Benchmarks add slender gains; realty, power stocks showcase resilience

Indian markets, despite sluggish global cues, managed to conclude the session slightly in the green after the government unveiled a bailout package for the troubled power sector. Bourses, throughout the session, traded in the tight band, with crucial levels of 18,750 (Sensex) and 5,700 (Nifty) proving to be tough nuts to crack, as market participants closely awaited the government’s market borrowing calendar for second half of current fiscal scheduled to be released within this week.

Power stocks remained on the buyers radar after the Cabinet Committee on Economic Affairs (CCEA) approved the package, which would restructure the debt of distribution companies by asking state governments to take over half of their short-term debt, with the remaining to be rescheduled by lenders. The Rs 1.9-lakh crore debt restructuring for power distribution companies, is the second such move in less than a decade. The package for power DISCOMS also boosted confidence of banks, which had exposure to these state electricity distribution (SEB) companies rising to 5-13% of their respective books. Banks like SBI, ICICI Bank, Kotak Mahindra Bank, Bank of Baroda, PNB and HDFC Bank are traded higher.

Confidence of the market participants also remained higher on reports suggesting that the PMO is all set to unleash measures aimed at boosting sectors such as industry, energy, finance and infrastructure. Markets also got some support from Prime Minister’s Economic Advisory Council Chairman C Rangarajan’s statement that Indian economy’s growth rate would pick up in the second half of this fiscal and will touch 6.7 per cent for 2012-13. Realty stocks extended recent gains as investors bet that retail real estate will get a boost from the entry of foreign supermarket chains in the country, with the government allowing up to 51% foreign direct investment in multi-brand retail trade. 

However, gains in realty and power stocks were offset by fall in metal stocks. Scrips like Sterlite Industries, Tata Steel, SAIL, Sesa Goa, NMDC and Jindal Steel & Power all edged lower after LMEX, a gauge of six metals traded on the London Metal Exchange, dropped 1.24% on September 24, 2012. The gains also remain capped as sugar stocks dropped after the government on Monday deferred a decision on scrapping subsidy on levy sugar under the public distribution system (PDS) quota ahead of the upcoming festive season demand. Moreover, Tyres stock too declined on reports the Competition Commission of India (CCI) is likely to impose stringent punishment on tyre manufacturers in a cartelisation case.

Global cues also weighed on sentiments as European counters traded flat in the early deals as investors remain concerned about global growth and waited for Spain to unveil plans to resolve its fiscal problems. Moreover, Asian equity indices ended the session mixed on Tuesday, with traders spooked by news that German consumer confidence had hit a 31-month low, wrangling over Greece's budget and uncertainty about Spain.

Back home, the NSE’s 50-share broadly followed index Nifty, rose by about just five points to hold its psychological 5,650 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex surged by over twenty points to finish near the psychological 18,700 mark. However, the broader markets traded with traction through the session outperforming benchmarks and ended the trade with a gain of about half a percent.

The overall volumes stood at over Rs 2.15 lakh crore, which remained on the higher side as compared to that on Monday. Moreover, the market breadth remained in favor of advances as there were 1,556 shares on the gaining side against 1,322 shares on the losing side while 130 shares remain unchanged.

The BSE Sensex gained 21.07 points or 0.11% to settle at 18,673.34, while the S&P CNX Nifty rose by 4.30 points or 0.08% to close at 5,673.90.

The BSE Sensex touched a high and a low of 18,790.01 and 18,636.16 respectively. Moreover, the BSE Mid cap index was up by 0.46% and Small cap index up by 0.53%. 

BHEL up by 2.67%, Cipla up by 1.92%, ITC up by 1.86%, HUL up by 1.75% and HDFC up by 1.28% were top gainers on the Sensex, while Jindal Steel down 4.35%, Maruti Suzuki down 2.42%, Sterlite Industries down 2.31%, Tata Motors down 1.66% and Tata Steel down 1.48% were top losers on the index.

The major gainers on the BSE sectoral space were, Realty up 2.08%, FMCG up 1.85%, Consumer Durable (CD) up 0.75%, Health Care (HC) up 0.60% and Power up 0.47%, while Metal down 1.36%, Auto down 0.72%, PSU down 0.27% and Oil and Gas down 0.20% were the only losers on the BSE sectoral space.  

Meanwhile, amid strong policy reforms and appreciation of rupee, Prime Minister's Economic Advisory Council (PMEAC) Chairman C Rangarajan, has expressed confidence in achieving 6.7% for entire 2012-13, as he expects the nation's growth to pick up in the second half of this fiscal. He also stated that the better than expected turn out of monsoon will add more agricultural productivity, aiding nation’s economy.

Economic growth had slowed to a nine-year low of 6.5 percent in 2011-12. While, the GDP growth in the April-June quarter was 5.5%, lower than 8% recorded in same period of previous financial year. Rangarajan pointed out that the recent hiking of diesel prices was an inevitable decision as it will curtail burden of fiscal deficit amid high crude oil prices and increasing burden on oil companies.

He also noted that the best strategy to bring down the increasing current account deficit is by garnering more capital into the country and hoped that the recent policy reforms will attract more international investments. He also opined that the current deficit might come down to 3.5%, from previous year’s 4.5%.

The S&P CNX Nifty touched a high and low of 5,702.70 and 5,652.45 respectively.

The top gainers on the Nifty were Kotak Bank up by 3.17%, BHEL up by 2.70%, HUL up by 2.29%, Cipla up by 2.18% and ITC up by 2.09%. On the flip side, Jindal Steel down by 4.70%, Cairn down 3.02%, JP Associates down 2.72%, Sterlite Industries down 2.65% and Axis Bank down by 2.49% were top losers.

The European markets were trading in red, France's CAC 40 down by 0.41%, Germany's DAX down by 0.33% and United Kingdom’s FTSE 100 down by 0.03%.

Asian markets made a mixed closing on Tuesday, though the mood in the region remained subdued since morning but few of the indices showed good efforts to close in green in the dying hours. There was concern related to Europe that kept the markets under pressure, as Germany and France disagreed on when to introduce a banking union for the 17-nation single currency and attempts to resolve the region’s debt crisis seemed deadlocked. On the same time the reports from China remained discouraging, as a survey pointed out that manufacturers and retailers in the nation are less optimistic about sales than they were three months ago and are cutting jobs. Meanwhile, China’s overnight money-market rate climbed to a seven-month high on speculation cash shortages will worsen when the financial markets will remain closed for a week starting October 1.