Benchmarks snap five days losing streak as inflation eases

Snapping their five days losing streak, Indian equity benchmarks ended the session near their intraday high supported by gains in rate sensitives like banking, auto and realty space after lower-than-expected inflation data re-ignited the hopes that Reserve Bank of India (RBI) will cut interest rates in its upcoming monetary policy review on December 18, 2012. The wholesale price index (WPI), India’s main inflation gauge, in a big relief, unexpectedly cooled down to 7.24 per cent for the month of November 2012 as compared to 7.45 per cent for October and 9.46 per cent during the corresponding month of the previous year, thereby registering second consecutive decline. Meanwhile, primary articles inflation rose to 9.42 per cent as against 8.21 per cent in the previous month. The food articles inflation also rose to 8.5 per cent as compared to 6.62 per cent in October.

However, frontline gauges slowed their momentum in noon trade following sluggish cues from European counters which made cautious start as German manufacturing sector slipped to 46.3 in December from 46.8 the previous month, remaining well below the 50 threshold that divides growth from contraction and missed the street expectations. Moreover, Asian markets shut shop mostly in the red, with strong Chinese manufacturing figures offset by concern about the US ‘fiscal cliff’ and downbeat Japanese business confidence data.

Back home, market regained their strength supported by rally in realty stocks which rose higher on reports that the Union Cabinet has cleared the new land acquisition bill, paving way for its introduction in the ongoing winter session of the parliament. Stocks like, Prestige Estates, Indiabulls Real Estate, DLF, DB Realty, Anant Raj Industries and Godrej Properties edged higher in the trade. Markets fast-tracked their pace in the last leg of trade supported by metal space, which surged over two percent as Chinese vast manufacturing sector expanded in December at its fastest pace in 14 months as new orders and employment rose. The HSBC flash purchasing managers' index for December rose to 50.9, the highest level since October 2011 and the fifth straight monthly gain. A figure above 50 indicates that growth is accelerating, while one below 50 shows slowing growth.

Back home, some support also came in from fertiliser space as shares of companies like, Chambal Fertilisers & Chemicals, National Fertilizers, Rashtriya Chemicals & Fertilizers etc rallied during the day after the Cabinet Committee on Economic Affairs (CCEA), approved a urea investment policy, which is likely to incentives fertiliser companies to set up new plants and expand existing capacity. The gains remain capped as cement major ACC and Ambuja Cements extended their southward movement after board of both these firms approved payment of technology and know-how fees to Switzerland's Holcim with effect from January 1, 2013.

The NSE’s 50-share broadly followed index Nifty rose by about thirty points to end comfortably above its psychological 5,850 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged by over eighty points to finish above the psychological 19,300 mark. Moreover, broader markets too witnessed some traction and ended the session in the green.

The overall volumes stood above Rs 1.65 lakh crore, which remained on the lower side as compared to that on Thursday. The market breadth remained in favor of declines as there were 1,456 shares on the gaining side against 1,470 shares on the losing side while 120 shares remain unchanged.

Finally, the BSE Sensex gained 87.99 points or 0.46% to settle at 19,317.25, while the S&P CNX Nifty rose by 28.10 points or 0.48% to end at 5,879.60.

The BSE Sensex touched a high and a low of 19,348.85 and 19,193.11, respectively. The BSE Mid-cap index was up by 0.60% and Small-cap index was up by 0.08%.

The top gainers on the Sensex were, Sterlite Industries up 3.57%, Hindalco Industries up by 3.54%, SBI up 2.58%, Jindal Steel up 2.48% and Tata Steel up 2.33%, while, Bharti Airtel down by 1.52%, BHEL down by 1.38%, Dr Reddys Lab down by 0.99%, Tata Power down by 0.90% and Cipla down by 0.60% were the top losers on the index.

The top gainers on the BSE Sectoral space were, Metal up 2.31%, Bankex up 1.27%, Realty up 1.01%, IT up 0.73% and PSU up 0.60%, while Consumer Durables (CD) down 1.23%, Health Care (HC) down by 0.29% and Power down by 0.23% were the top losers in the space.

Meanwhile, the Union Cabinet cleared the controversial land acquisitions bill which will be introduced in the winter session of parliament. With the new land acquisitions law, the government hopes to make easy land acquisition and also remove bureaucratic hurdles that hold up highway projects that have become a roadblock for the economic growth.

According to the provisions of the bill, permission of 80% of landowners would be required to acquire land for private industrial projects and in case of Public-Private Partnership projects permission of 70 percent of the landowners would be mandatory. However, no permission would be required in case of projects acquired for government purpose. The bill also has provisions to return the unutilized land to the land losers.

Cabinet Committee also cleared a proposal allowing the road ministry to decide the mode of execution of highway projects where the traffic volume is between 5,000 and 10,000 passenger car units, however the road ministry will have to go to the cabinet to get approval for each and every project, resulting in delays.

The S&P CNX Nifty touched a high and a low of 5,886.10 and 5,839.15 respectively.

The top gainers on the Nifty were Bank of Baroda was up 3.75%, Hindalco up 3.71%, Sesa Goa up 3.40%, Tata Steel up 2.92% and SBI was up 2.77%.

The top losers on the index were Bharti Airtel down by 1.86%, PowerGrid down by 1.48%, JP Associates down by 1.36%, BHEL down by 1.29% and Siemens down by 1.24%.

The European markets were trading mixed, France’s CAC 40 down by 0.05%, Germany’s DAX up 0.20% and the United Kingdom’s FTSE 100 down by 0.12%.

Asian markets ended mixed on Friday amid growing concerns about the looming fiscal cliff in US that overshadowed some upbeat economic reports in the region. However, Shanghai markets went home with strong gains after HSBC said China's manufacturing activity hit a 14-month high this month, another sign the world's number two economy is picking up steam. Japan’s Nikkei gave up some gains and closed lower, as yen’s weakness failed to lift stocks ahead of Sunday's election, moreover, Nikkei was pressurized with the closely watched Japanese business survey came out with the lowest reading since March 2010. While Hong Kong markets went home with green mark after touching a fresh 16-month high.