Buying in late hour help benchmarks to keep their head above water

Key domestic benchmark witnessed consolidation with both the frontline indices managed to keep their head above water on Wednesday. Buying which emerged in late trade, largely supported by recovery in European markets after a sluggish start, mainly acted as saving grace for domestic equity markets and helped them to re-conquer crucial 6,050 (Nifty) and 20,000 (Sensex) levels. Earlier, market made a positive start after Finance Minister P Chidambaram encouraged foreign investors to put their money in India, promising a conducive environment, besides a stable tax regime, lower fiscal deficit and high economic growth. Chidambaram’s efforts to present India as an investor-friendly country has come a little over a month before the Union Budget and a few days after Moody’s Investors Service reaffirmed a stable outlook on India’s sovereign ratings.

Sentiments took u-turn with both the indices entering into the red in noon trade as profit booking emerged at higher levels amid sluggish opening in European counters. But, hefty buying in dying hours helped the gauges to snap the session in the green. The recovery was seen on the back of revival in European markets triggered by upbeat corporate earnings and a better outlook for the global economy. Strong investors confidence data from Germany and improving economic numbers this month from the world’s top two economies, the US and China, also cheered investors. Asian markets ended mixed with Nikkei falling for a third straight day, reaching a three-week closing low on Wednesday after the Bank of Japan’s easing steps fell short of expectations, triggering profit-taking in shares bought in anticipation of the central bank’s decision.

Back home, stocks from banking sector remained on the buyers’ radar on revived hopes of rate cut on reports suggesting Finance Minister P Chidambaram insisting Reserve Bank of India (RBI) for striking a balance between needs of pushing growth and controlling inflation. RBI is slated to announce its third quarter review of monetary policy on January 29 amid demands by the industry that it should lower interest rates to boost industrial output, which contracted by 0.1 per cent in November.

Some strength also came in from telecom sector as stocks like Bharti Airtel, Idea Cellular and Reliance Communication edged higher after leading telecom operators, including Bharti Airtel, increased rates of special tariff vouchers and reduced free minutes usage, barely a month after hiking the price of 2G data plans. Airtel has reduced free minutes by 10 to 25% and has increased price of SPVs in the range of Rs 5 to Rs 15 while, another operator Idea Cellular has also withdrawn some of the promotional offers in various circles.

However, gains remain capped as public sector oil marketing companies like BPCL, HPCL and IOC lost ground as US crude oil futures traded near the highest level in four months on speculation that the United States will lift its debt limit. Fall in Auto sector too dampened the sentiments after stocks of Tata Motors, Ashok Leyland and Mahindra & Mahindra edged lower 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.

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

The overall volumes stood at over Rs 1.96 lakh crore, which remained on the higher side as compared to that on Tuesday. The market breadth remained in favor of declines as there were 817 shares on the gaining side against 1,411 shares on the losing side while 811 shares remain unchanged.

Finally, the BSE Sensex gained 45.04 points or 0.23% to settle at 20,026.61, while the S&P CNX Nifty rose by 5.80 points or 0.10% to end at 6,054.30.

The BSE Sensex touched a high and a low of 20,058.07 and 19,920.91, respectively. The BSE Mid cap index declined by 0.91% and Small cap index was down by 0.90%.

The top gainers on the Sensex were, Bharti Airtel up by 4.44%, Tata Power up by 2.38%, ITC up by 1.37%, Hero MotoCorp up by 1.02% and HDFC up by 0.92%, while, Hindustan Unilever down by 4.43%, Tata Motors down by 1.98%, Hindalco down by 1.54%, Gail India down 1.32% and Bajaj Auto down by 1.24% were the top losers on the index.

The top gainers on the BSE Sectoral space were TECk up by 0.64%, Bankex up 0.43% and Capital Goods (CG) up 0.10%, while Realty down 2.34%, PSU down 1.00%, Consumer Durables (CD) down 0.94%, Auto down 0.83% and Metal down 0.54% were top losers on the sectoral space.

Meanwhile, the government has issued guidelines for the second round of spectrum auction which is expected to fetch around Rs 45,000 crore to exchequer from airwaves sale. However, the guidelines did not mention the timeline for starting auction and related dates.

In the second round of auction, the government will put unsold GSM spectrum in 1800 MHz band, CDMA spectrum in 800 MHz and airwaves held by telecom licences in 900 MHz band that is coming for renewal starting 2014 onwards. As per the auction guidelines, spectrum auction for 1800 MHz and 900 MHz band, currently being used for GSM services, will be conducted simultaneously and auction of 800 MHz band, being used for CDMA services, in 21 out of 22 service area will be conducted separately.

The government 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. The government also slashed the base price of unsold GSM spectrum by 30 per cent, while the price of spectrum in 900 MHz has been fixed at two times the price of airwaves in 1800 MHz.

The S&P CNX Nifty touched a high and a low of 6,069.80 and 6,021.15 respectively.

The top gainers on the Nifty were Bharti Airtel up by 4.55%, Tata Power up by 2.51%, ICICI Bank up by 1.80%, ITC up by 1.11% and Hero MotoCorp up by 0.99%.

The top losers of the index were HUL down by 4.12%, HCL Tech down by 3.09%, JP Associates down by 2.39%, BPCL down by 2.24% and IDFC down by 2.01%.

The European markets were trading mixed, France’s CAC 40 down by 0.08%, United Kingdom’s FTSE 100 up by 0.18% and Germany’s DAX up by 0.29%.

Asian markets ended mixed on Wednesday amid caution as the earnings season gathered pace. Japanese stocks extended its southward journey and closed lower reporting a third straight day of decline as yen continued to strengthen against the dollar following the Bank of Japan's latest policy meeting. Chinese shares ended almost flat ignoring healthy gains on Wall Street Tuesday following a long weekend. Moreover, Hong Kong market went home with red mark as investors were hesitant to extend a rally that took the index to a 21-month high in the previous session. South Korea’s Kospi ended lower, overlooking Hyundai Motor’s gains ahead of its earnings report on Thursday.