Buying in late trade help benchmarks to eke out slender gains

Key domestic benchmark, shrugging off higher inflation numbers, ended the session with slender gains on Monday. Buying which emerged in late trade, largely supported by firm European counterparts, mainly acted as saving grace for domestic equity markets. The local gauges pulled back after breaching 18,600 (Sensex) as the inflation touched 2012 high by climbing to 7.81 percent from 7.55 percent in August as prices of potato, pulses, wheat and sugar soared. The impact of increase in diesel prices was also partly reflected in last month’s figures. High speed diesel inflation soared 8.94% after the government increased diesel prices by Rs 5 on September 13.

The main support to the domestic bourses came from European markets, which traded firmly in the opening deals as investor confidence was lifted by hopes that after the European Union Council meeting on Oct 18-19 in Brussels, Spain will seek bailout funds and Greece will shortly receive the required rescue package needed to overcome the financial instability it is facing while, most of the Asian equity indices, recouping from their earlier losses, ended the session in the green terrain. Japan’s Nikkei ended higher, with Hitachi Construction Machinery climbing 2.9 percent in Tokyo.

Back home, rate cut hopes in RBI’s upcoming second quarterly policy review on October 30, provided cushion to the markets, after traders examined that core inflation for the month of September remain unchanged at 5.56 percent and statement from RBI Deputy Governor that current anti-inflationary policy stance could be ineffective if financial imbalances remain. Additionally, oil and gas too supported the frontline indices gaining over half a percent led by market bellwether Reliance Industries, which surged over half percent ahead of its Q2 earnings provided impetus to the hibernating bulls. In a quarter led by refining, the company is expected to post an over 20 percent growth in profits sequentially.

Some amount of strength were provided by sugar stocks which extended Friday’s gains triggered by a panel headed by C Rangarajan submitting a report to Prime Minister Manmohan Singh, recommending to lift curbs in the sugar sector. FMGC stocks too supported the sentiments as scrips viz. HUL, Marico and Godrej Consumer edged higher on favourable outlook for Rabi or winter crop following wide-spread rains in August and September. However, the gains remain capped as Metal stocks like, Sesa Goa, Sterlite Industries, JSW Steel, Hindustan Zinc and Bhushan Steel  all edged lower as LMEX, a gauge of six metals traded on the London Metal Exchange, fell 1.61% to 3,438.20 on October 12, 2012. Moreover, Capital goods stocks extended recent losses as Capital goods output, a key investment indicator, clearly continued to be a disappointment as capital goods production witnessed a decline of  1.7 percent on y-o-y basis highlighting that companies are still wary of making investments in high-interest and uncertain economic climate.

The NSE’s 50-share broadly followed index Nifty gained by just over ten points to end above its psychological 5,650 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex rose by over twenty five points to finish above the psychological 18,700 mark. However, the broader markets traded in-line with benchmarks with mid cap index ending flat while, small cap index surged about half a percent.

The overall volumes stood at over Rs 1.33 lakh crore, which remained on the lower side as compared to that on Friday. The market breadth remained in favor of declines as there were 1,455 shares on the gaining side against 1,383 shares on the losing side while 141 shares remain unchanged.

Finally, the BSE Sensex gained 38.37 points or 0.21% to settle at 18,713.55 while the S&P CNX Nifty rose by 11.20 points or 0.20% to end at 5,687.25.

The BSE Sensex touched a high and a low of 18,726.38 and 18,596.65, respectively. The BSE Mid-cap and Small-cap indices were up by 0.06% and 0.43%, respectively.

Hindalco up 1.83%, BHEL up 1.55%, Cipla up 1.44%, Bharti Airtel up 1.15% and Tata Power up 1.12% were the major gainers on the Sensex. On the flip side, Maruti Suzuki down 2.46%, Infosys down 1.25%, Sterlite down 1.02%, L&T down 0.88% and Coal India down 0.74% were the major losers on the index.

The top gainers on the BSE sectoral space were FMCG up 0.75%, Oil & Gas up 0.53%, Realty up 0.52%, Bankex up 0.37% and Power up 0.35%, while Consumer Durables (CD) down 0.84%, IT down 0.76%, TECk down 0.49%, Auto down 0.30% and Capital Goods (CG) down 0.24% were top losers on the BSE sectoral space.

Meanwhile, the Foreign Investment Promotion Board (FIPB) is mulling to clear about 50 FDI proposals including those of Larsen & Toubro and Mahindra Group at its meeting on October 19, 2012. In the last meeting, the FIPB had approved 14 proposals of FDI total to Rs 113.35 crore. The FIPB’s green signal to various FDI proposals is the renewed efforts by the government to attract private investments.

According to the scheme, out of the total 49 proposals, 16 are fresh and 19 are those on which decisions were deferred in the previous meetings of the Board. The 6 proposals include those of Mahindra and Mahindra and Larsen & Toubro which relate to defence production and 3 to the telecommunications sector. As India permits FDI in most of the segments through automatic route, the FIPB clears those proposals which are related to sensitive sectors like defence and telecom.

In recent times, the government liberalized its FDI policy in the multi-brand retail and aviation sector. In addition to that the government would be seeking Parliament’s approval to raise foreign investment upper limit in the insurance sector to 49% from 26%.

 The S&P CNX Nifty touched a high and a low of 5,693.70 and 5,651.05 respectively.

The top gainers on the Nifty were Siemens up 1.91%, BHEL up 1.77%, Hindalco up 1.74%, Cipla up 1.62% and Ranbaxy up 1.58%.

The top losers on the index were Maruti down 2.64%, Infosys down 1.32%, Sesa Goal down 1.29%, JP Associates down 1.19% and Lupin down 1.00%.

European markets were trading in green. France’s CAC 40 up 1.22%, Germany’s DAX up 0.73% and Britain’s FTSE 100 up by 0.47%.

Asian shares ended mixed on Monday amid growth concerns ahead of the third-quarter corporate earnings season. Meanwhile, world’s second-largest economy, China, reported 1.9% rise in September inflation, while exports rebounded at nearly twice the rate expected, ahead of Chinese gross domestic product (GDP) numbers in this week. Japan’s Nikkei ended higher, with Hitachi Construction Machinery climbing 2.9% in Tokyo.