Equity markets add further ground; Nifty nears 6000 mark

Indian equity markets have added further ground on account of hectic buying activity witnessed in select blue chip stocks. Bourses mainly turbo-drove post Finance Minister P. Chidambaram stated 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. Sentiment at D-street were already sanguine on account of lower than expected December Inflation figures revived hopes of rate-cut from Reserve Bank of India (RBI), in its upcoming monetary policy review which is scheduled on January 29. Further, traders were seen piling some position in Realty, IT and TECk sectors while selling was witnessed in Auto and Health Care sectors.

In the scrip specific movement, Alok Industries was trading in green on reports that the company will sell its subsidiary based in Czech. Karma Industries was locked at upper circuit limit on news that engineering firm Crompton Greaves  has decided to buy compact fluorescent lamps business of the company. Maruti Suzuki, the country’s largest car producer, was trading under pressure after the management scaled down market share guidance. Jaiprakash Power Ventures was trading in red after reporting the disappointing numbers in the third quarter of current financial year 2012-13.

On the global front, all the Asian markets were trading in green barring Straits Times while European markets were trading on a mixed note. Back home, the NSE Nifty was at sniffing distance of 6000 mental mark, while BSE Sensex was comfortably trading above its 19,800 level. The market breadth on BSE was positive in the ratio of 1522:1187 while 136 scrips remain unchanged.

The BSE Sensex is currently trading at 19,833.51 up by 169.87 points or 0.86% after trading in a range of 19,864.86 and 19,689.09. There were 19 stocks advancing against 11 declines on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.85% and Small cap index was up by 0.55%.

The top gaining sectoral indices on the BSE were, Realty up by 3.62%, IT up by 2.36%, TECk up by 2.14%, Consumer Durables up by 1.23% and Capital Goods up by 1.01% while, Auto down by 0.63% and Health Care down by 0.03%, were the only losers on the index.

The top gainers on the Sensex were Infosys up by 2.81%, TCS up by 2.77%, ONGC up by 2.53%, Jindal Steel up by 2.41%, and ICICI Bank up by 1.69%.

On the flip side, Maruti Suzuki was down by 1.89%, Bajaj Auto was down by 1.18%, Cipla was down by 1.08%, Tata Motors was down by 0.82% and Coal India was down by 0.71% were the top losers on the Sensex.

Meanwhile, slowing down to a three year low level, the wholesale price index (WPI), India's main inflation gauge, unexpectedly cooled down to 7.18% (Provisional) for the month of December, 2012 as compared to 7.24% for November and 7.74% during the corresponding month of the previous year. Further, the annual reading for the month of October also was revised lower to 7.32% from earlier of 7.45%.

Re-igniting hopes of rate-cut from Reserve Bank of India (RBI), in its upcoming monetary policy review on January 29, the figures were not only below the consensus estimates of 7.40% figure for the month of December, but were also way below the Reserve Bank of India’s projection of around 8 percent in its October policy review. Build up inflation in the financial year so far was 4.72% compared to a buildup of 5.22% in the corresponding period of the previous year.

As per the government data, manufactured products which carries weight of almost 65% in the index, remained unchanged at its previous month’s level of 148.0 (Provisional). The index for ‘Food Articles’ group declined by 0.4% to 167.1 from 167.7 in the previous month. While, the index for primary articles group, which has a weightage of 20.12% in overall WPI and includes food, non-food and minerals group, declined by 0.4% to 220.0 from 220.8 of the previous month. The index for ‘Food Articles’ group declined by 0.5% to 212.2 from 213.2 in the previous month, while, the index for ‘Non Food Articles’ group rose by 0.8% at 202.9 (Provisional) from 201.3 (Provisional) for the previous month. However, the index for ‘Minerals’ group declined by 1.8% to 340.8 (Provisional) from 347.1 (Provisional) for the previous month.

Indian economy is headed for the weakest full-year growth in a decade, at about 6%, far below the near double-digit pace before the global economic downturn. But despite the slowdown, the Reserve Bank of India (RBI) has been hesitant to lower rates since April last year because of inflation rate hovering near seven percent, worsened by a weak rupee that has added to the cost of fuel imports.

However, continued softening trend in WPI inflation in recent months will open space for monetary easing by the Reserve Bank of India on January 29. RBI's in its upcoming policy review is widely expected to cut the policy repo rate, which has remained unchanged at 8.0 percent since April 2011, by at least 25 basis points.

The S&P CNX Nifty is currently trading at 5,999.30 up by 48.00 points or 0.81% after trading in a range of 6,008.40 and 5,962.15. There were 33 stocks advancing against 17 declines on the index.

The top gainers of the Nifty were DLF up by 6.29%, HCL Tech up by 3.90%, Infosys up by 2.78%, TCS up by 2.73% and ONGC up by 2.62%.

On the flip side, Maruti Suzuki down by 1.73%, Lupin down by 1.52%, Ultratech Cement down by 1.34%, Bajaj Auto down by 1.21% and Cipla down by 1.08%, were the major losers on the index.

Most of the Asian equity indices were trading in the green; Shanghai Composite soared 3.06%, Hang Seng rose 0.64%, Jakarta Composite surged 1.45%, KLSE Composite down 0.02%, KOSPI Composite was up by 0.52% and Taiwan Weighted was up by 0.06%, while Straits Times dropped 0.53%. Japanese Nikkei remained shut for trade today on account of Coming of Age (Adults') Day.

The European markets were trading on a mixed note with; France’s CAC 40 added 0.21%, Germany’s DAX edged higher by 0.09% while the United Kingdom’s FTSE 100 edged lower 0.02%.