Benchmarks snap four days losing streak on increased growth projection

Boisterous benchmarks showcased an enthusiastic performance on Wednesday, snapping their four days losing streak after the Congress-led UPA government raised the growth projection for fiscal year 2013-14 and simultaneously lowered the Inflation target for Asia’s third-biggest economy. After a firm start markets entered into the red for a while but, encouraging Economic Survey of 2012-13 helped the frontline indices to finish the session around their highest levels. Sensex re-captured its crucial 19,150 mark while, Nifty ended tad shy of 5,800 level as investors took to hefty across the board buying. Sentiments got bolstered after Economic Survey 2012-13, presented by Finance Minister P. Chidambaram in the Lok Sabha, stated that India’s economy may grow at 6.1-6.7% for the year 2013-14. The survey suggested that revival of growth will help contain NPAs, but more attention will have to be paid to whether projects are adequately capitalized up front given the risks. Further, the economic survey sees FY14 fiscal deficit at 4.8% while the current account deficit was pegged at 4.6%.

Supportive cues from Asian markets , too provided the much needed support to local markets. Asian counters mostly rose on Wednesday after US Federal Reserve head Ben Bernanke reaffirmed the central bank's huge monetary easing scheme, but a stronger yen sent Tokyo lower. While, European markets traded near their previous close mark with positive bias in the early trade. However, Investors remained hesitant and the euro came under pressure after Italy’s election results which left no party in overall control, raising concerns that uncertainty in Rome could see the euro-zone return to the dark days of crisis.

Back home, sentiments got some boost from telecom stocks like Idea Cellular, Bharti Airtel and Reliance Communication, which extended their rally after the Ministry of Communications & Information Technology, postponed the auction of 1800 and 900 MHz spectrum as it didn’t get any applications from potential bidders by the time of close on the last date for receipt of applications i.e. on February 25, 2013. Meanwhile, construction shares edged higher after the Economic Survey 2012-13 presented by the Union Finance Minister, P. Chidambaram in the Lok Sabha, noted that the government has taken several initiatives to expedite highway projects under the National Highway Development Project (NHDP).

The NSE’s 50-share broadly followed index Nifty rose by thirty five points to end tad below the psychological 5,800 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex-- rose by over one hundred and thirty points to finish above the psychological 19,150 mark. Moreover, broader markets too traded with traction during the session and ended the trade in the positive terrain

The overall volumes stood above Rs 2.30 lakh crore, which remained on the lower side as compared to that on Tuesday. The market breadth remained in favor of advances as there were 1,441 shares on the gaining side against 1,359 shares on the losing side while 130 shares remain unchanged.

Finally, the BSE Sensex gained 137.27 points or 0.72% to settle at 19152.41, while the CNX Nifty rose by 35.55 points or 0.62% to end at 5,796.90.

The BSE Sensex touched a high and a low of 19213.02 and 18997.82, respectively. The BSE Mid cap index up by 0.74% and Small cap index was up by 0.20%.

The top gainers on the Sensex were, Bharti Airtel up by 3.29%, L&T up 3.16%, Mahindra & Mahindra up 3.03%, ONGC up 2.91% and Bajaj Auto up 2.23%, while Gail India down by 1.72%, Infosys down by 1.56%, Tata Motors down by 1.11%, Coal India down by 1.08% and Hero MotoCorp down by 1.01% were the top losers on the index.

The top gainers on the BSE Sectoral space were, Capital Goods up 2.41%, Realty up 2.12%, Oil & Gas up 1.17%, Metal up 1.11% and FMCG up 1.10%, while IT down 0.96%, TECk down 0.23% and Health Care down 0.04% were the top losers on the sectoral space.

Meanwhile, after the central bank released the final guidelines for new banking licences, which said an applicant should be “fit and proper” for getting a licence and have a 10-year impeccable track record. Reserve Bank of India’s (RBI) Deputy Governor K. C. Chakrabarty  has opined that RBI is open to let realty and brokerages run banks, if they meet the “fit and proper criteria” as detailed in the final guidelines. Chakrabarty emphasized that realtors and brokerages carry out legitimate business and said “if they can demonstrate that they satisfy all the requirements, all the concerns how can you deny them. Definitely, if this is not in the guidelines, then it is open”.  

The final guidelines by the RBI allowed business houses, state-run enterprises and non-banking finance companies (NBFCs) to apply for licences to set up banks, making a climb-down from the initial stance, which had virtually barred Realtors and brokerages from its eligibility criteria, terming in its draft guidelines certain activities, such as real estate and capital market activities, in particular broking activities, which apart from being inherently riskier, represent a business model and business culture which are quite skewed with a banking model.

Chakrabarty said that the number of new banks would depend on the number of eligible and ‘fit and proper’ applicants and no additional time would be given to the new banks to follow cash reserve ratio, statutory liquidity ratio and priority-sector lending requirements, and they are expected to start following the norms from day one.

The CNX Nifty touched a high and a low of 5,818.20 and 5,749.70 respectively. 

The top gainers on the Nifty were JP Associates up by 5.85%, M&M up 3.38%, DLF up 3.14%, Bharti Airtel up 3.09% and L&T up by 2.95%.

On the flip side, the top losers of the index were, Ranbaxy down by 4.39%, Power Grid down by 1.98%, Siemens down by 1.84%, GAIL down by 1.82% and Kotak Bank down by 1.64%.

The European markets were trading in green, France’s CAC 40 up by 0.17%, United Kingdom’s FTSE 100 up by 0.15% and Germany’s DAX up by 0.07%.

Snapping earlier session’s losses, most Asian markets closed higher on Wednesday, as investors sentiments were boosted with solid US data and the Federal Reserve's re-dedication to monetary stimulus, taking Italy's political gridlock in stride. However, Japan's Nikkei went home with red mark as the yen firmed hurting exporters. Meanwhile, Hong Kong’s market ended marginally higher amid speculation that policymakers in Beijing will take steps to bolster equities.