Benchmarks gain some more ground; Auto shares spurts

Indian equity markets managed to snap yet another session in the green territory with the frontline equity indices amassing about half a percent gains and extending the gaining streak for the second consecutive session. The frontline gauges showed side-ways movement since the start due to fall in index heavyweight Reliance Industries (RIL) after anti-corruption activist-turned-politician Arvind Kejriwal on October 31, 2012, charged RIL’s chairman Mukesh Ambani for getting undue favours from the government over a contract to develop natural gas fields. Though, the company’s stock recovered from the down fall after RIL refuted Arvind Kejriwal’s allegations.

Frontline indices took U-turn in the second half as sentiment got some boost with survey showing that India’s manufacturing activity growth inched up in October from September’s 10-month low. HSBC purchasing managers’ index (PMI), a headline index designed to measure the overall health of the manufacturing sector, expanded at steady space of 52.9 in October. Sentiments also got bolstered after the growth in eight core sectors, which occupies 37.9% of weightage in the overall Index of Industrial Production (IIP), registered a growth of seven-month high at 5.1% in September, faster than the upwardly revised 2.3% in August and 2.5% in the September month of the previous fiscal, mainly on account of low-base advantage and rapid expansion in coal, cement and petroleum refinery products. Sentiments also got buttressed on the back of good Auto sales figure for the month of October. Maruti Suzuki India reported 86% growth in October 2012 total sales while; M&M registered 29% growth in October sales.

Cues from global markets too remained supportive as European counters traded firmly in the early deals, buoyed by relatively robust earnings reports despite economic weakness. Moreover, most of the Asian equity indices shut shop in the green supported by upbeat Chinese manufacturing data. Data showed China’s manufacturing activity expanded in October for the first time in three months, adding to renewed optimism that the world’s number two economy is beginning to awake from its recent slumber. The purchasing managers’ index (PMI) stood at 50.2 last month, better than 49.8 in September.

Back home, some amount of support also came in from consumer durable space which spurted over massive five percent led by Titan Industries, which reported 21.35% rise in its net profit at Rs 180.14 crore for the quarter ended September 30, 2012 as compared to Rs 148.45 crore for the same quarter in the previous year. Moreover, hopes that sales growth would pick up in November ahead of the festive season too supported the stocks in the same segment. Telecom stocks, viz., Bharti Airtel, Idea Cellular and Reliance Communication, too rang loud ahead of EGOM meet later in the evening to take a final call on the contentious issue of taking back the more efficient 900 MHz spectrum being used by the older telecom operators for reallocation at a later auction, a process commonly referred to as re-farming. However, the gains of local equity markets remain restricted on account of anxiety witnessed ahead of the outcome of Parthasarathi Shome committee’s final report on GAAR. As per some reports, the finance ministry has indicated that the ministry may defer introduction of GAAR by a year, setting aside the Shome panel's proposal for a three year deferral.

The NSE’s 50-share broadly followed index Nifty rose by over twenty five points to end near its psychological 5,650 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged by over fifty points to finish above the psychological 18,550 mark. Broader markets outperformed benchmarks and ended the trade with a gain of about a percentage point.

The market breadth remained in favor of declines as there were 1,673 shares on the gaining side against 1,162 shares on the losing side while 125 shares remain unchanged.

Finally, the BSE Sensex gained 56.32 points or 0.30% to settle at 18,561.70, while the S&P CNX Nifty rose by 25.32 points or 0.45% to end at 5,645.05.

The BSE Sensex touched a high and a low of 18,589.13 and 18,445.18, respectively. The BSE Mid-cap index was up by 0.85% and Small-cap index was up by 0.75%.

Tata Motors up 4.89%, Bharti Airtel up 4.41%, Cipla up 3.12%, Wipro up 3.02% and Bajaj Auto up 1.71% were the major gainers on the Sensex. On the flip side, Hindustan Unilever down 1.84%, ONGC down 1.34%, ITC down 1.26%, GAIL India down 0.90% and HDFC Bank down 0.89% were the major losers on the index.

The top gainers on the BSE sectoral space were, Consumer Durables (CD) up 5.57%, Auto up 2.20%, Realty up 1.79%, Power up 1.02% and Health Care (HC) up 0.88%. While FMCG down 0.86% and Oil & Gas down 0.28% were top losers on the BSE sectoral space.

Meanwhile, the much mooted issue of spectrum re-farming is likely to get fixed with a final decision, in the meeting of Empowered Group of Ministers (EGoM), which would be held on Nov 1. As per the previous meeting held on October 17, the Telecom Commission had decided to take back the more efficient 900 MHz spectrum which was being used by the older telecom operators for reallocation at a later auction.

The spectrum would be taken back at the time of renewal of licenses, which is expected to begin in late 2014, and replaced with spectrum in the 1,800 MHz band. The EGoM, headed by finance minister P Chidambaram, includes external affairs minister Salman Khurshid, information and broadcasting minister Manish Tewari and law minister Ashwani Kumar.

The cabinet is also likely to meet, to approve on a number of issues that have already been passed by the EGoM, which includes the one-time fee, spectrum sharing and tweaks to the mergers and acquisitions policy. The commission’s proposal on spectrum re-farming is based on the recommendations by the internal committee as well as TRAI.

The S&P CNX Nifty touched a high and a low of 5,649.75 and 5,601.95 respectively.

The top gainers on the Nifty were Tata Motors up 4.44%, Bharti Airtel up 4.34%, Cipla up 3.45%, IDFC up 2.80% and Wipro up 2.74%.

The top losers on the index were HUL down 1.82%, ONGC down 1.42%, ITC down 1.27%, HDFC Bank down 0.96% and GAIL down 0.92%.

European markets were trading in green. France’s CAC 40 up 0.63%, Germany’s DAX up 0.57% and Britain’s FTSE 100 up by 0.43%.

Asian markets ended mixed on the first day of November as losses were restricted with China's official and private sector manufacturing PMIs, which witnessed a recovery in the growth trend. However, Japan's Nikkei reversed early gains closed marginally higher following worse than expected earnings report from electronics major Panasonic Corp. Hang Seng Index went home with green mark with a mild recovery in Hong Kong property developers, which were on sellers radar following government’s measures to cool down the housing market. Meanwhile, Seoul markets ended lower after data showed that South Korea’s manufacturing activity contracted at a slower rate in October compared to that in the previous month.