Benchmarks resume northward journey; OMCs gain bolster sentiments

Indian equity markets resumed their northward journey after a day of halt as investors piled up positions in risky assets on hopes of growth recovery in Asia’s third-biggest economy after government allowed the oil companies to increase the diesel prices by a ‘small quantum’ periodically. Though, domestic bourses opened on a flat note amid lethargic global setup but soon, gaining steam traded strength to strength as investors continued hunting fundamentally strong but oversold bargains. Frontline indices tested the psychological 6,050 (Nifty) and 20,000 (Sensex) levels in the session and met with stern resistance around those levels but managed to finish the session with a gain of over half a percent and settled comfortably above 6,000 (Nifty) and 19,050 (Sensex) levels as investors took to hefty across the board buying. Comments by Finance Minister P Chidambaram on January 16, 2013, that the immediate priority of the government is to keep the investment cycle going also boosted sentiments.

Sentiments got buttressed after PSU oil marketing companies such as BPCL, HPCL and IOC rallied after government allowed oil refiners to partially hike diesel prices in a phased manner. This will help bring down the oil subsidy burden of OMCs. While rally in software counters too supported the sentiments after slew of upbeat quarterly results by sector heavy-weights raised hopes of growth recovery in the beleaguered technology sector. HCL Technologies registered rise of 46.71% in its net profit at Rs 724.72 crore for the quarter ended December 31, 2012 as compared to Rs 493.97 crore for the same quarter in the previous year. Total income increased by 26.60% at Rs 2806.14 crore for quarter under review as compared to Rs 2216.53 crore for the quarter ended December 31, 2011.

However, global cues remained choppy as European markets made a soft start as concerns grew over the outlook for growth and corporate earnings; while oil prices gained support after Islamist militants attacked an Algerian gas field. Asian counters too shut shop mostly in the red amid worries about the global growth outlook as investors remained cautious ahead of Chinese data on Jan 18.

Back home, some strength came in from PSU sector, which rose about one and a half percent after government authorised the National Investment Fund (NIF) to buy shares of public sector enterprises, including banks and insurance companies. The NIF will also be used to re-capitalize PSU banks and public sector insurance companies. Gains in stocks of CDMA operators too aided the sentiments as scrip like Reliance Communication and Tata Teleservices (Maharashtra) edged higher after the Union Cabinet approved reduction in reserve price for the auction of spectrum for CDMA by 50% from the previous reserve price.

The NSE’s 50-share broadly followed index Nifty gained by about forty points to end comfortably above its psychological 6,000 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex rose by one hundred and fifty points to finish over its psychological 19,950 mark. However, the broader markets struggled to get traction during the trade and ended the session mixed on Thursday.

The market breadth remained in favor of declines as there were 1,101 shares on the gaining side against 1,137 shares on the losing side while 782 shares remain unchanged.

Finally, the BSE Sensex gained 146.40 points or 0.74% to settle at 19,964.03, while the S&P CNX Nifty rose by 37.35 points or 0.62% to end at 6,039.20.

The BSE Sensex touched a high and a low of 20,005.98 and 19,783.41, respectively. The BSE Mid-cap index was up by 0.25% and Small-cap index ended lower by 0.03%.

The top gainers on the Sensex were, ONGC up by 3.66%, Reliance up by 3.40%, Bharti Airtel up by 3.36%, Tata Motors up by 2.67% and Wipro up by 2.63%, while, Cipla down by 2.09%, ICICI Bank down by 1.39%, Bajaj Auto down by 1.14%, Hindalco down 0.93% and Hero MotoCorp down by 0.92% were the top losers on the index.

The top gainers on the BSE Sectoral space were Oil & Gas up 3.11%, Realty up 2.05%, TECk up 1.60%, PSU up 1.41% and IT up 1.36%, while Capital Goods down 0.62% and Health Care down 0.15% were top losers on the sectoral space.

Meanwhile, the Cabinet has approved the decision to raise cap on subsidized LPG cylinders from six to nine, effective from April, 2013. The cabinet also allowed the oil companies to increase the diesel prices by a ‘small quantum’ periodically. For the current financial year, consumers will get a quota of five subsidized cylinders between September 2012 and March 2013 and from April 1, 2013, they will be entitled to nine cylinders per annum.

After the cabinet meeting, Petroleum Minister Veerappa Moily said, the decision to increase the number of subsidised liquefied petroleum gas (LPG) cylinder to each household comes immediately into effect. Further, petroleum minister added that oil companies have been permitted to raise diesel prices by a small quantum periodically till such time that they are able to cover present loss of Rs 9.60 per litre on the fuel. However, no decision was taken about hiking price of kerosene and LPG cylinder. 

The S&P CNX Nifty touched a high and a low of 6,053.20 and 5,988.10 respectively.

The top gainers on the Nifty were HCL Tech up by 4.48%, BPCL up by 3.68%, DLF up by 3.40%, ONGC up by 3.21% and Reliance up by 3.09%.

The top losers of the index were Cipla down by 2.02%, Reliance Infra down by 1.95%, ACC down by 1.77%, HDFC down by 1.62% and Ranbaxy down by 1.61%.

The European markets were trading mixed, France’s CAC 40 up by 0.44%, Germany’s DAX down by 0.33% and the United Kingdom’s FTSE 100 down by 0.21%.

Asian markets ended mostly lower after a volatile session on Thursday, with mainland Chinese market extending losses from recent highs as investors took some profit ahead of key economic growth data due on Friday. Hong Kong market also closed lower, weighted down by property stocks. However, Japan's Nikkei went home with green mark after yesterday's corrective plunge. The Bank of Japan's policy meeting next week will be the major trigger for the market, as it will give investors a chance to see how much the central bank aligns its policy with the new government's monetary policy goals.