Benchmarks make positive start; Sensex re-conquers 20,000 mark

After witnessing a fall of over half a percent in previous session, Indian equity benchmarks have made a decent start with Sensex re-conquering 20,000 bastion in the morning deals on Friday. The sentiments in the domestic market remained jubilant after Urban Development Minister Kamal Nath emphasized that India has seen a large number of reforms in recent years and the country expects to see about $1 trillion investments in infrastructure in the next five years to boost economic growth. Some strength also came in from rate sensitive counters like banks, auto and realty which edged higher on hopes that the Reserve Bank will reward the government next week for its efforts to reform the economy and bring its finances under control by announcing its first cut in interest rates in nine months.

On the global front, the US markets extended their winning streak supported by better jobs data, however the prevailing weakness in the Apple stocks weighed on the tech heavy Nasdaq. Meanwhile, the weekly jobless claims fell 5,000 to a seasonally adjusted 330,000, dropping to its lowest level in nearly five years. While, Asian equity indices were exhibiting mixed trend on Friday’s morning deals with Japanese Nikkei surging over two percent on the back of a weaker yen. Sentiments also got boost after Japan’s core consumer prices slipped for a second straight month in the year to December, signaling the economy was still in deflation and piling more pressure on the central bank to adopt further stimulus steps to achieve its new inflation target.

Back home, all the sectoral indices opened higher with the auto, technology, realty and banking leading the opening gains with over half a percent gains. Fast moving consumer goods, software, public sector undertakings and capital goods indices were the other notable index movers in the opening trades while, there were no losers on the BSE sectoral space. The broader indices were struggling to get some traction while, the market breadth on the BSE was negative; there were 828 shares on the gaining side against 882 shares on the losing side while 101 shares remain unchanged.

The BSE Sensex opened at 19,945.69; about 21 points higher as compared to its previous closing of 19,923.78, and has touched a high and a low of 20,000.78 and 19,928.11 respectively.

The index is currently trading at 20,000.35, up by 76.57 points or 0.38%. There were 21 stocks advancing against 9 declines on the index.

The overall market breadth has made a negative start with 45.72% stocks advancing against 48.70% declines. The BSE Mid cap index was up by 0.32% and Small cap index was trading flat at its previous close.

The top gaining sectoral indices on the BSE were Auto up by 0.66%, TECk up by 0.60%, Realty up by 0.55%, Bankex up by 0.51% and FMCG up by 0.48%. While, there were the no losers on the index.

The top gainers on the Sensex were Tata Motors up by 2.18%, Bharti Airtel up by 1.33%, Maruti Suzuki up by 1.33%, Dr Reddys Lab up by 1.22% and TCS up by 1.19%.

On the flip side, Sun Pharma was down by 0.94%, Tata Power was down by 0.84%, Coal India was down by 0.83%, Wipro was down by 0.63% and Hero MotoCorp was down by 0.32% were the top losers on the Sensex.

Meanwhile, An Empowered Group of Ministers (EGoM) is expected to approve new policy guidelines for the pricing of natural gas based on the Rangarajan committee report, which was submitted recently. If approved it would more-than-double the price of domestic gas sold by the state owned oil companies along with it would also raise costs for power and fertiliser companies and other natural gas buyers such as city gas distributors.

The Rangarajan committee, which recently submitted its report, recommended pricing of domestically produced natural gas at an average of international hub prices and cost of imported LNG instead of present mechanism of market discovery. Further, the Rangarajan formula is the mean of weighted averages of the producer price of liquefied natural gas imports to India and the price prevalent in Europe, the US and Japan.

At current rates, the price was about $7.4. Though domestic gas prices had been aligned to $4.2 fixed for Reliance Industries (RIL)’ KG-D6 gas in 2007, this time, RIL would have to wait till 2014, when its gas price is due for revision. Moreover, the Rangarajan formula is applicable to all natural gas producers, including government companies for nominated fields and private companies. The new price would be uniformly applicable to all consumers.

Though, the existing contracts for domestic companies would remain unaffected till the expiry of the contract period and the new policy would usher in uniformity in pricing. Further, the new policy would also be applicable to coal bed methane and all other non-conventional gas including shale.

In 2011-12, domestic gas output stood at 154 million standard cubic metres a day (mscmd) and for this year, it is expected to fall as RIL is producing less than 25 mscmd. Presently, gas produced from nominated fields is sold at $2.52 a million British thermal units (mBtu) to certain consumers. 

The S&P CNX Nifty opened at 6,024.50; about 5 points higher as compared to its previous closing of 6,019.35 and has touched a high and a low of 6,035.45 and 6,014.45 respectively.

The index is currently trading at 6,033.50, up by 14.15 points or 0.24%. There were 27 stocks advancing against 21 declines and 2 remain unchanged on the index.

The top gainers of the Nifty were Tata Motors up by 2.10%, Bank of Baroda up by 1.64%, JP Associate up by 1.39%, Maruti Suzuki up by 1.18% and Bharti Airtel up by 1.16%

On the flip side, Ranbaxy down by 1.32%, Sun Pharma down by 1.31%, Tata Power down by 1.25%, Ambuja Cements down by 1.17% and UltraTech Cement down by 1.15%, were the major losers on the index.

Most of the Asian equity indices were trading mixed; Shanghai Composite declined 6.72 points or 0.29% to 2,295.88, Hang Seng dipped 92.61 points or 0.39% to 23,506.29, KOSPI Composite tumbled 25.34 points or 1.29% to 1,939.14 and Taiwan Weighted dropped 43.20 points or 0.56% to 7,652.79.

On the flip side, Jakarta Composite rose 1.08 points or 0.02% to 4,419.81, KLSE Composite added 1.19 points or 0.07% to 1,636.44, Nikkei 225 surged 223.31 points or 2.10% to 10,844.18 and Straits Times was up by 7.16 points or 0.22% to 3,255.55.