Benchmarks close at 24-month high; Sensex just shy 20,000 mark

Buoyed by strong corporate earnings and expectations of a generous rate cut by the Reserve Bank of India (RBI), domestic benchmarks building on previous session’s gains concluded the day’s trade with a gain of over half a percent on Tuesday. Though, markets in the noon deals appeared to be exhausted with their run up rally, the lost momentum was soon restored as both the frontline indices were back on track thanks to spurt in banking counter on account of better than expected third quarter results of two private sector lenders viz. Axis Bank and South Indian Bank, which led Sensex topping the 20,000-mark for the first time since January 7, 2011.  Axis Bank reported 22.22% rise in its net profit at Rs 1347.22 crore for the quarter as compared to Rs 1102.27 crore for the same quarter in the previous year while, South Indian Bank reported 25.44% rise in its net profit at Rs 128.25 crore for the quarter as compared to Rs 102.24 crore for the same quarter in the previous year.

Sensex lost its crucial 20,000 mark as profit booking was witnessed at the end of trade but, both the gauges ended the session at their 24-month high supported by interest rate sensitive realty stocks which rose for the second straight day 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 would bolster expectations that the RBI will shift its attention to supporting economic growth by lowering interest rates at its monetary policy review on January 29, 2013.

However, global cues remained sluggish as European counters traded cautiously in the early deals as a speech by Federal Reserve Chairman Ben Bernanke failed to inspire traders. Moreover, most of the Asian equity indices ended mixed on Tuesday as worries about the US debt ceiling impasse led investors to take profit after a strong recent run. However, mainland Chinese stocks extended their rally on more buying amid hopes for greater foreign participation in the domestic markets, while Japanese shares too advanced after the yen dropped to multiyear lows on Monday.

Back home, market continued to trade jubilantly as sentiments got support from Telecom stocks as scrips like Bharti Airtel, Idea Cellular, etc saw a sudden surge in the late trade on talks of imposition of voice tariff as early as next week. Cement stocks too boosted the sentiment with Ambuja Cement, ACC and UltraTech Cement all registering gains of over 1% on decision to fight back cartelisation case. Shares of cement companies rallied on news of them drawing up plans to question the legality of the cartelisation case when it comes up for hearing before the Competition Appellate Tribunal (COMPAT) on January 29. However, gains remain capped up to certain level after stocks from Sugar space, namely, Shree Renuka Sugars, Bajaj Hindusthan, Balrampur Chini and EID Parry, ended mixed even after the government liberalizing the procedure for exports of pharmaceutical grade and specialty sugar.

The NSE’s 50-share broadly followed index Nifty gained by over thirty points to regain its psychological 6,050 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex rose by over eighty points to finish near its psychological 20,000 mark. However, the broader markets struggled to get traction during the trade and ended the session mixed on Tuesday.

The overall volumes stood at over Rs 1.70 lakh crore, which remained on the lower side as compared to that on Monday. The market breadth remained in favor of declines as there were 1,078 shares on the gaining side against 1,111 shares on the losing side while 842 shares remain unchanged.

Finally, the BSE Sensex gained 80.41 points or 0.40% to settle at 19,986.82, while the S&P CNX Nifty rose by 32.55 points or 0.54% to end at 6,056.60.

The BSE Sensex touched a high and a low of 20,036.82 and 19,881.78, respectively. The BSE Mid-cap index was up by 0.27% and Small-cap index ended lower by 0.06%.

The top gainers on the Sensex were, Bharti Airtel up by 4.81%, ITC up by 1.98%, ICICI Bank up by 1.53%, Tata Power up by 1.51% and Bajaj Auto up by 1.07%, while, Coal India down by 1.54%, Sterlite Industries down by 1.31%, Jindal Steel down by 0.74%, Sun Pharma down 0.66% and Infosys down by 0.62% were the top losers on the index.

The top gainers on the BSE Sectoral space were Realty up by 1.05%, Bankex up by 0.72%, FMCG down 0.59%, TECk up by 0.58%, and Consumer Durables (CD) up by 0.45%, while Metal down 0.30% and IT down 0.23% were top losers on the sectoral space.

Meanwhile, the government in next three weeks will decide on pricing of spectrum that will be sold in the second round of auction beginning March 11. The government is likely to raise Rs 45,000 crore from the spectrum sale that is expected to be completed before March end.

The Supreme Court yesterday allowed mobile phone operators, whose licenses were due to be revoked this week as per an earlier court order, to continue service till February 4. The time was given as the court wanted certain answers from the government on the status and floor price of the coming re-auction of 2G spectrum. However, Department of Telecommunications (DoT) had urged the court to allow companies to operate until the next airwave auction.

Telecom Minister Kabil Sibal, affirmed Apex Court order as “positive” and believes that spectrum pricing issues will be decided before February 4, when the apex court will again hear the matter. “I think it’s a positive sign and I am sure that just as the previous auction process was completed without any problem the new auctions will also be completed within the time-frame and before the end of March,” Sibal said.

However, last time around, about 70 percent of the airwaves went unsold in the November auction that raised Rs 9,410 crore, less than 25 percent of the amount the government was targeting to raise from spectrum sale this fiscal.

The S&P CNX Nifty touched a high and a low of 6,068.50 and 6,018.60 respectively.

The top gainers on the Nifty were Bharti Airtel up by 5.23%, Ambuja Cement up by 4.03%, BPCL up by 3.39%, Axis Bank up by 3.02% and Ultra Tech Cement up by 2.88%.

The top losers of the index were Sesa Goa down by 1.70%, Coal India down by 1.21%, HCL Tech down by 1.16%, Asian Paint down by 0.95% and Reliance Infra down by 0.81%.

The European markets were trading mixed, France’s CAC 40 up by 0.10%, Germany’s DAX down by 0.05% and the United Kingdom’s FTSE 100 up by 0.05%.

Asian markets ended mixed on Tuesday as investors booked some profit after a recent strong recent run, on concerns about the U.S. debt ceiling. Japan’s Nikkei closed higher on the back of the yen's slide the previous day as expectations grew that strong political pressure will prompt the Bank of Japan to deliver bold monetary easing measures. Chinese stocks went home with a green mark on expectation for greater foreign participation in the domestic markets. However, Hong Kong market closed lower, as telecom firms were under pressure, while South Korea's stocks closed in negative territory, weighed down by foreign investors, who extended their selling streak to the fourth consecutive session.