Benchmarks start new F&O series on positive note; Nifty regains 5,700 mark

Key equity benchmarks, after witnessing steep fall on Budget day, started the new F&O series on a positive note as traders kept them-self busy in buying beaten down fundamentally strong stocks. The markets showed some signs of recovery in mid morning trades after the brutal butchery in previous trading sessions owing to the disappointing federal budget, however, the psychological 5,750 (Nifty) and 19,000 (Sensex) levels proved to be stern resistance levels for the frontline indices as they failed to break those crucial points and dipped into the negative terrain. However, the key gauges found strong support around the crucial 5,700 (Nifty) and 18,900 (Sensex) levels on the downside and rebounded from those levels. Market participants were seen piling up positions largely across the board as they hunted for undervalued but fundamentally strong bargains after the recent sell-off.

Markets gained further in the afternoon session after the Finance Ministry issued a clarification on Tax Residency Certificate (TRC). The government wishes to make it clear that Tax Residency Certificate produced by a resident of a contracting state will be accepted as evidence that he is a resident of that contracting state and the Income Tax Authorities in India will not go behind the TRC and question his resident status.

However, global cues remained unsupportive as European counters traded lower in the early trade as sentiments got undermined by the looming budget cuts in the United States and Italy’s political stalemate. Most of the Asian equity indices ended the session in red with sentiment burdened by worries over the economic fallout. Moreover, weak manufacturing data from China also dampened the sentiments.

Back home, better-than-expected manufacturing activity in India provided some support to the markets. HSBC Markit manufacturing PMI rose to a seasonally adjusted annual rate of 54.2, from 53.2 in the preceding month. Benchmarks also got some boost from buying in public sector banking stocks like PNB, BOB, IDBI Bank and SBI after the Finance Minister said that the government will provide Rs 14,000 crore for capital infusion in public sector banks in FY 2014. Rally in PSU oil marketing companies too supported the sentiments. Stocks like BPCL, HPCL and IOC surged as US crude oil futures fell to the lowest level this year as manufacturing in China, the world’s second-biggest oil consumer slowed in February 2013.

Some support also came in from buying in software pack as stocks like Infosys, Wipro, Tech Mahindra and Mahindra Satyam gained after the Indian rupee fell to a six-week low against the US dollar on March 1, 2013. Additionally, shares of education like Everonn Education, Career Point, NIIT and Aptech soared after Finance Minister P Chidambaram in the Union Budget 2013-14 increased allocation to the education sector.

The NSE’s 50-share broadly followed index Nifty jumped by over twenty five points to end above the psychological 5,700 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex-- increased by over fifty points to finish above the psychological 18,900 mark. However, broader markets struggled to gain traction throughout the trade and ended the session mixed.

The overall volumes stood above Rs 1.34 lakh crore, which remained on the lower side as compared to that on Thursday. The market breadth remained in favor of declines as there were 1,336 shares on the gaining side against 1,522 shares on the losing side while 112 shares remain unchanged.

Finally, the BSE Sensex gained 56.98 points or 0.30% to settle at 18,918.52, while the CNX Nifty rose by 26.65 points or 0.47% to end at 5,719.70.

The BSE Sensex touched a high and a low of 18,988.97 and 18,820.90, respectively. The BSE Mid cap index up by 0.29% and Small cap index was down by 0.18%.

The top gainers on the Sensex were, Maruti Suzuki up by 4.98%, Jindal Steel up 2.87%, Bajaj Auto up 2.63%, L&T up 2.51% and Cipla up 2.40%, while Bharti Airtel down by 3.89%, Dr Reddys Lab down by 1.44%, ITC down by 1.42%, Hero MotoCorp down by 1.30% and TCS down by 1.00% were the top losers on the index.

The top gainers on the BSE Sectoral space were, Consumer Durables (CD) up 3.20%, Capital Goods (CG) up 1.62%, Auto up 1.50%, Power up 0.80% and Metal up 0.63%, while Realty down 3.93%, TECk down 0.22%, FMCG down 0.09% and Oil & Gas down 0.04% were the top losers on the sectoral space.

Meanwhile, global rating agencies, Standard & Poor's (S&P) and Fitch have kept their sovereign rating on India at same level after the Budget announcement on February 28, but warned that policy execution and controlling subsidies would be the key risks to look out for during the year. The FY14 Budget has projected fiscal deficit at 5.2 and 4.8 per cent respectively for this fiscal and next, reflecting the weak economic environment.

Both the agencies have expressed their views on the Indian economic outlook and considered the factors, which are important to improve the ratings. S&P said ‘the future trajectory of the rating will be determined by factors like economic growth prospects, external position, fiscal reforms like the introduction of the goods and services tax, action on subsidy reduction and the political climate’. Further, it also cautioned that there is little progress in structural reforms to reduce the vulnerability of the government’s fiscal position and there is a possibility that the government may exceed its budgeted expenditure target.

While, Fitch said ‘delivery of subsidy reforms, GDP growth and uncertain proceeds from the privatization process (are) the key risks for the government's policies’. Regarding the upcoming election, the agencies stated that with elections due in 2014, the adherence to fiscal consolidation remains encouraging. Last year, both agencies (S&P and Fitch) had threatened the country to downgrade their sovereign rating to junk status. 

The CNX Nifty touched a high and a low of 5,739.45 and 5,679.90 respectively. 

The top gainers on the Nifty were Maruti up by 5.28%, JP Associates up 4.82%, Reliance Infra up 3.51%, BPCL up 3.51% and Power Grid up by 3.50%.

On the flip side, the top losers of the index were, DLF down by 5.97%, Bharti Airtel down by 3.44%, IDFC down by 2.18%, Siemens down by 1.76% and Cairn down by 1.58%.

The European markets were trading in red, France’s CAC 40 down by 1.02%, United Kingdom’s FTSE 100 down by 0.33% and Germany’s DAX down by 0.70%.

Snapping earlier session’s gains, Asian markets ended mixed on Friday, as investors sentiments were hampered by lusterless manufacturing data from China and concerns over the economic fallout from Italy's political confusion as well as possible US spending cuts. China's Shanghai Composite ended lower as factory growth cooled in February to multi-month lows, signaling China's economy slipping into another slowdown. However, Japan's Nikkei went home with green mark, on expectations of strong reflationary measures from the Bank of Japan in coming months. Indonesia’s stocks closed higher as data showed country's trade deficit narrowed slightly in January from the previous month as exports posted their smallest fall in nearly a year.

South Korean markets remained closed for the trade today.