Domestic benchmarks edged higher; ECB meet outcome eyed

Key domestic benchmarks edged higher on Thursday, after witnessing a steep fall in previous session, on hopes that the European Central Bank (ECB) will announce a bond-market intervention at its policy meeting later in the global day. Bourses struggled for direction throughout the first half of day’s trade however gained strength in second half following firm European counters while, buying in public sector oil marketing companies too aided the sentiments. Stocks like BPCL, HPCL and IOC all edged higher by about a percent triggered by hopes that the prices of petrol, diesel and LPG may be hiked next week after Finance Ministry told the Petroleum Ministry that it has no funds left to subsidise fuels. The increase could result in petrol turning costlier by Rs 4 a litre, diesel by Rs 5 and LPG by Rs 50 a cylinder.

Software pack, throughout the session, provided strength to the bourses gaining over a percentage point after the rupee dropped to its lowest level in three weeks against the dollar on September 6, 2012. Stocks like Wipro, TCS, Infosys and HCL Technology rose by 1-5 percent. Auto stocks also lent support to the indices as M&M, Maruti Suzuki and Hero MotoCorp all edged higher on buzz that the government may not go for slapping an additional tax on diesel cars instead it is thinking of hiking the prices of diesel to generate revenues.

Domestic benchmarks picked up pace mainly in noon trade following firm European counters, which hovered near an eight-week high on Thursday on expectations that the European Central Bank will unveil new tactics to cut high borrowing costs for indebted euro zone states at a policy meeting later in the day. Moreover, Asian peers too helped the domestic sentiments as most of them went home with green mark on the back of bargain-hunting following two days of losses due to batch of weak manufacturing data that fuelled concerns over the global economy.

Back home, 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. Moreover, banking related stocks were mostly higher on bargain hunting after recent losses. However, the gains remain capped by FMCG segment, which lost over one and half a percent on profit booking after gaining continuously from past few days.

The NSE’s 50-share broadly followed index Nifty, rose by just over ten points but ended below the psychological 5,250 support level while Bombay Stock Exchange’s Sensitive Index - Sensex moved up by about forty points to finish above the psychological 17,350 mark. Moreover, the broader markets too traded in line with benchmarks and ended the session on positive note.

The markets rose on overall volumes of over Rs 1.00 lakh crore, which remained on the lower side as compared to that on Wednesday. Moreover, the market breadth remained in favor of advances as there were 1,429 shares on the gaining side against 1,350 shares on the losing side while 171 shares remain unchanged.

The BSE Sensex gained 32.93 points or 0.19% to settle at 17,346.27, while the S&P CNX Nifty rose by 12.70 points or 0.24% to close at 5,238.40.

The BSE Sensex touched a high and a low of 17,418.40 and 17,294.74 respectively. However, the BSE Mid cap index was up by 0.31% and Small cap index up by 0.24%.

Wipro up by 4.43%, Infosys up by 3.58%, Jindal Steel up by 1.98%, Tata Motors up by 1.90% and ICICI Bank up by 1.86% were top gainers on the Sensex, while BHEL down by 3.20%, ITC down by 2.69%, Bharti Airtel down by 2.09%, Hindustan Unilever down by 0.98% and HDFC Bank down by 0.91% were top losers on the index.

The major gainers on the BSE sectoral space were, IT up 2.55%, TECk up 1.85%, Auto up 0.73%, Health Care (HC) up 0.59% and Bankex up 0.52%, while FMCG down 1.76%, Consumer Durables (CD) down 0.86%, Capital Goods (CG) down 0.76%, Realty down 0.04% and Oil & Gas down 0.01% were major losers on the BSE sectoral space.  

Meanwhile, seeking an immediate price hike in diesel, LPG cylinders and kerosene amid soaring production costs, the Petroleum and Natural Gas Ministry has moved a Cabinet note. The Union Cabinet is also likely to discuss on limiting supply of subsidized LPG cylinders to 4-6 per household in a year and a cut of Rs 14.78 per litre excise duty currently levied on petrol. The ministry’s proposal has also suggested barring of households with income of more than Rs 50,000 per month or Rs 6 lakh in a year from getting subsidized LPG cylinders.

The Cabinet Committee on Political Affairs, headed by Prime Minister Manmohan Singh, will make the final call on hikes as early as next week. The government’s immediate move on this clearly points out, as a measure to avert a fiscal disaster and a sovereign credit downgrade to junk by global ratings agencies, as the widening deficit would put India on the brink of losing investment grade.

The ministry have been advocating for the reduction of subsidies on fuels like diesel as it is eating into the budget and have been affecting the financial health of state-run oil companies. But the fears of a popular backlash had stopped the Centre from raising prices for more than a year. The three state-run fuel retailers - Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp have together racked up losses of Rs 47,811 crore in the first quarter, four times the loss from a year earlier.

The S&P CNX Nifty touched a high and low of 5,260.60 and 5,217.65 respectively.

The top gainers on the Nifty were Wipro up by 4.67%, Ambuja Cement up by 4.66%, Infosys up by 3.54%, ACC up by 2.61% and Jindal Steel up by 2.49%. On the flip side, BHEL down by 3.06%, ITC down by 2.63%, Bharti Airtel down by 2.62%, Ranbaxy down by 1.45% and IDFC down by 1.43% were the major losers.

The European markets were trading in green, France's CAC 40 up by 0.97%, Germany's DAX was up by 1.22% and United Kingdom’s FTSE 100 was up by 0.55%.

Most Asian stock markets went home with green mark on the back of bargain-hunting following two days of losses due to batch of weak manufacturing data that fuelled concerns over the global economy. Markets were optimistic about the European Central Bank meeting, which anticipated announcing a plan to support financially struggling European countries. Investors are also waiting for Friday's U.S. payrolls data for signs of life in the world's largest economy. Sustained signs of weakness in the U.S. economy may lend a hand to influence the Federal Reserve for announcing new action after its meeting next week. Shanghai Composite ended higher with infrastructure stocks leading the rally on news that China's top planner had approved investment in subway projects since April.