Benchmarks gain ahead of December F&O expiry

Buoyed by firm global cues, Indian equity indices snapped the day’s trade with a healthy gain of about a percent on the penultimate day of December series Futures and Options contract expiry. Frontline gauges, after a flat-to-positive start, extended their northward journey and ended the session above their crucial 5,900 (Nifty) and 19,400 (Sensex) bastions. Gains in the domestic market were mainly triggered by reports that US President Barack Obama plans to return early from his annual vacation to take part in talks to avert the fiscal cliff of austerity measures, which is due to take effect at the start of 2013.

Sentiments also remained sanguine after Asian markets ended on a positive note after Japan’s ex- Prime Minister Shinzo Abe, whose Liberal Democratic Party won a landslide victory in the December 16 election, was appointed as premier today. The new government has promised economic policies to boost growth while, the European markets remain closed for Christmas holidays.

Back home, domestic bourses made a cautious start as traders remained on sidelines in the early trade on report that India’s foreign direct investment (FDI) inflows into the services sector increased by a mere 5 per cent to $3.6 billion during the April-October period of this fiscal. But, later on, the gauges picked up the pace supported by banking shares which led the gains on hopes of easing liquidity as the Reserve Bank of India (RBI) continued with cash injection measures and on expectations of a rate cut in January. Rally in realty stocks too supported the sentiments. Stocks like DLF, Unitech, HDIL, Indiabulls Real Estate and Anantraj Industries surged on report that realty prices have seen an increase of about 10 percent in the last one year.

Some support to the frontline indices also came in from Pharma stocks like Cipla, Glenmark Pharma, Sun Pharma and Ranbaxy Laboratories which edged higher as the Planning Commission has set a target for the pharmaceutical industry to reach $100 billion by 2020 and account for five per cent share of the global drug industry in the next five years. Capital goods space too rallied by over one and a half percent led by Bharat Heavy Electricals and Larsen & Toubro (L&T) which rose after the government extended interest rate subsidy for some exporters. Shares of textile firms viz. Vardhman Textile, Arvind, Century Textiles and Industries, Aarvee Denims & Exports, S Kumar Nation and Alok Industries also edged higher as the government is expected to announce measures on December 26, 2012, to boost India’s exports.

Sentiments also got some boost after market bellwether Reliance Industries, the owner of world’s biggest refining complex in Gujarat, gained by about a percent on reports that a panel appointed by the government had recommended a pricing formula that could sharply raise the prices of natural gas. The other notable movers include, Credit Analysis and Research (CARE) which settled with a premium of over twenty three percent on its debut.

The NSE’s 50-share broadly followed index Nifty rose by about fifty points to end above its psychological 5,900 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex rose by over one hundred and sixty points to finish above the psychological 19,400 mark. Moreover, broader markets too traded in the green throughout the session, ending with a gain of about half a percent.

The overall volumes stood above Rs 2.95 lakh crore, which remained on the higher side as compared to that on Monday. The market breadth remained in favor of advances as there were 1,523 shares on the gaining side against 1,416 shares on the losing side while 127 shares remain unchanged.

Finally, the BSE Sensex gained 162.37 points or 0.84% to settle at 19,417.46, while the S&P CNX Nifty rose by 49.85 points or 0.85% to end at 5,905.60.

The BSE Sensex touched a high and a low of 19,468.40 and 19,274.07, respectively. The BSE Mid-cap index was up by 0.66% and Small-cap index was up by 0.36%.

The top gainers on the Sensex were, Bharti Airtel up 2.78%, ICICI Bank up 2.38%, L&T up 2.19%, Jindal Steel up 2.03% and SBI up 1.84%, while, Hindustan Unilever down by 1.40%, Hero MotoCorp down by 0.81%, Tata Motors down by 0.42%, Infosys down by 0.33% and TCS down by 0.25% were the top losers on the index.

The top gainers on the BSE Sectoral space were, Capital Goods (CG) up 1.68%, Bankex up 1.36%, Realty up 1.22%, Power up 0.95% and Oil & Gas up 0.80%, while IT down 0.17% were top losers on the sectoral space.

Meanwhile, India’s foreign direct investments (FDI) in the services sector increased by a mere 5 per cent to $3.6 billion during the April-October period this fiscal, as against $3.42 billion for the financial and non-financial services sector during same period of last fiscal. However, the overall FDI inflows has declined by about 27 per during the first seven months of the ongoing financial year to $14.78 billion, from $20.29 billion in the year-ago period. In 2011-12, foreign investment in the services sector which contributes over 50 per cent to India’s GDP rose to $5.21 billion from $3.29 billion in 2010-11.

Sectors that enticed higher FDI during the period under review include hotel and tourism ($3.11 billion), metallurgy ($1.21 billion), construction ($691 million) and automobile ($743 million). Meanwhile, country-wise, high levels of FDI during the period came from Mauritius $6.75 billion, Japan ($1.52 billion), Singapore $1.24 billion, the Netherlands ($1.05 billion) and the UK ($611 million).

According to DIPP, the government is making sustained efforts like including stake holders in policy formation to make the policy the investment regime more attractive and conducive for the investors. Foreign investments are a vital part of India and currently the country requires over $1 trillion by 2017 to overhaul its infrastructure sector such as ports, airports and highways to boost growth.

Apart from increasing the limit to 100 per cent in the single brand retailing, the government has also allowed FDI in multi-brand retail sector. The government has made 30% mandatory sourcing from small and medium enterprises of India for the foreign players in case of FDI in multi-brand retail.

The S&P CNX Nifty touched a high and a low of 5,917.30 and 5,859.55 respectively.

The top gainers on the Nifty were Bharti Airtel was up 2.72%, JP Associates up 2.66%, ICICI Bank up 2.47%, L&T up 2.35% and Jindal Steel up 2.17%.

The top losers on the index were Hindustan Unilever down by 1.64%, Hero MotoCorp down by 0.45%, Infosys down by 0.28%, Grasim down by 0.28% and Tata Motors down by 0.23%.

The European markets were closed for Christmas holidays.

Asian markets extended gains on Wednesday, with most major markets ending higher with investors centering on the hopes of US negotiations to avert a budget crunch looming at the end of the year. Meanwhile, Japanese market went home with green mark as the yen touched its lowest levels against the dollar and euro since 2011, after minutes from the Bank of Japan's November meeting reflected a pacifist tilt and some determination to drive the yen lower. However, Taiwan's market lagged the region ending lower; while bourses in Hong Kong remained closed for holiday.