Sensex surges about 1% on a choppy Tuesday; outclasses global peers

Stock markets in India showcased high degree of resilience on Tuesday as the benchmark equity indices finished an extremely volatile session on a sanguine note. The benchmark gauges showcased a strong performance by vehemently garnering close to a percentage point and the sharp rally looked even more prominent since it came on a day when equity indices across Asia largely exhibited mixed trends while European counterparts traded on a positive note, but failed to match the fervor with which the Indian bourses soared.

With the sharp upmove the frontline indices not only surpassed the psychological 5,100 (Nifty) and 16,800 (Sensex) levels but also regained most part of the ground lost in previous session’s brutal sell-off. After getting off to a flat to positive opening, the markets traded in close proximity with the previous closing levels for most part of morning trades as cues from the Asian space remained sluggish.

While the Greek polls ensured that there would be no break-up of the European Union, which capped the downside, however hopes of a concerted EU action to provide stimulus faded after German Chancellor Angela Merkel said that the new Greek government had to meet commitments made to international lenders, limiting the markets’ upside chances.

Meanwhile, investors shrugged the disappointing reports showing rating agency Fitch revised Asia's third largest economy’s outlook to Negative from Stable, citing concerns on India’s economic growth potential, inflationary pressures and weak public finances as major challenges.

However, the domestic markets showed renewed vigor in afternoon trades following the positive European market opening as sentiments got support from growing speculation that Greece's New Democracy party will come to a coalition agreement with the socialist Pasok party however, Spain's soaring government bond yields limited gains.

On the domestic front, Prime Minister Manmohan Singh took the opportunity at the G-20 Summit in Mexico to send positive signals to not only global investors but also domestic stake holders that the government was determined to take tough decisions and bring the flagging economy back to high growth trajectory. Meanwhile, cues from the money market remained supportive as the rupee came off the lows of the day and inched below the 56 per dollar levels.

Moreover, the oil and gas sector remained the top gainer in the space with over two percent gains amid increasing hopes that the government would bite the bullet and hike prices of diesel. Chief Economic Advisor of India Kaushik Basu, who is in favour of partially decontrolling diesel prices, stated that a report on deregulation may finally take shape by next week.

The defensive FMCG and Healthcare pockets rallied over a percent in the session and remained among prominent gainers. On the other hand, the IT index remained only chink in the armor with trivial losses.

On the global front, markets in Asia settled on a mixed note as the relief from Greece’s election results has faded away amid concern that the financial crisis in the 17 nations that use the euro was far from over. European markets traded on a positive note however the major equity indices failed to capitalize on the momentum on Tuesday as investors remained on the sideline ahead of Federal Open Market Committee’s (FOMC) two-day meeting, which will start from today.

Back home, the NSE’s 50-share broadly followed index Nifty, climbed by over three and fourth of a percent to settle above the psychological 5,100 support level while Bombay Stock Exchange’s Sensitive Index - Sensex accumulated over one hundred fifty points to finish just above the crucial 16,850 mark. Moreover, the broader markets settled on a flat note with the Small Cap index failing to rise above its previous closing levels and underperforming all its larger peers.

The markets surged on large volumes of over Rs 2.03 lakh crore while the turnover for NSE F&O segment also remained on the lower side as compared to that on Monday at over Rs 1.5 lakh crore. The market breadth turned positive by the end as there were 1,350 shares on the gaining side against 1,321 shares on the losing side while 135 shares remained unchanged.

Finally, the BSE Sensex gained 153.97 points or 0.92% to settle at 16,859.80, while the S&P CNX Nifty rose by 39.60 points or 0.78% to close at 5,103.85.

The BSE Sensex touched a high and a low of 16,890.00 and 16,681.89 respectively. The BSE Mid cap index was up by 0.17% and Small cap index down by 0.01%.

Gail India up 2.66%, Reliance up 2.58%, ITC up 2.49%, Bharti Airtel up 1.83% and ONGC up 1.67% were the major gainers on the Sensex, while Sterlite Industries down 1.62%, BHEL down 1.33%, Infosys down 1.29%, Tata Power down 1.14% and Jindal Steel down 0.37% were major losers on the index.

The top gainers on the BSE sectoral space were Oil & Gas up 2.14%, FMCG up 1.58%, Health Care up 1.13%, PSU up 0.94% and Capital Goods up 0.57%, while IT down 0.09% was top loser on the BSE sectoral space. 

Meanwhile, in a move that is aimed at boosting investor sentiment, the government is mulling stake sale in as many as 15 public sector companies for disinvestment like BHEL, Hindustan Copper, SAIL, NMDC, NHPC, MOIL and Engineers India in the current financial year in an effort to raise 20,000 crore.

The list of the public sector companies was presented in the recently concluded road-shows for Qualified Foreign Investors (QFI) in five Gulf nations. On the sidelines, Thomas Mathew, Joint Secretary (Capital Market) in the Finance Ministry, said, ‘investors have shown great interest in the divestment programmes. Various options are available for offloading shares.’

As per the finance ministry’s plan, 10% stake sale is being considered in companies like NALCO, NHPC, NMDC, MOIL and Hindustan Aeronautics (HAL). Meanwhile a stake sale in NMDC is expected to earn an estimated Rs 6,000 crore, NHPC may fetch Rs 230 crore and MOIL Rs 395 crore. The Department of Disinvestment is also planning a 10% stake sale in Engineers India, which could yield an amount of Rs 790 crore. The government is also planning a 12.5% stake sale of Rashtriya Chemicals (RCF), which would help the exchequer collect Rs 380 crore.

The department has also gone ahead for a 10% stake sale in NALCO, which could fetch an amount close to Rs 12,000 crore based on current market price. Along with 5% stake sale in SAIL, the company is also planning to come out with a fresh issue of equity shares in the open market. Further, 5% stake sale in BHEL is estimated to fetch around Rs 3,000 crore.

Earlier, as a part of disinvestment plan, the government had planned to sell stake in RNIL through an initial public offering (IPO), which got delayed mainly on the back of volatile market conditions. In the last financial year, the government had proposed to raise an amount of Rs 40,000 crore but was only able to achieve Rs 14,000 crore due to volatile market condition.

The S&P CNX Nifty touched a high and low 5,113.60 and 5,048.10 respectively.

The top gainers on the Nifty were Ambuja Cement up 3.45%, GAIL up 3.24%, Siemens up 2.64%, Reliance up 2.52% and ITC up 2.26%. On the flipside, Sesa Goa down 2.93%, Sterlite Industries down 1.46%, Infosys down 1.26%, Cairn down 1.23% and PNB down 1.22% were the top losers on the index.

The European markets were trading mixed, as France's CAC 40 down 0.03%, Germany's DAX up 0.80% and United Kingdom’s FTSE 100 up 0.31%.

After witnessing massive gains in previous two sessions, Asian counters snapped the day’s trade on a mixed note on Tuesday as investors remained on the sideline ahead of Federal Open Market Committee’s (FOMC's) two-day meeting which will start from today. Moreover, the relief from Greece’s election results has faded away amid concern that the financial crisis in the 17 nations that use the euro was far from over. Moreover, the investors shifted their attention back to Spain, whose borrowing costs surged Monday above the 7 percent level that had forced Greece, Portugal and Ireland to seek international help.  Meanwhile, Hong Kong benchmark Hang Seng and Japanese benchmark Nikkei dropped 0.27% and 0.75% respectively on renewed euro zone fears after Italian and Spanish bond yields spiked, with investors staying away from risky bets. Likewise, Shanghai too ended in the red due to loom surrounding the euro zone debt crisis which have been shifted to Spain after Sunday’s Greek election.