Benchmarks extend jubilation; Sensex re-conquer 20,000 level

Extending their previous session’s jubilation, Indian equity benchmarks snapped the day’s trade in the positive trajectory with a gain of over quarter a percent. Though, benchmarks retreated from its two-year highs on Friday, but ended the session above their psychological 20,000 (Sensex) and 6,050 (Nifty) levels, led by buying activity in oil and gas counters. Shares of companies from oil & gas space moved higher after the oil marketing companies hiked diesel prices last night after getting nod from the government to hike prices from time to time. The sentiments got buttressed after PSU sector stocks rallied after government authorized 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. The positive momentum of the bourses was also rendered by banking stocks, which beefed up gains on rate cut expectation. Hopes were that government’s decision of partially deregulating diesel prices, a move towards fiscal consolidation, may help ease the apparent hawkish stance of RBI, which puts fiscal consolidation as a pre-condition for rate cuts.

Besides, positive global cues too aided the sentiments as European counters edged higher in early deals as miners received support from data out of China which revealed growth in the resource-hungry country quickened at the end of last year. Moreover, Asian equity indices too ended the session mostly in the green supported by better than expected China’s fourth quarter growth data. The nation’s Q4 GDP showed a 7.9% on-year rise compared with expectations for a 7.8% rise. The data release also included industrial production figures, which increased by 10.3% in December.

Back home, some support came in from CDMA operators as scrips 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. Interest rate sensitive realty stocks too extended their recent gains as December’s softer headline inflation and decline in exports in December 2012 would bolster expectations that the Reserve Bank of India will shift its attention to supporting economic growth by lowering interest rates at its monetary policy review on January 29, 2013. However, profit-booking in Information Technology (IT), Auto and Health Care (HC) space prevented the further up-tick of the bourses. Appreciation of Indian currency to two and half month high, was working against IT counter.

The NSE’s 50-share broadly followed index Nifty gained by above twenty five points to end comfortably above its psychological 6,050 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex rose by seventy five points to finish over its psychological 20,000 mark. However, the broader markets struggled to get traction during the trade and ended the session with a cut of about half a percent.

The market breadth remained in favor of declines as there were 971 shares on the gaining side against 1,331 shares on the losing side while 769 shares remain unchanged.

Finally, the BSE Sensex gained 75.01 points or 0.38% to settle at 20,039.04, while the S&P CNX Nifty rose by 25.20 points or 0.42% to end at 6,064.40.

The BSE Sensex touched a high and a low of 20,126.55 and 19,990.62, respectively. The BSE Mid cap and Small cap indices decline 0.23% and 0.52% respectively.

The top gainers on the Sensex were, ONGC up by 7.31%, NTPC up by 4.59%, Maruti Suzuki up by 3.26%, Gail India up by 2.10% and HDFC up by 1.56%, while, Wipro down by 7.88%, Hero MotoCorp down by 2.86%, Dr Reddys Lab down by 2.60%, Hindustan Unilever down 2.10% and Sterlite Industries down by 2.03% were the top losers on the index.

The top gainers on the BSE Sectoral space were Oil & Gas up 3.09%, PSU up 2.77%, Power up 1.44%, Realty up 0.86% and Capital Goods up 0.21%, while IT down 1.13%, TECk down 1.13%, Auto down 0.73%, Metal down 0.61% and Consumer Durables down 0.59% were top losers on the sectoral space.

Meanwhile, barely hours after petroleum minister M Veerappa Moily permitted oil marketing companies to set diesel prices, the retailers grabbed the opportunity. Oil Marketing Companies (OMCs) hiked diesel price by 45 paise excluding taxes effective January 18, 2013. While the base hike in diesel price being 45 paise, it would lead to an increase of 51 paise in Delhi after including local VAT. New rate for diesel now stand at Rs 47.66 a litre.

However, in a bit of relief to the common-man, petrol prices, which were only earlier this week hiked by 35 paise, will come down by 25 paise per litre. Meanwhile, the base rate cut on petrol was 25 paise; it translates into a reduction of 29.75 paise in price in Delhi to Rs 67.27 a litre.

In a bold reform, the government has planned similar monthly hikes in future to cut record subsidies. This was coupled with a decision to charge bulk consumers like defence, railways and state transport undertakings market price which is almost Rs 10 a litre more than retail selling rate, to save an estimated Rs 12,907 crore in annual subsidy. Although price of petrol is purely market-determined, diesel still remains under government control, even though oil firms now have the freedom to make little changes in the price.

According to Indian Oil, the hike in diesel price will lead to reduction in under-recoveries by Rs 3,400 crore till March 2013. Meanwhile, based on the current prices and volumes, the decrease in the under-recoveries on annual basis on HSD (diesel) shall be approximately Rs 15,000 crore for OMCs as a whole.

However, as a sweetener to the bitter pill, besides slender petrol price reduction, the Cabinet Committee on Political Affairs chaired by Prime Minister Manmohan Singh bowing to public pressure raised the cap on subsidised LPG to nine cylinders per household from six.

The S&P CNX Nifty touched a high and a low of 6,083.40 and 6,048.30 respectively.

The top gainers on the Nifty were BPCL up by 10.44%, ONGC up by 7.31%, NTPC up by 4.90%, Maruti Suzuki up by 3.73% and Gail up by 2.56%.

The top losers of the index were Wipro down by 8.06%, Dr Reddy's Laboratories down by 2.68%, Hero MotoCorp down by 2.62%, Jindal Steel down by 2.34% and Hindustan Unilever down by 2.11%.

The European markets were trading mixed, France’s CAC 40 up by 0.31% and the United Kingdom’s FTSE 100 up by 0.44% while Germany’s DAX down by 0.06%.

Most of the Asian equity indices ended the session in the green terrain on Friday on the back encouraging data from the China. The nations’ economy grew 7.9 percent in the fourth quarter of 2012 from a year earlier, strengthening from 7.4 percent in the third quarter -- the lowest since the depths of the global financial crisis. Other Chinese data released showed industrial output grew 10.3 percent in December from a year ago, above an expected 10.1 percent increase, and retail sales in December rose 15.2 percent on the year ago, also topping an estimated 14.9 percent rise.  Meanwhile, Japanese benchmark Nikkei surged by around three percent for its biggest daily gain in 22 months as the yen resumed its downtrend, improving earnings prospects for Japanese exporters.