Equity markets continue to trade in fine fettle; Sensex holds 19400 psychological level

Indian equity markets continue to trade in fine fettle thanks to sustained buying by funds and retail investors on account of revival of global risk sentiment, with U.S. lawmakers launched a last-chance round of budget talks to prevent the world's largest oil consumer from slipping back into recession. Massive gains of stocks from Oil & Gas, Information Technology and Public Sector Undertaking counters also fuelled the rally at D-street.

Oil & gas stocks enticed traction on Petroleum Ministry's proposal to gradually raise diesel prices by Re 1/litre every month over a 10-month period. On the other hand, Stocks from rate sensitive Realty and Bankex counter were down and out on profit-booking. Additionally, Metal stocks rose as LMEX, a gauge of six metals traded on the London Metal Exchange gained 1% on Thursday, 27 December 2012. After kick starting the new F&O series on positive note, 30 share index, Sensex, was trading above 19400 level, with gains of close to half a percent, while 50 share index, Nifty, was trading sub 5900 bastion. Meanwhile, Broader indices, despite trimming some of their gains, were trading in decent shade of green.

On the global front, Asian stock markets were trading sanguine on Friday with Japanese shares touching a fresh 2012 high for a second straight session amid persistent weakness in the yen. The upbeat market sentiment in the region eclipsed on comments from U.S. Senate Majority Leader Harry Reid on Thursday that there might not be sufficient time to meet the January 1 deadline to avert the fiscal cliff. The House of Representatives will meet on Sunday in a last-ditch effort to hash out a deal. Additionally, European shares are set for a positive open, tracking positive Asian shares on expectations of monetary easing in Japan and also helped by guarded optimism over the 'fiscal cliff'.

Closer home, the BSE Sensex is currently trading at 19416.06, up by 92.26 points or 0.48% after trading in a range of 19445.04 and 19346.07. There were 21 stocks advancing against 9 declines on the index. The overall market breadth on BSE is in the favour of advances which have thumped declines in the ratio of 1467:1054, while 143 shares remained unchanged.

The broader indices were trading in green; the BSE Mid cap and Small cap index was trading up by 0.58% and 0.39% respectively.

The top gaining sectoral indices on the BSE were, Oil & Gas up by 2.10%, IT up by 0.90%, PSU up by 0.87%, TECk up by 0.75% and Capital Goods up by 0.68% while, Bankex down by 0.20% and Realty down by 0.06% were the losers on the sectoral space.

The top gainers on the Sensex were ONGC up by 2.78%, Reliance up by 2.04%, Maruti Suzuki up by 1.58%, Sterlite Industries up by 1.53% and Hindalco Industries up by 1.44%.

On the flip side, Coal India down by 0.66%, SBI down by 0.58%, M&M down by 0.47%, Jindal Steel down by 0.45% and HDFC Bank down by 0.40% were the top losers on the Sensex.

Meanwhile, inaugurating the 57th meeting of National Development Council (NDC), Prime Minister Manmohan Singh hinted at tough decisions such as raising energy prices and cut in subsidies to achieve the 8 per cent growth target in the 12th Five-Year Plan. The NDC, which comprises Cabinet Ministers and state Chief Ministers, meeting was held to approve the 12th Plan (2012-17) document.

The Planning Commission for the second time proposed reduction in the average annual growth target for the 12th Plan from 9 per cent to 8.2 per cent and now to 8 per cent. According to Singh, “Coal, petroleum products and natural gas are all priced below international prices and also electricity is effectively underpriced, especially for some consumers; immediate adjustment of prices to close the gap is not feasible, but some phased price adjustment is necessary. Further, PM added that Central Government and the States must work together to create awareness in the public that we must limit the extent of energy subsidies.

Talking about overall subsidies, the Prime Minister said that some subsidies are a normal part of any socially just system, but subsidies should be well designed and effectively targeted and the total volume must be kept within limit of fiscal sustainability. However, limiting subsidies is one of the efforts to make available resources for more productive usages. Explaining this, Singh focused on generating revenues to finance programmes of inclusiveness.

Singh added that there is also a need to bring down the demand of petroleum products as country is a net importer of this critical energy resource. India imports over 75 per cent of its crude oil requirement.  The S&P CNX Nifty is currently trading at 5,898.40, up by 28.30 points or 0.48% after trading in a range of 5,909.75 and 5,881.80. There were 37 stocks advancing against 13 declines on the index.

The top gainers of the Nifty were BPCL up by 3.73%, ONGC up by 2.95%, Reliance up by 2.15%, Ambuja Cement up by 1.73% and Maruti Suzuki up by 1.60%.

On the flip side, HDFC Bank down by 0.60%, Axis Bank down by 0.52%, DLF down by 0.49%, M&M down by 0.47% and SBI down by 0.46% were the major losers on the index.

Most Asian equity indices were trading in the green; Shanghai Composite surged 1.18%, Hang Seng added 0.11%, Jakarta Composite surged 0.65%, KLSE Composite jumped 0.38%, Nikkei 225 soared 0.70%, KOSPI Composite increased 0.49%, Taiwan Weighted was up by 0.67%, and Straits Times rose 0.22%.