Benchmarks witness enthusiastic performance on Tuesday

Buoyed by firm global cues, key domestic benchmarks showcased an enthusiastic performance on Tuesday, recovering from the multi-month lows suffered in last few sessions, by rallying close to one and a half percentage points and breaking a lot of psychological levels in their northbound journey. There appeared not even an iota of profit booking in the session as the benchmarks managed to fervently gain from strength to strength as investors continued hunt of fundamentally strong but oversold stocks. Frontline indices managed to finish the session around their intraday high and settled comfortably above 5,750 (Nifty) and 19,100 (Sensex) levels as investors took to hefty across the board buying.

The positive global cues mainly boosted the morale of the markets as most of the Asian equity indices ended the session in the green terrain on reports that the US Federal Reserve will continue with its bond-buying plan to support growth in US while China maintained 7.5 percent growth target for fiscal year 2013 raising growth recovery optimism. Meanwhile, gains in financial stocks helped lifting key European indices to a fresh two-year high on Tuesday as monetary policy support from central banks continued to underpin investors’ sentiment.

Back home, sentiment continued to remain jubilant through the trade after global rating agency, Moody’s, applauded Finance Minister P Chidambaram’s Budget saying that it pursues realistic fiscal consolidation path and is credit positive for the country’s sovereign rating. Giving thumbs up to the Union Budget 2013, Moody’s said that FY14 Budget is proposed to bring down the fiscal deficit to 4.8 percent of the GDP from 5.2 percent in the revised estimates for the current financial year. Also, Finance Minister P Chidambaram’s statement that fiscal deficit in the current financial year is likely to be less than the provisional figure of 5.2 percent announced in the national budget last week, supported the positive sentiment.

Some support also came in from buying in metal counter as stocks like Sterlite Industries, JSW Steel, Bhushan Steel, Jindal Steel & Power, Hindalco Industries all edged higher after China announced economic growth target of 7.5% for 2013. China is world’s largest consumer of copper and aluminum. Buying in software counter too strengthened the sentiments. Stocks like Infosys, TCS, Wipro and HCL Tech edged higher after the Indian rupee hit the lowest level in nearly two months on March 4, 2013. The unit dropped earlier to a low of 55.15, the weakest since January 8, 2013. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.

Oil & gas sector too kept buzzing as Oil India reported a ‘significantly big’ discovery in the Rajasthan field and after the Defence Ministry, in response to a direction by the Cabinet Committee on Investment (CCI), gave a partial go-ahead to two oil and gas blocks in areas near defence installations. Additionally, shares of sugar manufacturer remained on buyers’ radar on reports that the government may consider easing curbs on sugar sector on expectation of higher production.

The NSE’s 50-share broadly followed index Nifty gained by over eighty points to end above its psychological 5,750 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex surged by over two hundred and sixty points, ending above its psychological 19,100 mark. Moreover, the broader markets too traded neck-to-neck with benchmarks and ended the session with a gain of over a percentage point. The market breadth remained in favor of advances as there were 1,679 shares on the gaining side against 1,142 shares on the losing side while 112 shares remain unchanged.

Finally, the BSE Sensex surged 265.21 points or 1.40% to settle at 19,143.17, while the CNX Nifty climbed by 85.75 points or 1.50% to end at 5,784.25.

The BSE Sensex touched a high and a low of 19,164.04 and 18,943.62, respectively. The BSE Mid cap index up by 1.66% and Small cap index was up by 1.11%.

The top gainers on the Sensex were, Sterlite Industries up by 4.47%, Hindalco up 4.29%, Tata Motors up 3.73%, ICICI Bank up 3.36% and Wipro up 3.30%, while Bajaj Auto down by 0.64%, BHEL down by 0.63%, ITC down by 0.26% and NTPC down by 0.10% were the top losers on the index.

The top gainers on the BSE Sectoral space were, Realty up 3.13%, Metal up 2.65%, Bankex up 1.89%, Auto up 1.78% and Oil & Gas up 1.54%, while there was no loser on the sectoral space.

Meanwhile, a proposal is being made for increasing the sectoral exposure limit of commercial banks and financial institutions to the power sector from 15% to 20% in order to channelise liquidity into the sector. The proposal is being discussed by high level committee on financing infrastructure headed by Deepak Parekh.

Parekh panel has underlined the need for making adequate provisions for mitigating investors’ risks to augment investment in power sector.

As per the Reserve Bank of India (RBI) guidelines, the exposure ceiling limits of commercial banks to the power sector are 15% of capital funds in case of a single borrower and 40% for a borrower group. The decision to increase the sectoral cap has to be taken by the RBI.

Increasing sectoral exposure limit to the power sector would enable the availability of more funds to the sector which is primarily required to meet working capital and debt re-payment needs of State Electricity Distribution Utilities (Discoms), power generation and transmission companies.

However, the commercial banks would find it difficult to agree to this proposal as increasing the borrowing limit would eventually increase the interest and the principal amount and without fuel supply agreements and viable power purchase agreements it might get difficult for the players in the power sector to service these obligations, thus elevating the risk of non-performing assets.

The CNX Nifty touched a high and a low of 5,790.10 and 5,722.40 respectively. 

The top gainers on the Nifty were Sesa Goa up by 5.27%, Hindalco up 4.72%, HCL Tech up 4.28%, Ambuja Cement up 4.25% and Tata Motors up by 4.09%.

On the flip side, the top losers of the index were, Bajaj Auto down by 1.22%, BHEL down by 0.67%, NTPC down by 0.23%, HDFC down by 0.05% and Sun Pharma down by 0.01%.

The European markets were trading in green, France’s CAC 40 up by 1.24%, United Kingdom’s FTSE 100 up by 0.72% and Germany’s DAX up by 1.49%.

Snapping earlier session’s sharp fall, Asian markets recovered sharply and ended mostly higher on Tuesday, with Japan’s Nikkei extending gains on hopes for further monetary easing under a new central bank chief. The Shanghai Composite Index bounced back after earlier session’s losses and closed higher as the National People's Congress - the country's parliament - began its annual session, although property developers fell further under the lingering influence of fresh restrictions imposed on the sector late last week.