Benchmarks bid adieu 2013 with 7-9% rise, ends slightly higher on last day

Indian equity indices concluded the last trading session of calendar year 2013 slightly in the positive terrain and garnered decent gains of around seven to nine per cent on annual basis, backed by FII investment of around $20 billion during the year, marking third highest flows. Nevertheless, Indian markets underperformed their global peers in 2013 on widespread concerns about a domestic economy suffering from low growth but high inflation.

Earlier, the domestic bourses made a strong opening as sentiments remained firm on hopes that inflows from foreign institutional investors (FIIs) will continue despite the US Federal Reserve starting to withdraw its stimulus programme from January 1. Afterwards, the frontline gauges traded in tight band throughout the session as investors remained on sidelines ahead of April-November fiscal deficit reading. Gains also remained capped with cautiousness on Reserve Bank of India’s (RBI) Governor Raghuram Rajan’s statement that the challenge of containing inflation is limiting the central bank’s ability to boost economic growth.

On the global front, Asian markets ended mostly higher, though the mood remained cautious and some of the markets in the region remained closed on New Year’s Eve. Investors also remained on sidelines ahead of China’s official manufacturing data due on Wednesday, widely expecting a slowdown in factory activity. European shares inched higher in a short session on Tuesday before the New Year break, with pan-European indexes set to post their biggest annual gains since 2009.

Back home, sentiments got some support in from of appreciation in Rupee due to lack of significant dollar demand. On the currency front, Indian rupee was at 61.80 per dollar at the time of equity markets closing as compared to previous close of Rs 61.92 per dollar.

Stocks related to retail sector edged higher, led by Trent as the government cleared proposals by UK-based retail giant Tesco’s proposal to invest around Rs 680 crore. Tesco has sought permission to pick up 50% stake in Trent Hypermarket, a wholly owned subsidiary of Trent, a Tata Group company. However, select stocks from banking sector remained under pressure after the Reserve Bank of India (RBI) stated that risks to the banking sector have increased during the past six months due to rising bad loans and has proposed tightening banks' exposure limit for single borrower and single groups.

The NSE’s 50-share broadly followed index Nifty rose by over ten points to end above its psychological 6,300 level, while Bombay Stock Exchange’s sensitive Index -- Sensex surged by around thirty points to end above the psychological 21,150 mark.

Broader markets however, traded with traction through the day and ended the session with a gain of around half a percent. Moreover, the market breadth remained in favour of advances, as there were 1,497 shares on the gaining side against 1,060 shares on the losing side, while 162 shares remained unchanged.

Finally, the BSE Sensex gained 27.67 points or 0.13%, to settle at 21170.68, while the CNX Nifty added 12.90 points or 0.21% to settle at 6,304.00.

The BSE Sensex touched a high and a low of 21230.88 and 21122.68, respectively. The BSE Mid cap index was up by 0.72%, while the Small cap index gained 0.32%.

The top gainers on the Sensex were Tata Power up 2.81%, Wipro up 1.26%, RIL up 1.06%, Axis Bank up 1.00%, and Hindalco Inds up 0.66%, on the flip side BHEL down 1.62%, Maruti Suzuki down 0.78%, Mahindra & Mahindra down 0.63%, HDFC Bank down 0.58%, and Infosys down by 0.46%,were the top losers on the index.

On the BSE Sectoral front Power up by 0.60%, Oil & Gas up by 0.52 %, PSU up by 0.32%, Capital Goods up by 0.21%, and Healthcare up by 0.21%, were the top gainers, while Metal down by 0.21% and FMCG down by 0.06% were the only losers on the sectoral front.

Meanwhile, with an aim to enhance foreign investment into the country, the Department of Industrial Policy and Promotion (DIPP) has started consultations with stakeholders on allowing foreign direct investment in retail e-commerce before the end of this financial year. Currently, 100 percent FDI is allowed in business-to-business (B2B) e-commerce, while business-to-consumer (B2C) is still prohibited.

The DIPP has prepared the discussion paper under the commerce and industry ministry for feedback. After receiving feedback, the cabinet note will be circulated to all ministries for an inter-ministerial discussion. The draft also deals with the issues concerning mandatory sourcing norms, which has been sharply criticised by global retailers. At present, there is a mandatory 30 percent local sourcing norms for foreign players.

The DIPP is considering whether to allow FDI in e-commerce only in goods or to include services as well. Including FDI in e-commerce in services would have larger implications as the ambit is huge. In India, online services such as net-banking, payment of taxes, ticketing and bill payment, matrimonial sites are developing at a brisk pace. On goods selling front, flipkart, jabong and firstcry are major players selling a large variety of goods through online. Furthermore, DIPP is facing another problem as foreign players have already tied up with domestic companies; therefore these players are opposing the government’s decision to allow FDI at this juncture.

The CNX Nifty touched a high and low of 6,317.30 and 6,287.30 respectively.

The top gainers on the Nifty were IDFC up by 4.72%, Jaiprakash Associates up by 3.13%, Tata Power Company up by 2.53%, UltraTech Cement up by 1.54%, and HCL Technologies up by 1.52%, On the other hand, BHEL down by 1.78%, Maruti Suzuki India down by 0.86%, Jindal Steel & Power down by 0.82%, Mahindra & Mahindra down by 0.67%, and Tata Steel down by 0.59%, were the top losers.

Most of the European markets were trading in green, France's CAC 40 was up by 0.23%, and United Kingdom's FTSE 100 was up by 0.37%, while Germany's DAX was down by 0.39%.

The Asian markets concluded Tuesday’s trade mostly in green, the last day of the year with markets in South Korea, Japan and Indonesia closed on New Year’s Eve. Markets were also cautious ahead of China’s official manufacturing data due on Wednesday, with investors widely expecting a slowdown in factory activity. Investors have long been concerned about high levels of debt in China, and uncertainty over the local banking system’s exposure to bad debt. This year in particular, rising money-market rates shook confidence in the Chinese stock market and contributed to its fourth consecutive year of poor performance. China’s central bank stated that it would continue with a prudent monetary policy, maintain an appropriate level of liquidity and bring about the reasonable growth of credit.

Calls for China to accelerate financial reforms grew louder after figures showed its indebted local governments owe nearly $3 trillion in a debt build-up. The National Audit Office, China’s state auditor, reported that local governments had total outstanding debt of 17.9 trillion yuan at the end of June, a sum that includes contingent liabilities and debt guarantees. Hong Kong’s total exports’ value rose 5.8% to $325.5 billion over a year earlier, compared to a year-on-year increase of 8.8% in October. Within this total, re-exports’ value rose 6% to $320.9 billion, while that of domestic exports fell 10.4% to $4.6 billion. Concurrently, imports’ value increased 5.2% to $370.1 billion, compared to a year-on-year increase of 6.3% in October. South Korean CPI rose to a seasonally adjusted annual rate of 1.1%, from 0.9% in the preceding month.