Benchmarks negotiate positive close for second consecutive session

Key Indian benchmarks ended the volatile day of trade in positive territory for second day in a row with Sensex re-conquering its crucial 18,500 mark as investors showed some optimism after Lok Sabha Speaker Meira Kumar rejected Trinamool Congress’ (TMC) no-confidence motion against the government on its decision to allow foreign direct investment (FDI) in multi-brand retail sector. The Lok Sabha Speaker disallowed it as it could not muster the required support of 50 members. However, some profit booking was witnessed in the late trade as proceedings in both houses adjourned for the first day of Winter Session on uproar over FDI in retail and reservation to SCs/STs in promotions.

Overall, the undertone remained up-beat after the government allowed India’s largest insurer Life Insurance Corporation (LIC) to invest up to 30 percent in a company as against the earlier limit of 10 percent. Sentiments also got supported after banking space spurted over half a percent on hopes that the winter session of parliament will pass bills to liberalize the insurance, pension and banking sector. While, State run public bank and also index heavyweight, State Bank of India (SBI) scooped up gains on likely capital infusion. Banking Secretary reported that the State Bank of India would get funds under capital infusion plan.

Global cues also supported the sentiments as European counters advanced for a fourth straight session to touch a one-week high on Thursday on hopes that a deal on Greece’s bailout will be agreed. Meanwhile, Asian markets ended mostly in the green as Chinese manufacturing data indicated that the economy continues to pick up. The purchasing managers’ index came out at 50.4, compared with a final reading for October of 49.5, indicating an expansion for the first time in 13 months. Moreover, Japanese shares rose to six-month high as the yen weakened further against the dollar and euro on expectations that the country's central bank will unveil fresh monetary easing measures.

Back home, rally in metal stocks too backed the investors’ emotions as stocks like, Hindalco, JSW Steel, Sesa Goa, SAIL, Sterlite Industries and Tata Steel all edged higher on preliminary results from a factory survey showed that China’s vast manufacturing sector saw expansion accelerate in November for the first time in 13 months. Further, telecom stocks, namely, Reliance Communication, Bharti Airtel, Idea Cellular and MTNL, rang-loud after Planning Commission Deputy Chairman Montek Singh Ahluwalia, a week after flop 2G spectrum auction, accepted that it was a mistake to fix such a high reserve price for the 2G spectrum auction, which kept leading telecom companies away from the bidding. However, the gains remain capped as shares in drug-makers dipped on speculation the government’s final decision on the pricing policy for the sector might be more disruptive than expected. As per reports, panel of ministers agreed to settle on a market-based pricing mechanism, as expected, but capping drug prices at a simple average price of brands as opposed to the initial proposal of using a weighted average, a move if implementation would be negative for the sector.

The NSE’s 50-share broadly followed index Nifty rose by over ten points to end comfortably above its psychological 5,600 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex gained over fifty points to finish above the psychological 18,500 mark. Moreover, broader markets too traded in-line with benchmarks and ended the session with a gain of about half a percent. The market breadth remained in favor of advances as there were 1,431 shares on the gaining side against 1,366 shares on the losing side while 146 shares remain unchanged.

Finally, the BSE Sensex gained 56.96 points or 0.31% to settle at 18,517.34, while the S&P CNX Nifty rose by 12.95 points or 0.23% to end at 5,627.75.

The BSE Sensex touched a high and a low of 18,567.68 and 18,456.20, respectively. The BSE Mid-cap index was up by 0.32% and Small-cap index was up by 0.39%.

SBI up 1.89%, L&T up 1.72%, Infosys up 1.55%, Mahindra & Mahindra up 1.21% and ITC up by 1.17% were the major gainers on the Sensex. On the flip side, Tata Motors down 2.49%, ICICI Bank down 1.03%, Sun Pharma down 0.62%, Reliance down 0.52% and Cipla down by 0.50% were the major losers on the index.

The few gainers on the BSE sectoral space were Capital Goods (CG) up 1.07%, IT up 0.85%, TECk up 0.80%, FMCG up 0.62% and PSU up 0.55%. While, Oil & Gas down 0.49%, Consumer Durables (CD) down 0.36% and Auto down 0.24% were major losers on the BSE sectoral space.

Meanwhile, with the European Union and the US markets struggling with fiscal crisis, in a move to help the exporters, the Commerce Ministry is planning to introduce a method of providing incentives to exporters in order to achieve the $320 billion exports target for the current financial year. As per the Commerce and Industry Additional Secretary Rajeev Kher, special efforts were needed that could be in nature of incentives, additional markets and making more efforts on market promotions.

Further, with the recent FICCI survey highlighting that the export target of $320 billion for FY13 is unlikely to be met due to the global demand slowdown. Moreover, rising cost of raw materials and weak demand from overseas are primary factors that are bothering members of the export community. As a result, primary focus will now be for providing tax incentive or market promotion scheme with an ultimate aim of making the export more profitable.

At present, Europe and the US have been the primary export markets and as per Kher, new export strategy should be developed targeting other countries like Africa and the Middle East to take the next leap forward.

However, trade deficit with China has also risen to $40 billion and thus arises the need to export more to that country. Further, optimistic about the pharma sector, Kher said the sector will be able to achieve the export target of $25 billion by 2014. Moreover, increasing imports and widening trade deficit will definitely impact the country's CAD which will put pressure on rupee.

The S&P CNX Nifty touched a high and a low of 5,643.35 and 5,608.00 respectively.

The top gainers on the Nifty were Grasim up 2.29%, L&T up 1.87%, SBI up 1.80%, HCL Tech up 1.70% and NTPC up by 1.67%.

The top losers on the index were Tata Motors down 2.79%, Siemens down 2.12%, Ultratech Cement down 1.80%, ICICI Bank down 1.29% and IDFC down by 1.17%.

European markets were trading in green. France’s CAC 40 up 0.39%, Germany’s DAX up 0.71% and Britain’s FTSE 100 was up by 0.54%.

Most Asian markets went home with green mark on Thursday, amid advancing Chinese manufacturing data, which expanded for the first time in more than a year last month. Hang Seng index ended with strong gains, pulled by Hong Kong-listed firms linked to China’s economic health. Moreover Japan’s Nikkei closed higher after touching 7-month high, due to yen’s ongoing weakness which continued to boost exporters. Furthermore, Seoul shares gained on hopes that the Greek crisis will be resolved despite the IMF and EU ministers delaying the decision on granting further aid to debt-stricken Greece until next week.