Re-energized bulls take benchmarks to two-year highs; Nifty re-conquers 6,000 levels

Boisterous benchmarks showcased an enthusiastic performance on Monday by rallying close to one and a half percentage points and breaking many psychological levels in their northbound journey. There appeared not even an iota of profit booking throughout the session as the benchmarks fervently gained strength to strength as investors continued their hunt for fundamentally strong but oversold stocks. Frontline indices managed to finish the session around highest levels, settling above 6,000 (Nifty) and 19,900 (Sensex) levels as investors went for hefty across the board buying. Sentiments got bolstered on hopes for a interest rates cut by RBI in this month to boost economy that is set to post its slowest growth in a decade, as the wholesale price index (WPI), India’s main inflation gauge, unexpectedly eased at 7.18 percent for the month of December as compared to 7.24 percent (Provisional) for the previous month and 7.74 percent during the corresponding month of the previous year.

Investors shrugged off ugly CPI Inflation numbers which rose to 10.56% in December, faster than the 9.9 percent gain seen in November. Bourses mainly turbo-drove in last leg of trade post Finance Minister P Chidambaram’s statement that the government has deferred implementation of controversial rules on tax avoidance to April, 2016, a move which is likely to ease foreign investor sentiments, who are opposed to the controversial rule. The finance ministry had earlier said that it would implement GAAR (General Anti-Avoidance Rules) from April, 2014.

Global cues too supported the sentiments as European counters traded jubilantly in early deals after the region’s improving economic growth outlook and declining prospects of further monetary easing bolstered demand. Moreover, most of the Asian equity indices ended the session in the green. Chinese benchmark surged by over 3 percent after a regulator said the country will grant foreigners greater access to its stock markets, with financials fronting the rally. Hang Seng, Nikkei and Kospi also went up substantially.

Back home, rally in software and technology stocks mainly bolstered the sentiments as stocks like, Infosys, TCS, HCL Tech and Tech Mahindra extended their previous session’s gains after sector bellwether Infosys on January 11, 2013 surprised the street with better-than-expected results for the third quarter ended December 2012 (Q3) and also raised its full year guidance. Support also came in from interest rate sensitive realty sector which remained the top gainer among the sectoral space as December’s softer headline inflation print along with recent data showing contraction in industrial production in November 2012 and decline in exports in December 2012 bolstered expectations that Reserve Bank of India will shift its attention to supporting economic growth by lowering interest rates at its monetary policy review on 29 January 2013.

The NSE’s 50-share broadly followed index Nifty gained by over seventy points to regain its psychological 6,000 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex rose by over two hundred and forty points to finish above its psychological 19,900 mark. The broader markets also traded in-line with benchmarks and ended the session with a gain of about a percent. 

The overall volumes stood at over Rs 1.90 lakh crore, which remained on the higher side as compared to that on Friday. The market breadth remained in favor of advances as there were 1,394 shares on the gaining side against 878 shares on the losing side while 735 shares remain unchanged.

Finally, the BSE Sensex surged 242.77 points or 1.23% to settle at 19906.41, while the S&P CNX Nifty climbed by 72.75 points or 1.22% to end at 6,024.05.

The BSE Sensex touched a high and a low of 19948.63 and 19689.09, respectively. The BSE Mid-cap index was up by 1.20% and Small-cap index ended higher by 0.74%.

The top gainers on the Sensex were, ONGC up by 4.28%, Infosys up by 3.49%, Jindal Steel up by 3.34%, TCS up by 2.14% and HDFC up by 1.93%, while, Maruti Suzuki down by 1.72%, Cipla down by 1.23%, Bajaj Auto down by 1.14%, Tata Motors down 0.65% and M&M down by 0.64% were the top losers on the index.

The top gainers on the BSE Sectoral space were Realty up by 5.01%, IT up by 2.57%, TECk down 2.37%, Consumer Durables (CD) up by 1.80%, and Oil & Gas up by 1.58%, while Auto down 0.46% and Health Care (HC) down 0.06% were top losers on the sectoral space.

Meanwhile, giving relief to the markets and investors, Finance minister P Chidambaram has said the GAAR (General Anti-Avoidance Rules), the controversial law against tax avoidance through foreign investments, has been deferred to April 2016. Earlier, the finance ministry had deferred GAAR implementation to April, 2014.

While, the government has proposed the GAAR in 2012-13 budget to prevent tax evasion and evoked sharp reactions from foreign as well as domestic investors who feared that unbridled powers to taxmen would result in harassment of investors. Amendments to GAAR are set to be finalized according to the Chapter 10A of the Income Tax Act.

The S&P CNX Nifty touched a high and a low of 6,036.90 and 5,962.15 respectively.

The top gainers on the Nifty were DLF up by 7.75%, ONGC up by 4.84%, HCL Tech up by 4.70%, Jindal Steel up by 3.70% and Infosys up by 3.61%.

The top losers of the index were Lupin down by 1.65%, Bajaj Auto down by 1.41%, Maruti Suzuki down by 1.38%, Cairn down by 1.20% and Cipla down by 1.19%.

The European markets were trading in green, France’s CAC 40 up by 0.58%, Germany’s DAX up by 0.72% and the United Kingdom’s FTSE 100 up by 0.11%.

Asian markets mostly ended higher on Monday, as Chinese stocks rallied considerably after head of the securities regulator commented that the country may soon relax restrictions on foreign equities investment. However, Singapore market closed lower as stocks of property developers fell after the government introduced new cooling measures. South Korean stocks went home with green mark, reversing earlier losses, with institutional and retail investors buying shares. In Japan, Bank of Japan Governor Masaaki Shirakawa is to give a speech on Tuesday, which could have an impact on the yen if he suggests that policy makers intend to raise their inflation target in light of Prime Minister Shinzo Abe's continued calls for a clear 2.0% inflation target.

Japanese markets were closed for a public holiday.