Benchmarks witness profit-booking at higher levels; Nifty further retracts from 6350 level

After trading strength to strength since early deals, benchmarks equity indices, paring gains have now started coming off their day’s high level as investors have started booking profits at higher levels. Led by the banking sector, the secular up-move of the bourses is on account of across the board buying activities, with only exceptions being the stocks from Capital Goods sector which have been hit hardest, succumbing to bout of selling pressure. Meanwhile, Interest rate-sensitive stocks gained on expectation that weak growth and an easing of inflation will spur the RBI bank to keep policy on hold later this month. In the private sector banks space, ICICI Bank gains 1.7%, while Axis Bank rallied by 2.2%. Among real estate stocks, DLF was up 1.8 %, while Unitech gained 1.9%. Thus, off day’s high, Sensex and Nifty, trading with gains of over half a percent, are moving far away from the crucial 21,300 and 6,350 levels respectively. Meanwhile, broader indices despite paring their gains, continue to outperform larger peers, with gains of over 3/4 of a percent.

On the global front, Asian share markets endure mixed fortunes on Thursday in the wake of disappointing data on Chinese manufacturing, while investors showed renewed appetite for commodities as the New Year got underway. Closer home, sentiment at Dalal Street also took a bit of a hit after India's factories lost momentum last month as softness in new domestic orders prompted firms to lower production growth. HSBC Manufacturing Purchasing Managers' Index (PMI), which gauges business activity in Indian factories but not its utilities, fell to 50.7 in December from 51.3 in the previous month. However, the overall undertone remains to be positive right from start of trade. Amidst across the board buying activities, besides banking, stocks from Consumer Durables and Health Care counters are grabbing traders’ attention. Additionally, Aviation stocks, viz Jet Airways and Spicejet, too are flying higher after media reports suggested that public sector oil refining-cum-marketing companies (PSU OMCs) on Wednesday, 1 January 2014, increased the price of aviation turbine fuel (ATF) by 2.7%. Further, shares of buses makers -- Tata Motors and Ashok Leyland – gained traction after the Ministry of Urban Development on underscored that it has sanctioned buses to a total of 13 cities/cluster of cities after the Central Sanctioning & Monitoring Committee Meeting held on 31 December 2013. The overall market breadth on BSE is in the favour of advances which have thumped declines in the ratio of 1466:793; while 139 shares remained unchanged.

The BSE Sensex is currently trading at 21268.12 up by 127.64 points or 0.60 % after trading in a range of 21,331.32 and 21,140.58. There were 21 stocks advancing against 9 stocks declining on the index.

The broader indices too marginally pared their gains; the BSE Mid cap index was up by 0.84%, while Small cap index up by 0.87%.

The gaining sectoral indices on the BSE were Consumer Durables up by 1.69%, Bankex up by 1.57%, Metal up by 0.90%, Healthcare up by 0.72%, IT up by 0.43% and TECk up by 0.37%.  On the flip side, Capital Goods down by 0.21% was the lone loser on the index. 

The top gainers on the Sensex were Maruti Suzuki up by 2.52%, SBI up by 2.19%, Axis Bank up by 2.03%, HDFC up by 1.82% and Sun Pharma up by 1.66%. On the flip side, NTPC down 1.09%, Coal India down by 1.01%  Bharti Airtel down by 0.74%, Bajaj Auto down by 0.54% and L&T down by 0.49%.

Meanwhile, the Cabinet Committee on Economic Affairs (CCEA) is likely to consider the Power Ministry’s proposal soon to amend the Mega Power Policy introduced in November 1995 to provide impetus to the setting up of large power projects and derive benefits from economies of scale. The amended power policy is expected to provide benefits to thermal power projects of 1,000 MW and hydel plants of 500 MW. Meanwhile, policy guidelines were also modified in 1998, 2002 and 2006 to encourage power development in the North Eastern region and Jammu & Kashmir.

Mega Power Policy allows mega power projects to tie up electricity sales to distribution utilities through long-term power purchase agreements. The benefits of Policy also apply to energy-efficient supercritical projects, which are awarded through international competitive bidding with the mandatory condition of setting up indigenous manufacturing facilities.

These mega power projects can also sell power outside these agreements, in accordance with the National Electricity Policy 2005 and the Tariff Policy 2006, which have amended from time to time.

The CNX Nifty is currently trading at 6,341.15, up by 39.50 points or 0.63% after trading in a range of 6,358.30 and 6,300.65. There were 36 stocks advancing against 14 declining on the index.

The top gainers of the Nifty were Bank of Baroda up by 3.50%, Ranbaxy up by 2.92%, PNB up by 2.76%, Maruti up by 2.49% and SBI up by 2.14%. On the flip side, NTPC down by 1.23%, Coal India down by 1.04%, Bharti Airtel down by 0.81%, Bajaj Auto down by 0.69% and BHEL down by 0.66% were the major losers on the index.

Asian equity indices were trading mixed; Shanghai Composite declined 0.40%, Hang Seng dipped 0.13%, KLSE Composite contracted by 0.62%, Seoul Composite tumbled by 2.20%. While, Taiwan Weighted was up by 0.01%, Jakarta Composite up by 1.00% and Straits Times was up by 0.14%.