Benchmarks extend euphoria for third straight day; Sensex surpasses 20,100 level

Benchmark equity indices, protracting previous two sessions’ euphoria, fervently went on gaining ground, to conclude with modest gains of over quarter a percent. The frontline gauges gained for the fifth out of six trading session mainly led by shares in state-run oil firms, which surged for a third day on Monday, with BPCL and HPCL extending their gains after the government’s decision to allow higher diesel prices. The rally was also led by buying in index-heavyweight Reliance Industries (RIL) which hit fresh 52-week high after better-than-expected results in the fiscal third quarter. The company reported 23.92% rise in its net profit at Rs 5502.00 crore for the quarter under review as compared to Rs 4440.00 crore for the same quarter in the previous year.

However, global cues remained mixed as European shares inched towards two-year highs and German Bund futures dipped, as a political attempt to break a budget impasse in the United States revived appetite for shares and dented craving for safe-haven assets. While, Asian markets ended mostly lower with Japanese shares sliding back from last week’s multi-year peaks as a two-day meeting at the Bank of Japan got underway.

Back home, retaining India’s credit rating at the existing level, global agency Moody’s cautioned that a high fiscal deficit could pull down the growth in the coming years. Moody’s said that ‘large government deficits and debt ratios as well as supply constraints in the form of infrastructure, policy and administrative inefficiencies constrain the sovereign credit profile’. However, on the positive side, the global rating agency reaffirmed sovereign credit rating of India at Baa3, which indicates investment grade, with a stable outlook.

Some strength also came in from FMCG pack as stocks like Nestle India, ITC, Colgate-Palmolive (India), Britannia Industries, Marico and Godrej Consumer edged higher after the government said sowing of Rabi or winter crops, so far this year has exceeded the area sown by this time last year. Rally in power stocks too aided the sentiments as stocks like BHEL, Adani Power and JSW Energy surged on hopes that the government may approve setting up a coal regulator in its nine-member ministerial panel meeting headed by Finance Minister P Chidambaram.

However, the gains remain capped as selling witnessed in auto counters and stocks like Tata Motors, Mahindra & Mahindra and Ashok Leyland declined on concerns that higher diesel prices will hit sales adversely as the government on January 17, 2013 allowed PSU OMCs to change diesel prices by a small margin from time to time. Stocks of India’s cement giants too remained under pressure.

The NSE’s 50-share broadly followed index Nifty gained by about twenty five points to end comfortably above its psychological 6,050 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex rose by over fifty points to finish over its psychological 20,100 mark. However, the broader markets struggled to get traction during the trade and ended the session on a mixed note.

The overall volumes stood above Rs 1.74 lakh crore, which remained on the higher side as compared to that on Friday. The market breadth remained in favor of declines as there were 1,371 shares on the gaining side against 1,510 shares on the losing side while 140 shares remain unchanged.

Finally, the BSE Sensex gained 62.78 points or 0.31% to settle at 20,101.82, while the S&P CNX Nifty rose by 17.90 points or 0.30% to end at 6,082.30.

The BSE Sensex touched a high and a low of 20,163.38 and 20,056.46, respectively. The BSE Mid cap index declined 0.14% and Small cap index up by 0.02% respectively.

The top gainers on the Sensex were, Reliance up by 2.35%, BHEL up by 2.25%, L&T up by 2.00%, Maruti Suzuki up by 1.87% and Bharti Airtel up by 1.82%, while, Sun Pharma down by 1.86%, Tata Motors down by 1.55%, NTPC down by 1.46%, TCS down 1.45% and Cipla down by 1.38% were the top losers on the index.

The top gainers on the BSE Sectoral space were Capital Goods up 1.49%, Oil & Gas up 1.31%, FMCG up 1.06%, Power up 0.75% and TECk up 0.29%, while Realty down 1.31%, Health Care down 0.41%, Auto down 0.31%, Bankex down 0.21% and PSU down 0.15% were top losers on the sectoral space.

Meanwhile, the government is expected to get over Rs 9,497 crore from the sale of CDMA band spectrum in the second round of auctions in March and one-time fee on airwaves held by existing operators. If the entire CDMA spectrum auction is sold at the revised starting price, then the estimated auction proceeds will be Rs 9,497.15 crore. It includes Rs 6,463.95 crore from auction directly and Rs 3,033.20 crore from one-time spectrum fee.

The bidders of the CDMA spectrum are likely to be given option of deferred payment, as was recommended by Telecom Regulatory Authority of India, where they will have an option to pay 25 per cent of the bid amount. Pursuant to which, the government will be able to get at least Rs 1,615 crore from sale of spectrum in the auction.

Earlier, the Union Cabinet on January 17 approved a 50 per cent reduction in the reserve price of CDMA spectrum for the auction to be scheduled in March. In the previous auction, reserve price for CDMA spectrum was 11 times higher than the amount telecom operators paid in 2008, which did not attract bidders due to high reserve price. The decision follows a recommendation by the Empowered Group of Ministers (EGoM) which suggested a 50 per cent cut in the reserve price of 800 MHz band.

Meanwhile, the one-time spectrum fee will be levied on existing players including Reliance Communications, Tata Teleservices, Sistema Shyam and both state-owned telecom operators BSNL and MTNL with effect from January 1, 2013 for rest of their licence period.

The S&P CNX Nifty touched a high and a low of 6,094.35 and 6,065.10 respectively.

The top gainers on the Nifty were Reliance Infra up by 3.99%, Bharti Airtel up by 2.36%, BHEL up by 2.23%, Relinace up by 2.19% and L&T up by 2.00%.

The top losers of the index were DLF down by 2.53%, Sun Pharma down by 1.69%, HDFC down by 1.67%, TCS down by 1.50% and Tata Motors down by 1.40%.

The European markets were trading in green, France’s CAC 40 up by 0.27%, United Kingdom’s FTSE 100 up by 0.56% and Germany’s DAX up by 0.37%.

Most Asian markets ended lower on Monday, after touching multi month’s highs in last week, amid concerns whether political leaders in Washington will be able to reach a deal on the government's debt limit. Japan's Nikkei closed in negative territory ahead of Bank of Japan’s policy meeting and on profit-taking after the index posted its biggest one-day point and percentage gain since March 2011 on Friday. Moreover, China's Shanghai Composite went home with red mark as investors consolidated early session’s gains which came on the back of slightly better-than-expected fourth-quarter gross domestic product growth figures.