 0.69% to settle at 16,328.25, while the S&P CNX Nifty rose by 35.00 points or 0.71% to close at 4,942.80.

The BSE Sensex touched a high and a low of 16,370.12 and 16,123.04 respectively. The BSE Mid cap and Small cap indices were up by 0.63% and 0.33% respectively.

The major gainers on the Sensex were L&T up by 5.41%, Sun Pharma up by 3.20%, Sterlite Industries up by 3.16%, Infosys up by 3.13%, and Hero MotoCorp up by 2.65% while NTPC down by 2.94%, Maruti Suzuki down by 2.57%, ITC down by 1.35%, Bharti Airtel down by 1.28% and Gail India down by 1.27% were the major losers on the index.

The few gainers on the BSE sectoral space were Capital Goods (CG) up by 3.07%, Metal up 2.21%, IT up 1.56%, TECk up 1.09% and Health Care (HC) up by 0.97%, while FMCG down by 0.64% was the only loser on the BSE sectoral space.

Meanwhile, the government has notified the decision to remove the limit on sugar exports, issuing the notification more than a week after an inter-ministerial meeting, Chaired by Prime Minister Manmohan Singh, it was decided to eliminate ceiling on sugar exports by putting it under the Open General Licence (OGL). The move is likely to help industry export its surplus sugar and clear cane payment arrears to farmers that have mounted to over Rs 10,000 crore.

According to the notification, effective from 11th May, there would be no quantitative restrictions on sugar exports and producers are not required to obtain export release order from the Food Ministry under OGL in the 2011-12 marketing year (October-September) till further orders.

The notification further stated that a trader who has imported raw sugar under the Advance Authorisation Scheme (AAS), under which mills are obligated to export the sweetener after processing, on 'grain-to-grain' basis are also not required to obtain export release order. However, export release order is required for mills exporting sugar under AAS on tonne-to-tonne basis.

As per the notification, exporters are asked to upload details about quantity of sugar shipments through online facility to the Food Ministry within three working days. They are also asked to give details of physical exports. Till April, physical shipments of 1.6 million tonnes of sugar were undertaken. During the 2010-11 marketing year, physical exports had stood at 3.1 million tonnes.

The S&P CNX Nifty touched a high and low of 4,955.20 and 4,868.55 respectively.

The top gainers on the Nifty were Sesa Goa up by 5.19%, L&T up by 5.18%, Cairn India up by 3.94%, Sun Pharma up by 3.64% and Sterlite Industries up by 2.96%.

On the flip side, NTPC by 3.02%, Maruti Suzuki down by 2.89%, IDFC down by 1.98%, ITC down by 1.60%, and ONGC down by 1.17% were the top losers on the index.

The European markets were trading in green, as France's CAC 40 up by 0.62%, Britain’s FTSE 100 up 0.16%, while Germany's DAX was up by 0.32%.

Sentiments continued to remain bearish for yet another day in the Asian region with most of the indices snapping the day’s trade in the negative terrain on Tuesday, rattled by a political impasse in Greece that could lead the debt-stricken country to a destabilizing exit from the euro currency union. However, the fears of a Greek exit of the euro zone were offset by data late in the trading session showing Germany’s economy expanded more than expected. German gross domestic product grew by a surprise 0.5 percent in the first quarter in seasonally adjusted terms - well ahead of a consensus forecast, as exports helped the economy bounce back from contraction of 0.2 percent in the fourth quarter.

Meanwhile, Japanese Nikkei closed down 0.81 percent, although it pulled back from the lowest intraday level since the beginning of February in the afternoon session, with traders suspecting the Bank of Japan of purchasing exchange-traded funds to support the market, while Kospi Composite shares extended falls to a four-month intraday low on Tuesday, dropping below a key chart level as investors fled riskier assets on heightened concerns that Greece could be expelled from the euro zone. However, Hong Kong shares eked out gains today on strength in large caps such as Tencent Holdings and oil refiners that helped the benchmark index halt an eight-day losing streak which took it deep into oversold territory.