Post Session: Quick review

Catching up with the global rally and also giving thumbs-up to RBI’s status quo stance in its ‘December mid-quarterly policy review’, Indian equity markets putting up a good show, puffed up gains of close to one and a half percent on Wednesday. Barometer gauges, which were trading lackluster in early deals, took a drastic turn after Reserve Bank of India left repo and reverse repo rates unchanged at 7.75% and 6.75% respectively contrary to the street’s expectation of 25 basis points rate hike. With investors turning bullish on equities and relentlessly building positions, local equity markets concluded near day’s high point, which took Sensex and Nifty, past the crucial 20,850 and 6,200 levels respectively by the close of trade. Meanwhile, broader indices too following the suite, went home with gains of close to a percent.

Besides, the positive domestic trigger, optimistic global set-up also fortified the glory of Indian equity markets. In the global front, Asian shares tiptoed higher on Wednesday as investors waited to hear when the US Federal Reserve will begin unwinding its stimulus campaign, a major driver for global risk assets in recent years, While European shares too were trading upbeat.

Closer home, although markets cooled off from day’s high point on RBI’s cautious tone of hiking rates, if the expected softening of food inflation does not materialise and translate into a significant reduction in headline inflation in the next round of data releases, it re-gained fervor yet again in the dying hours of the trade. Making most of the positive news at home front, rate sensitive counters, Realty, Banking and Auto counters, topped the gainers chart. However, amidst across the board buying activity, none of the sectoral indices ended in red. Among the banking space, shares in state-owned banks outperform their private sector counterparts on expectations of higher bond portfolio gains after the central bank unexpectedly kept the country's policy interest rate on hold. Canara Bank, Bank of India rallied 3-5%, while ICICI Bank ended in red and HDFC bank gained over a percent. Meanwhile, fertilizer stocks such as Rashtriya Chemical fertilizer, Coromandel International and National Fertiliser rallied after finance ministry granted Rs 10,000 crore under a special banking arrangement (SBA) as sought by the department of fertilizer to help the industry tide over the liquidity crunch. Additionally, retail stockss lit up after Tesco Plc applied to buy a 50 percent stake in Trent Hypermarket, a unit of Tata Group's Trent. Trent soared 10%, Future Retail gained 5%, while Shopper's Stop gained over 3%.

The market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 1498: 958, while 169 scrips remained unchanged. (Provisional)

The BSE Sensex gained 271.45 points or 1.32% to settle at 20883.59.The index touched a high and a low of 20917.57 and 20568.70 respectively. Among the 30-share Sensex, 28 stocks gained, while 2 stocks declined. (Provisional)

The BSE Mid cap and Small cap indices ended higher by 1.39% and 1.16% respectively. (Provisional)

On the BSE Sectoral front, Realty up by 3.69%, Capital Goods up by 2.76%, Oil & Gas up by 2.30%, Power up by 2.22% and PSU up by 2.02% were the top gainers, while there were no losers on the sectoral space. (Provisional)

The top gainers on the Sensex were BHEL up by 6.02%, Tata Power up by 4.15%, Bajaj Auto up by 3.87%, Hero MotoCorp up by 3.20% and Gail India up by 3.06%, while, Jindal Steel down by 0.97% and SSLT down by 0.39% were the only losers in the index. (Provisional)

Meanwhile, In a new year's gift to the market, Reserve Bank of India (RBI), in its December mid-quarter monetary policy review, delivered the unexpected and maintained a status quo stance on its key policy rates as it left the policy repo and reverse repo rate under the liquidity adjustment facility (LAF) unchanged at 7.75% and 6.75% respectively. Further, RBI kept the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0 per cent of net demand and time liability (NDTL). Additionally, marginal standing facility (MSF) rate and the Bank Rate too stood unchanged at 8.75%.

Despite keeping the rates on hold, RBI stroke a cautious tone, by calling current inflation too high, citing the prospect of easing retail prices and its concerns about the weak domestic economy. He underscored that retail inflation measured by the consumer price index (CPI) had risen unrelentingly through the year so far, mainly because of unseasonal upturn in vegetable prices, double-digit housing inflation and elevated levels of inflation in the non-food and non-fuel categories. Additionally, he pointed that Wholesale inflation went up sharply from Q2 onwards, with upside pressures evident across all constituent components.

Further, on growth front, although RBI acknowledged modest pickup in real GDP growth in Q2 of 2013-14 that was largely by robust growth of agricultural activity and by an improvement in net exports, it expressed its concerns over weakness in industrial activity, which persisted into Q3 and suggested continuing headwinds to growth.

Importantly in its outlook, RBI underscored that high level of CPI inflation excluding food and fuel leaves no room for complacency and that it would have to act accordingly, including on off-policy dates, if the expected softening of food inflation does not materialises and translates into a significant reduction in headline inflation in the next round of data releases, or if inflation excluding food and fuel does not fall.

India VIX, a gauge for markets short term expectation of volatility lost 4.30% at 17.54 from its previous close of 18.33 on Tuesday. (Provisional)

The CNX Nifty gained 89.65 points or 1.46% to settle at 6,228.70. The index touched high and low of 6,236.00 and 6,129.95 respectively. Out of the 50 stocks on the Nifty, 46 ended in the green, while 3 ended in the red and one stock remains unchanged.

The major gainers of the Nifty were BHEL up 6.32%, DLF up by 5.63%, PNB up by 4.73%, IndusInd Bank up by 4.29% and Bajaj-Auto up by 4.08%. The key losers were Jindal Steel down by 0.87%, SSLT down by 0.57% and UltraTech Cement down by 0.27%. (Provisional)

Most of the European markets were trading in green with, France’s CAC 40 up by 0.70%, the United Kingdom’s FTSE 100 up by 0.30% and Germany’s DAX up by 0.75%.

The Asian markets concluded Wednesday’s trade on a mixed note with Japan’s stocks led Asian markets higher ahead of the conclusion of the US Federal Reserve’s policy meeting. Indonesia’s central bank plans to introduce a one-year currency swap next week as part of broader efforts to deepen the market. Japanese business confidence has soared to a six-year high, the country’s central bank stated, underscoring growing optimism among major companies despite a slowdown in the world’s third-largest economy. The Bank of Japan’s quarterly Tankan survey, which polled more than 10,500 firms, surged to its strongest level since December 2007, with a reading for large manufacturers rising to plus 16 from plus 12 in September. Japanese exports rose 18.4% from a year earlier in November, overshooting expectations for a 17.3% rise. That marked the ninth consecutive month of increase, as manufacturers benefited from a weaker yen brought about by Prime Minister Shinzo Abe’s pro-growth strategies. A recovery in exports is important for the country’s economy ahead of a planned sales-tax increase in April.

China attracted $8.5 billion in foreign direct investment in November--up 2.35% on year, the Ministry of Commerce stated. The figure was more than October’s $8.42 billion which was up 1.24% on year. FDI in the January-November period rose 5.48% on year to $105.5 billion. Non-financial overseas direct investment rose 28.3% on year in the January-November period to $80.2 billion. Besides, the price of homes in big cities continued to rise from a year earlier in November, despite Beijing’s efforts to cool the market. New home prices increased month on month in 66 of the 70 major cities monitored by the government last month, up from 65 in October.