Benchmarks end above crucial levels on reforms push

Prolonging their previous session’s rally, Indian equity markets snapped the session with a gain of over half a percent. Frontline gauges, throughout the session, traded firmly and re-conquered their crucial 5,900 (Nifty) and 19,450 (Sensex) levels by the end of the trade supported by shares of non-banking financial companies (NBFC) and banking stocks, which edged higher during the trade after the Lok Sabha on Monday passed a banking bill paving way for foreign investments in the sector and establishment of new private banks. The jubilation continued as the Companies Bill too was passed envisaging new set of rules to improve the quality of governance as it prescribes for stringent rule for auditors and strengthens the hands of the Serious Fraud Investigation Office (SFIO). Under the Companies Bill, corporates that make an average profit of at least Rs 5 crore or have a worth exceeding Rs 500 crore, or their turnover exceeds Rs 1,000 crore in the last three years will have to allocate funds for corporate social responsibility.

Global cues too supported the sentiments as European counters made a firm opening on Wednesday, with banks posting the biggest advances, as optimism that US policy makers were close to reaching a budget deal lured investors into riskier assets. Moreover, most of the Asian equity indices shut shop in the green terrain as optimism grew that a deal would be made to avert the fiscal cliff amid hopes of economic stimulus from the Bank of Japan this week.

Back home, investors remained hopeful of fastening economic growth on the domestic front, as the government looked determined about the reform measures after the passing of two important bills -  banking and companies’ law. Traders also remained optimistic after Planning Commission Deputy Chairman Montek Singh Ahluwalia emphasized on lowering of interest rates to boost economic growth which is beginning to look up after moderating to 5.4 per cent in the first half of the current fiscal. Some relief also came in from currency markets after Indian rupee recovered against US currency on the back of selling of American currency by exporters and banks.

Bull-run continued till end as consistent buying demand persisted among rate-sensitive sectors like Auto and Realty stocks on hopes of policy easing by the Reserve Bank of India in January monetary policy after positive undertone in Tuesday’s review. Some support also came in from software and technology pack which edged higher by over a percentage point on hopes of resolution to the US cliff standoff would improve the outlook for a key export market. Metal shares extended their gains for the fourth straight day, garnering about one and a half percent after a preliminary version of HSBC’s China manufacturing purchasing managers’ index (PMI) hit a 14-month high in December 2012.

The NSE’s 50-share broadly followed index Nifty rose by about thirty points to end comfortably above its psychological 5,900 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged by over one hundred and ten points to finish above the psychological 19,450 mark. Moreover, broader markets too traded in-line with benchmarks snapping the session with a gain of over half a percent.

The overall volumes stood above Rs 1.84 lakh crore, which remained on the lower side as compared to that on Tuesday. The market breadth remained in favor of declines as there were 1,650 shares on the gaining side against 1,311 shares on the losing side while 114 shares remain unchanged.

Finally, the BSE Sensex gained 111.25 points or 0.57% to settle at 19,476.00, while the S&P CNX Nifty rose by 32.80 points or 0.56% to end at 5,929.60.

The BSE Sensex touched a high and a low of 19,516.02 and 19,419.76, respectively. The BSE Mid-cap index was up by 0.55% and Small-cap index was up by 0.44%.

The top gainers on the Sensex were, Sun Pharma up 3.44%, Tata Motors up by 3.29%, ONGC up 3.16%, Wipro up 2.55% and Jindal Steel up 2.36%, while, HDFC down by 1.83%, L&T down by 1.36%, ITC down by 1.18%, ICICI Bank down by 0.89% and NTPC down by 0.32% were the top losers on the index.

The top gainers on the BSE Sectoral space were, Auto up 1.84%, Health Care (HC) up 1.58%, Metal up 1.49%, IT up 1.33% and Oil & Gas up 1.30%, while Capital Goods (CG) down, 0.62%, FMCG down 0.38% and Consumer Durables down 0.05% were top losers on the space.

Meanwhile, commenting on Reserve Bank’s mid-quarter monetary policy review, Planning Commission Deputy Chairman Montek Singh Ahluwalia has emphasized on lowering of interest rates to boost economic growth which is beginning to look up after moderating to 5.4 per cent in the first half of the current fiscal. However, during March 2012, Finance Ministry had projected a growth rate of 7.6 per cent for the current fiscal.

As the fiscal deficit declines, the resources which are flowing into the financing of fiscal deficit, will flow back into the economy. Further, Ahluwalia added that deceleration in growth has bottomed out and the second half would be better and as the RBI has chosen to keep all the key rates and ratios unchanged in its policy review unveiled, but have decided not to take any action. By adding further the Deputy Chairman said that the government is taking steps to promote infrastructure sector projects.

The S&P CNX Nifty touched a high and a low of 5,939.40 and 5,910.80 respectively.

The top gainers on the Nifty were Sun Pharma was up 4.47%, Asian Paints up 3.36%, ONGC up 3.22%, Tata Motors up 3.17% and Jindal Steel up 2.75%.

The top losers on the index were HDFC down by 2.00%, Axis Bank down by 1.47%, L&T down by 1.45%, ITC down by 1.43% and ICICI Bank down by 0.95%.

The European markets were trading in green, France’s CAC 40 up by 0.45%, Germany’s DAX up 0.28% and the United Kingdom’s FTSE 100 up by 0.83%.

Asian markets ended mostly higher on Wednesday amid positive hopes from US fiscal cliff negotiations. Japan's Nikkei ended with strong gains, sending the benchmark over the 10,000-point mark for the first time since April on the back of strong gains for financial and exporter shares and in expectations of more aggressive measures from LDP's Shinzo Abe, who is in charge of the government. However, mainland China shares erased early gains and ended in red.

The South Korean market was closed for the country’s Presidential election.