Benchmarks start new series on a positive note

Indian equity benchmarks kick started the new F&O series on a positive note with frontline gauges garnering gain of over half percentage point on last trading day of the week, buoyed by supportive global cues coupled with appreciation in Indian rupee against dollar. During the session, the frontline equity indices traded in an extremely tight range hardly budging from the psychological 6,300 (Nifty) and 21,200 (Sensex) levels. Nevertheless, markets traded in the green terrain throughout the day and settled near their intraday high. Sentiments remained up-beat since morning after data showed that foreign funds were net buyers of Indian stocks on December 26, 2013. Foreign institutional investors (FIIs) bought shares worth a net Rs 743.70 crore on Thursday. Some support also came in from currency front where Indian rupee appreciated against dollar on the back of dollar sale by state-run banks on behalf of the Reserve Bank of India (RBI).

Supportive cues from US markets provided the much needed support to local markets in early deals. Rally in Asian markets too boosted the traders’ morale with Chinese shares outperforming the region, as a week-long spike in interbank lending rates settled, easing concerns about the health of China’s financial system. Moreover, European markets too traded with traction in early deals with, CAC, DAX and FTSE all edging higher by over half a percent.

Back home, there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too participated in the rally. Buying in select power space too supported the sentiments, as the Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Manmohan Singh, relaxed the coal tapering linkage policy for nine power projects with investments worth Rs 60,000 crore. Moreover, sugar stocks too remained on the buyers’ radar as the cabinet okayed guidelines for interest-free loan to sugar mills, making it clear to sugar mill owners that the interest-free loan of Rs 6,600 crore is meant “exclusively” to pay the cane price including arrears to farmers.

Rally in software and technology counters too aided the sentiments with stocks like Infosys, TCS, Wipro, Tech Mahindra and HCL Technologies all edging higher after recent data from US pointed to a sturdier US economy, further brightening the outlook for India’s export-dependent IT sector. Additionally, banking stocks too edged higher, with Axis bank extending previous session’s gains triggered by the government’s decision to clear a proposal of the bank for increase in foreign investment ceiling in the bank to 62% from 49%, while PSU banks, like Allahabad bank and Dena Bank, too were up on capital infusion from GoI.

The NSE’s 50-share broadly followed index Nifty rose by over thirty points to end above its psychological 6,300 level, while Bombay Stock Exchange’s sensitive Index -- Sensex increased by around one hundred and twenty points to end near the psychological 21,200 mark.

Broader markets too traded with traction during the session and ended the session slightly in the green. Moreover, the market breadth remained in favour of advances, as there were 1,384 shares on the gaining side against 1,170 shares on the losing side, while 150 shares remained unchanged.

Finally, the BSE Sensex surged by 118.99 points or 0.56%, to settle at 21193.58, while the CNX Nifty gained 34.90 points or 0.56% to settle at 6,313.80.

The BSE Sensex touched a high and a low of 21235.14 and 21113.25, respectively. The BSE Mid cap index was up by 0.26%, while the Small cap index gained 0.13%.

The top gainers on the Sensex were TCS up 2.98%, Wipro up 1.89%, Cipla up 1.73%, HDFC up 1.50%, and Infosys up 1.41%, on the flip side Maruti Suzuki down 1.09%, RIL down 1.06%, BHEL down 0.83%, Bajaj Auto down 0.72%, and Axis Bank down by 0.59%,were the top losers on the index.

On the BSE Sectoral front, IT up by 1.71%, Teck up by 1.39%, Healthcare up by 0.68%, FMCG up by 0.58%, and Bankex up by 0.52%, were the top gainers, while Oil & Gas down by 0.42%, and Auto down by 0.09%, were the only losers on the sectoral front.

Meanwhile, Planning Commission Deputy Chairman Montek Singh Ahluwalia has asserted that India should reduce its debt within 5-6 years by putting fiscal policy on the right path. Noting that a fiscal policy must be directed towards higher level of economic efficiency, it is particularly important for low income countries like India to design fiscal policy to promote economic growth.

By adding further, Ahluwalia has stated that one of the objectives of fiscal policy is to stabilize and shield the economy from external and internal shocks. As India being a federal structure, there should be appropriate framework for distributing revenue between the Centre and States, States to lower level bodies and others. Moreover, Ahluwalia added that the government must focus on reducing subsidies in order to enhance revenue. Country’s fiscal deficit reached around 84 percent of the budgeted target in the first seven months of the current fiscal.

Highlighting the inflation problem, Ahluwalia stressed that inflation is likely to ease in the coming future. The WPI inflation accelerated to a 14-month high of 7.52 percent in November, while retail inflation quickened to a high of 11.24 percent during the same month, mainly on account of high food prices.

The CNX Nifty touched a high and low of 6,324.90 and 6,289.40 respectively.

The top gainers on the Nifty were TCS up by 3.09%, NMDC up by 2.78%, Kotak Mahindra Bank up by 1.80%, Cipla up by 1.75%, and Wipro up by 1.60%, On the other hand, Jaiprakash Associates down by 1.74%, Maruti Suzuki India down by 1.12%, Reliance Industries down by 1.07%, Asian Paints down by 0.94%, and UltraTech Cement down by 0.82%, were the top losers.

The European markets were trading in green, France's CAC 40 was up by 0.91%, Germany's DAX was up by 0.77%, and United Kingdom's FTSE 100 was up by 0.60%.

The Asian markets concluded Friday’s trade in green with Chinese shares outperformed the region, as a week-long spike in interbank lending rates settled, easing concerns about the health of China’s financial system. China’s economy could approach $21 trillion over the next eight or nine years, nearing the size of that of the US, even as growth is expected to slow to around 6% from about 7.5% currently, according to a major Chinese research institute. Thailand Industrial Production fell to a seasonally adjusted -10.6%, from -4.0% in the preceding month.

Japan’s retail activity accelerated in November, while industrial production inched up just slightly. Retail sales rose 4% from a year earlier, picking up their pace from October’s revised 2.4% rise, while large retailers saw their same-store sales grow by an annual 0.6%, swinging from a 0.1% decline the previous month. Industrial output, meanwhile, ticked up by a seasonally adjusted 0.1% during November, slowing sharply from October’s 1% rise. Still, a survey of manufacturers included in the monthly data set showed expectations for December’s result to climb 2.8%, while January’s result was tipped to surge 4.6%.

Japan moved a bit closer to its inflation goal in November, with data showing a 1.2% rise for the core consumer price index from a year earlier. It was also higher than the 0.9% increase in October. That marked the sixth straight month of price rises and brought the country closer to the 2% inflation target pledged by the government and the Bank of Japan.