Benchmarks end at 2-year closing highs; Nifty surpasses 6,000

Extending their gains for third straight day, Indian equity benchmarks snapped the trade at their two-year closing highs on Thursday in a range-bound session. Though, the gains remained marginal as investors, throughout the trade, opted for profit booking at higher levels. Nevertheless, markets managed to keep their head above water led by oil & gas sector which remained the top gainer, as the Rangarajan panel proposed a new gas pricing formula and if the recommendations of the Panel find their way then the domestically produced gas price in the country would hover around $7-8/mmBtu at the current rate. Investors confidence also got some boost from statement of PM’s Economic Advisor Council chairman C Rangarajan, that the current account deficit in 2012-13 is likely to be in the region of the last financial year's level of 4.2% of the GDP and are not a thing to worry as capital inflows through FDI, FII, external commercial borrowings or NRI deposits were adequate to cover the gap.

Supportive cues from Asian markets also provided the much needed support to local markets after the US Congress backed a deal to avert a fiscal cliff of drastic tax rises and spending cuts in an upbeat start to the year for regional markets. Investors’ morale got buttressed after China’s official purchasing managers’ index (PMI) for the non-manufacturing sector rose to a four-month high of 56.1 in December from 55.6 in November, adding to signs of a revival in the world’s second-largest economy. However, disappointing cues from European market capped gains of Indian markets up to certain extent as investors resorted to profit booking following the decline in European counters.

Back home, sentiments were strongly supported by technology and software space, which helped frontline indices to end above their crucial 6,000 (Nifty) and 19,750 (Sensex) levels. Stocks like Infosys, TCS, Wipro and HCL Technologies edged higher in the trade on expectations of better-than-expected third-quarter earnings for IT companies when they report results starting later this month. Some support came in from metal counters as stocks like Tata Steel, SAIL, Sterlite Industries, Hindalco and Sesa Goa surged as LMEX, a gauge of six metals traded on the London Metal Exchange, jumped 3.68% to 3,581.70 on January 2, 2013.

Meanwhile, shares of gold loan firms like Manappuram Finance, Muthoot Finance and Muthoot Capital Services edged higher after the Reserve Bank of India report on January 2, 2013, proposed increasing the loan-to-value ratio on gold loans to 75% from 60% currently. Shares of jewellery retailers’ viz. Shree Ganesh Jewellery House, PC Jeweller, Gitanjali Gems, Rajesh Exports and Tara Jewels, extended Wednesday’s rally triggered by expectations of pick up in jewellery sales during the ongoing wedding season.

The NSE’s 50-share broadly followed index Nifty rose by sixteen points to end above the psychological 6,000 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex rose by fifty points to finish above the psychological 19,750 mark. Moreover, broader markets outperformed benchmarks and ended the session with a gain of over half a percent.

The overall volumes stood above Rs 1.02 lakh crore, which remained on the lower side as compared to that on Wednesday. The market breadth remained in favor of advances as there were 1,713 shares on the gaining side against 1,262 shares on the losing side while 126 shares remain unchanged.

Finally, the BSE Sensex gained 50.54 points or 0.26% to settle at 19,764.78, while the S&P CNX Nifty rose by 16.25 points or 0.27% to end at 6,009.50.

The BSE Sensex touched a high and a low of 19,786.30 and 19,693.29, respectively. The BSE Mid-cap index was up by 0.77% and Small-cap index ended higher by 0.93%.

The top gainers on the Sensex were, Dr Reddys Lab up by 2.35%, Bharti Airtel up by 1.99%, ONGC up by 1.95%, Reliance up by 1.51% and Infosys up by 1.24%, while, Tata Power down by 1.39%, Sun Pharma down by 1.09%, Maruti Suzuki up 0.95%, Hero MotoCorp up 0.87% and HDFC Bank down by 0.74% were the top losers on the index.

The top gainers on the BSE Sectoral space were Oil & Gas up by 1.37%, TECk up by 1.32%, IT up by 1.10%, Realty up by 1.09% and PSU was up by 0.48%, while FMCG down 0.50%, Consumer Durables (CD) down 0.38%, Capital Goods (CG) down 0.38%, Bankex down 0.09% and Auto down 0.09% were top losers on the sectoral space.

Meanwhile, as per the Prime Minister's Economic Advisor Council Chairman C Rangarajan, current account deficit is likely to be around the last year's level of 4.2 percent of the GDP for 2012-13 financial year. Expressing view on the contraction of current account deficit in second half of current fiscal, Rangarajan said, 'the export sector will be much better in the second half of this fiscal than the first half'.

Further, Rangarajan believes for the year as whole capital inflows will be adequate to cover CAD of the current fiscal year. In the past capital inflows though FDI, FII, external commercial borrowings or NRI deposits have been adequate to cover the current account deficit. On the rupee movement, he said that the mismatch between capital flows and current account deficit added pressure on the currency and so far this fiscal, capital inflow has remained adequate therefore, the downward pressure on the rupee is unlikely.

India’s current account deficit (CAD) hit an all time high of 5.4% of gross domestic product or $22.3 billion in the July-September period of 2012, mainly on the back of declining exports. The CAD represents the difference between exports and imports after considering cash remittances and payment. CAD was $18.9 billion in the same period a year ago and $16.4 in the first quarter of 2012.

The S&P CNX Nifty touched a high and a low of 6,017.00 and 5,986.55 respectively.

The top gainers on the Nifty were Cairn up by 2.44%, Dr Reddy’s up by 2.36%, Bharti Airtel up by 2.29%, ONGC up by 1.97% and Infosys up by 1.63%.

The top losers of the index were Tata Power down by 1.56%, PNB down by 1.27%, Sun Pharma down by 1.20%, Lupin down by 1.20% and Hero MotoCorp down by 1.12%.

The European markets were trading in red, France’s CAC 40 down by 0.56%, Germany’s DAX down by 0.27% and the United Kingdom’s FTSE 100 down by 0.15%.

Asian markets ended mostly higher on Thursday after US lawmakers agreed a deal to avert the fiscal cliff, but worries about upcoming fights in Washington weighted the sentiments. Investors were hopeful for the steady economic revival in China, on the data showing that services sector expanded in December. South Korean market closed lower as car makers and other exporters fell on concerns that the firming local currency will sap their profits. Meanwhile, Hong Kong’s market closed in green, as last year's growth-sensitive laggards leading gains on Thursday.

Markets in Japan and China remained shut for public holidays and will reopen on Friday.