Benchmarks end near intraday high on hopes of diesel price hike

Indian equity indices, after reeling under pressure in the first half, staged a spirited comeback in late trade snapping the session near intraday high buoyed by hopes of fuel price hike. Though, the bourses traded in the red terrain during first half of the session on concern that there will be a possible downgrade of India’s sovereign debt rating if the expected reforms do not come through in the next few days. But, sentiments took U-turn supported by PSU oil marketing companies, which gained strength as petroleum ministry plans to raise diesel rates by Rs 4-5 per litre after the parliament session ends on September 7, 2012 as oil firms’ revenue loss has soared to almost half the retail price. The companies like BPCL, HPCL and IOC all surged between 0.50-2.50 percent.

Sentiments also got a booster as banking shares firmed up after global investment bank Goldman Sachs upgraded Indian banks to ‘neutral’ from ‘cautious’ citing favourable risk/reward in public sector bank stock prices, as the gap between state-owned and private banks widened to a 10-year high. The market sentiment also strengthened as investors started hoping that the government will kick-start the reform process in the face of a sharp slowdown in the Indian economy. The market continued to grab some support from news that a panel appointed by the government to review the proposed General Anti Avoidance Rules (GAAR) recommended in a report on September 1, 2012 that the government should abolish the tax on gains arising from transfer of listed securities, applicable to both residents as well as non-residents.

However, global cues remained unsupportive as Asian stocks closed lower, as global investors await policy intervention by the world's leading central banks in the next few days. Meanwhile, European shares were languishing in red as investors turned cautious in the run-up to a European Central Bank (ECB) meeting, with the Swiss market lagging after figures showed an unexpected contraction in the country's economy.

Back home, the sentiments was pulled higher by metal stocks like Jindal Steel & Power, JSW Steel, Tata Steel, SAIL and Sterlite Industries, which edged higher as LMEX, a gauge of six metals traded on the London Metal Exchange gained 1.16% on September 3, 2012. Some strength also came in after media shares like Zee Entertainment Enterprises, Dish TV India, Wire & Wireless India, NDTV, TV Today Network and Sun TV Network surged on renewed buying ahead of the October 31, 2012 deadline for cable TV digitization in four metro cities of Delhi, Mumbai, Kolkata and Chennai. However, the gains remain capped after P Chidambaram's Vijay Kelkar Panel submitted fiscal report, which underscored that in worst case scenario without any action on subsidies fiscal deficit could balloon up to 6.1 percent of GDP in the current year.

The NSE’s 50-share broadly followed index Nifty, up by twenty points, ended comfortably above the psychological 5,250 support level while Bombay Stock Exchange’s Sensitive Index - Sensex moved up by fifty five points to finish above the psychological 17,400 mark. However, the broader markets too witnessed a decent trade throughout the session and ended the session with a gain of over half a percent. The market breadth remained in favor of advances as there were 1,538 shares on the gaining side against 1,209 shares on the losing side while 160 shares remain unchanged.

The BSE Sensex gained 56.47 points or 0.32% to settle at 17,440.87, while the S&P CNX Nifty rose by 20.25 points or 0.39% to close at 5,274.00.

The BSE Sensex touched a high and a low of 17,452.70 and 17,308.27 respectively. However, the BSE Mid cap index was up by 0.53% and Small cap index up by 0.39%.

Gail India up by 2.60%, Jindal Steel up by 2.44%, Reliance up by 1.87%, Tata Motors up by 1.71% and Tata Steel up by 1.41% were top gainers on the Sensex, while HDFC down by 1.54%, Cipla down by 1.47%, Tata Power down by 1.28%, Baja Auto down by 0.98% and Sun Pharma down by 0.61% were top losers on the index.

The major gainers on the BSE sectoral space were, Realty up 1.59%, Oil & Gas up 1.19%, Power up 0.92%, Consumer Durables (CD) up 0.89% and Metal up 0.83%, while IT down 0.05% and Health Care down 0.04% were major losers on the BSE sectoral space.  

Meanwhile, with the continuing logjam in parliament and BJP's apparent climb down, Prime Minister Manmohan Singh has made it clear that no immediate cancellation of the coal block allocations will be made till the inter-ministerial group submits its report on the issue. The PM also pointed out that he is ready to fight with the opposition on the issue, mean while appealed to them to allow Parliament to function.

The centre has taken this stand to avoid sending the wrong signal internationally, as it would scare away investors who would perceive India as an unreliable destination. At the same time it would open the government to litigation since many of the genuine allottees would be well within their rights to go to courts for relief in the event if the cancellations were made without proper review and investigation.

The Inter-Ministerial Group (IMG) has already been in touch with many of the allottees and had sent them show cause notices in April itself when the Comptroller and Auditor General draft report was ready and government knew that the trouble was brewing. All the coal blocks given from 2004 to 2009 were reviewed and 58 were given show cause notices and they are being reviewed now. However, 26 blocks were de-allocated in 2010 itself.

The S&P CNX Nifty touched a high and low of 5,278.35 and 5,233.20 respectively.

The top gainers on the Nifty were GAIL up by 2.69%, Jindal Steel up by 2.47%, JP Associates up by 2.41%, Reliance up by 2.33% and Tata Motors up by 1.95%. On the flip side, IDFC down by 1.86%, HDFC down by 1.83%, Cipla down by 1.44%, Tata Power down by 0.97% and Sun Pharma down by 0.79% were the major losers.

The European markets were trading in red, France's CAC 40 down by 0.64%, Germany's DAX was down by 0.50% and United Kingdom’s FTSE 100 was down by 0.97%.

Most Asian shares closed with red mark on Tuesday amid worries over weakening regional and global economic activity. Investors were expecting more stimulus measures from central banks and hopes for progress in tackling Europe's debt crisis lent support. Hong Kong shares fell to their lowest close since July 27, as investors continued to exit counters judged to have grim outlooks. Japan's Nikkei average index eased slightly to end at a four-week closing low for the third session in a row, though the eye-catching move of the day was the 12.4 percent rebound in shares of embattled TV maker Sharp Corp.