Benchmarks pare early gains to end flat

Paring most of their initial gains, Indian equity benchmarks ended the session on a flat note on Monday. Sentiments remained up-beat in morning on report that indirect-tax collections grew by 5% in the April-November period of this fiscal, crossing Rs 3 lakh crore mark. Some support also came in from report that foreign funds remained buyers of Indian stocks on December 20 2013. Foreign institutional investors (FIIs) bought shares worth a net Rs 990.19 crore on Friday. But, investors opted to book profit at higher levels in late trade, being the holiday truncated F&O expiry week, though markets managed to end in the green, extending their northward journey for second straight day.

Supportive cues from US markets supported the local markets as sentiments remained up-beat their after latest data showed that final reading of third quarter GDP pointed to growth of 4.1%, which was the strongest reading since the economy expanded by 4.9% in the fourth quarter of 2011, and well above the 2.5% gain reported in the second quarter. Moreover, firm opening in European markets too supported the sentiments. Asian markets too ended mostly in the green terrain.

Back home, some support also came in from currency front after Indian rupee appreciated on account of dovish comments made by Prime Minister’s Economic Advisory Council (PMEAC) Chairman C Rangarajan, who underscored that he expects a fall in vegetable prices to likely ease the headline inflation and retail inflation to 6.5 percent and 9.20 percent respectively in December. Rally in public sector oil marketing companies (OMCs) too supported the sentiments. Stocks like BPCL, HPCL and IOC edged higher after OMCs hiked petrol prices on December 20 by 41 paise a litre following the government’s decision to raise commission paid to petrol pump dealers and firming global oil rates. Simultaneously, diesel rates were increased by 10 paise per litre due to a hike in dealers’ commission.

Stocks related to power sector too remained on buyers’ radar as the government is working on a proposal where separate entities would handle electricity supply and distribution. The banking stocks too were in action, as the finance ministry has directed state-run banks to recover at least 10% of loans that have gone bad, by the end of this financial year. On the flip side, shares of major tyre companies, MRF, Ceat, Apollo Tyres, JK Tyre Industries, slowed down on profit-booking after reports suggested that the government has hiked customs duty on imported rubber. According to media reports, the customs duty will now be at 20% or Rs 30 per kg, whichever is lower as against Rs 20/kg or 20% whichever is lower, earlier.

The NSE’s 50-share broadly followed index Nifty rose by over ten points to end near its psychological 6,300 level, while Bombay Stock Exchange’s sensitive Index -- Sensex surged by over twenty points to end above the psychological 21,100 mark.

Broader markets outperformed benchmarks and ended the session with a gain of over a percentage point. Moreover, the market breadth remained in favour of advances, as there were 1,594 shares on the gaining side against 918 shares on the losing side, while 170 shares remained unchanged.

Finally, the BSE Sensex gained 21.31points or 0.10%, to settle at 21101.03, while the CNX Nifty added 10.25 points or 0.16% to settle at 6,284.50.

The BSE Sensex touched a high and a low of 21207.89 and 21059.12, respectively. The BSE Mid cap index was up by 1.26%, while the Small cap index gained 1.20%.

The top gainers on the Sensex were Hindalco Industries up 3.69%, BHEL up 2.17%, Hero MotoCorp up 1.67%, ONGC up 1.48%, and Tata Steel up 1.28%, on the flip side Infosys down 2.35%, Tata Power down 1.71%, HDFC down 1.22%, TCS down 0.47%, and Mahindra & Mahindra down by 0.44 %,were the top losers on the index.

On the BSE Sectoral front, Realty up by 3.16%, Metal up by 1.52%, Capital Goods up by 1.30%, PSU up by 1.05% and Power up by 0.93%, were the top gainers, while IT down by 0.98%, and Teck down by 0.83%, were the only losers on the sectoral front. 

Meanwhile, the Highway and Road Ministry expects stalled road projects worth over Rs 1 lakh crore to start getting executed from next month onwards as report of C Rangarajan Committee for restructuring the annual premium owed to the government by developers of stressed road projects is likely to be accepted by month-end. The panel, headed by PMEAC chairman C Rangarajan, was set up in November to decide the modalities of the premium rescheduling policy, while final decision could be implemented by the highways ministry after the Cabinet approval.

As per the Rangarajan panel report, 75 percent of the premium amount payable by the road developers to the government will be restructured in the first three years of the contract. Currently, developers pay some portion of premium to the government in the first year of the project which keeps increasing in the subsequent years. Companies make payment to the the National Highways Authority of India under the build, operate and transfer (BOT) mode. The move is likely to provide relief to a large number of players such as GMR, GVK and Ashoka Buildcon, whose projects have been facing delays on account of high premium.

The development of infrastructure is a most critical prerequisite to boost the economy’s growth and the ministry of road transport and highways is taking measures to revive the growth in highway road projects in the country. The government has also entered into the 'Public Private Partnership (PPP)' programme in order to bring adequate resources for setting up of a sound and efficient infrastructural base. Meanwhile, it has set the $1-trillion investment target for the infrastructure sector for the 12th Five Year Plan (2012-17).

The CNX Nifty touched a high and low of 6,317.50 and 6,266.95 respectively.

The top gainers on the Nifty were Jindal Steel & Power up by 5.41%, PNB up by 4.46%, DLF up by 4.17%, Hindalco Industries up by 3.47%, and Grasim Industries up by 2.71%, On the other hand, Infosys down by 2.38%, Tata Power Company down by 1.87%, HDFC down by 1.48%, Lupin down by 1.03%, and Asian Paints down by 0.94%, were the top losers.

The European markets were trading in green, France's CAC 40 was up by 0.04 %, Germany's DAX was up by 0.42%, and United Kingdom's FTSE 100 was up by 0.36%.

The Asian markets concluded Monday’s trade mostly in green, Chinese stocks gained for the first time in 10 trading sessions, indicating improving confidence among investors concerned that a spike in interbank lending rates last week could gum up the country’s financial system. Nikkei Stock Exchange was closed for the day on account of Emperor’s Day holiday. Borrowing costs in China’s money market started soaring again following a brief fall earlier Monday, as the central bank’s recent fund injection failed to appease jittery investors amid a seasonal surge in demand for cash by banks. The seven-day repurchase-agreement rate, a benchmark measure of the cost that banks charge each other for short-term loans, rose to 9.8%, up from 8.2% and its highest level since it hit 11.62% on June 20, at the peak of China’s summer cash crunch.