Markets get a last hour u-turn to end in green; Nifty settles at 19 month high

The Indian markets witnessed a face saving trend reversal in final hours that led the major indices into green at the closing. It can be called a volatile day of trade with markets getting a modest gap-up start after the government making it to Lok Sabha, rejecting opposition brought motion that sought withdrawal of its decision to allow foreign direct investment in multi-brand retail.  However, within minutes of opening bell, all enthusiasm was overtaken by the concern that the government in the Rajya Sabha might find it difficult to muster the numbers. The trade that had remained in consolidation phase for last couple of days on the FDI issue, lost traction and suffered sharp profit booking with Sensex and Nifty breaching their crucial levels of 19200 and 5850 respectively, there was gloom once again on the street, as the government ran short of numbers in the Upper House. Apart from the political development, the investment banker, Credit Suisse lowering economic growth of India to 5.9 per cent from 6 per cent for the fiscal year ending March, too turned out to be mood dampener for the markets.

The global cues mostly remained positive, as the US markets ended mixed overnight, while most of the Asian markets ended in green, supported by hopes that a compromise will be reached in US to avoid the fiscal cliff of year-end tax hikes and spending cuts, threatening to push the US economy back into recession. Though, the pessimistic mood at the local bourses could not take much cues from the positive opening of the European markets.

Back home, the trade remained lackluster throughout the session after the initial slump and traders once again adopted a wait and watch stance. Profit booking was seen in the sectors that have been moving higher in last couple of days, while the retail stocks that came into jubilant mood in morning after the Lok Sabha vote, returned to their cautious mood. Broader indices that tried to hold the markets for some time, too gave up to intense selling pressure. However, towards the end of the trade, market took a sudden u-turn after Bahujan Samaj Party chief Mayawati said that her party will vote in favour for FDI in multi-brand retail in the Rajya Sabha. Traders once again went on a buying spree at lower levels on expectations that the FDI in multi-brand will be approved by the Rajya Sabha with support from the Bahujan Samaj Party. On sectoral front, high beta realty index after witnessing early session’s profit booking, once again returned to the lime light and gained by around 2%. Power and banking too gained over a percent on BSE. Banking pack showed spurt, equally in PSU and private sector banks both, though Finance Minister P Chidambaram said that state-owned banks have been asked to take fresh steps to speed up recovery of non-performing assets. On the other hand IT sector once again remained the laggard with Cognizant's regulatory filing, triggering worries whether the outsourcing industry may need to budget for another year of slow to moderate growth in 2013. Tech sector too lost about a percent on BSE, as the sector heavy weight Bharti Airtel kept reeling in red, losing another over one and half a percent.

Finally, the BSE Sensex gained 94.94 points or 0.49% to settle at 19486.80, while the S&P CNX Nifty rose by 30.40 points or 0.52% to end at 5,930.90.

The BSE Sensex touched a high and a low of 19523.25 and 19186.24, respectively. The BSE Mid-cap index was up by 0.73% and Small-cap index gained 0.46%.

Sterlite Industries up 2.35%, Tata Motors up 1.93%, Hindalco up 1.78%, SBI up 1.68% and BHEL up by 1.43% were the major gainers on the Sensex, while Infosys down 1.84%, Bharti Airtel down 1.59%, TCS down 1.14%, Cipla down 0.62% and Wipro down 0.33% were major losers on the index.

The major gainers on the BSE sectoral space were Realty up 1.81%, Power up 1.18%, Bankex up 1.16%, Consumer Durables (CD) up 0.85% and Oil & Gas up 0.84%, while IT down 1.37%, TECk down 1.05% and Health Care (HC) down 0.04% were three losers on the BSE sectoral space.

Meanwhile, giving a setback to foreign telecom investors, highest law official in the country Attorney General Goolam Essaji Vahanvati said that foreign investors in mobile phone companies whose licenses were cancelled by the Supreme Court in its Feb 22 orders can’t claim damages for cancellation of their 2G licenses.

The attorney general has further said that claim of damages of these companies was based on a complete misunderstanding of the constitutional position prevailing in the country. Reiterating his stance, Vahanvati said that countries entering into bilateral agreements 'ought to have been fully aware of the constitutional set up of the country, where the Parliament has the powers to make laws, and the government of India in its executive powers can enter into treaties'.

These global investors are Norway's Telenor, Russia's Sistema, Capital Global and Axiata Group had submitted notices to the Indian government for alleged breach of bilateral investment protection agreements after the apex court quashed their mobile permits.

However, the Ministry of External Affairs (MEA) and the Department of Commerce has not agreed to Vahanvati’s opinion and expressed views on this stance that foreign companies can take legal action against the government and claim damages under the bilateral investment protection pacts (BIPA). Further, they added that according to international law the Indian State is a single entity and the conduct of any authority is attributable to the State of India.

The S&P CNX Nifty touched a high and a low of 5,942.55 and 5,838.90 respectively.

The top gainers on the Nifty were JP Associates up 4.07%, Axis Bank up 3.16%, Reliance Infra up 2.87%, BHEL up 2.61% and Tata Motors up by 2.29%.

The top losers on the index were HCL Tech down 2.46%, Bharti Airtel down 2.00%, Infosys down 1.83%, TCS down 1.45% and Ranbaxy down 0.90%.

European markets were trading in green. France’s CAC 40 up 0.43%, Germany’s DAX up 1.03% and Britain’s FTSE 100 was up by 0.21%.

Asian stock markets ended mixed on Thursday amid U.S. President Barack Obama’s indication that there will be no deal to avert the fiscal crisis unless Republicans are willing to increase the income tax rates on the top 2 percent of Americans. Japan’s Nikkei ended higher after touching seven-month high, supported by the yen's weakness against the dollar. China's Shanghai Composite went home with red mark and Hong Kong's Hang Seng index eased marginally following earlier session’s strong rally. Moreover, Seoul shares closed slightly higher despite concerns about stalled U.S. budget talks, while Kospi average edged up 1 percent to a fresh seven-week high in relatively thin trading.