Benchmarks end in the green for first time in 2014

Buoyed by firm global cues, Indian equity benchmarks, snapping their five days losing streak ended in the positive terrain on Wednesday for the first time in 2014. Though, the domestic bourses traded in narrow range, but in the green, throughout the session as investors opted for wait and watch approach ahead of the official start of the third quarter corporate earnings, beginning on January 10, 2013 with IT major Infosys and private sector bank IndusInd Bank. However, gains on the up-side remained capped as sales by foreign institutional investors in the previous three sessions weighed on investor sentiment. Foreign institutional investors remained sellers for the third straight day on January 7 with sales of Rs 567 crore.

Supportive cues from US markets provided the much needed support to local markets initially and sentiments remained up-beat on report that US trade deficit narrowed by much more than anticipated in the month of November. Rally in Asian markets too boosted the traders’ morale with Japanese Nikkei surging around two percentage point on the back of weakness in yen against dollar. However, disappointing start of European markets took its toll on domestic sentiments and capped the gains on the up-side.

Back home, some support came in after Finance Minister P Chidambaram asked taxmen to step up collections in view of fiscal deficit threatening to exceed the target. Some support also came in from currency front where Indian rupee appreciated 19 paise to 62.16 at the time of equity markets closing, as against the previous close of 62.30 at the Interbank Foreign Exchange market.

Stocks related to gold and jewellery space viz. Rajesh Exports, Shree Ganesh Jewellery, Gitanjali Gems, PC Jeweller etc. edged higher, as the Planning Commission member Saumitra Chaudhuri pitched for relaxation in curbs on gold imports citing improved current account deficit. Gold imports fell to 19.3 tonnes in November from a high of 162 tonnes in May in the wake of a series of curbs by both the government and the RBI. Additionally, shares of select public sector companies like, Coal India, IDBI Bank, Syndicate Bank, Allahabad Bank etc. edged higher on the buzz that the government may force cash rich state-run firms to declare hefty interim dividend to enable the government to meet the fiscal deficit target for the current year.

The NSE’s 50-share broadly followed index Nifty rose by over ten points to end comfortably above its psychological 6,150 level, while Bombay Stock Exchange’s sensitive Index -- Sensex added over thirty points to end above the psychological 20,700 mark.

Broader markets too traded with traction throughout the session and ended the trade with a gain of around half a percent. Moreover, the market breadth remained in favour of advances, as there were 1,514 shares on the gaining side against 1,057 shares on the losing side, while 160 shares remained unchanged.

Finally, the BSE Sensex gained 36.14 points or 0.17%, to settle at 20729.38, while the CNX Nifty added 12.35 points or 0.20% to settle at 6,174.60.

The BSE Sensex touched a high and a low of 20786.41 and 20688.18, respectively. The BSE Mid cap index was up by 0.59%, while the Small cap index gained 0.29%.

The top gainers on the Sensex were Coal India up 4.77%, Cipla up 3.38%, Gail India up 2.49%, Tata Power up 1.82%, and Dr Reddys Lab up 1.62%, on the flip side L&T down 2.03%, Axis Bank down 1.98%, SSLT down 1.67%, BHEL down 1.33%, and ONGC down by 1.09%,were the top losers on the index.

On the BSE Sectoral front Healthcare up by 1.04 %, PSU up by 0.82%, Auto up by 0.71%, Metal up by 0.43% and Oil & Gas up by 0.35%, were the top gainers, while Capital Goods down by 1.35%, Consumer Durables down by 0.58%, Realty down by 0.44%, and Power down by 0.03%, were the only losers on the sectoral front.

Meanwhile, as per the HSBC business survey on emerging countries, services and manufacturing sectors across emerging economies recorded slower expansion in December, except in India where the both segments continued to witness contraction. The composite HSBC emerging markets index fell to 51.6 in December from 52.1 in November, showing a weaker rate of expansion. The survey indicated that manufacturing output continued to rise at a faster pace than services output which rose at the slowest rate in three months. New business inflows in global emerging markets rose for the fifth month running, while backlogs continued to expand marginally.

HSBC survey further added that inflationary pressures in emerging markets remained muted in December, with average input prices rising at the slowest pace since July, leading to the weakest increase in output prices in the reported month. HSBC Chief Global Economist Stephen King asserted that despite the relative weakness, there is no indication of any imminent descent into recession. HSBC Index value above 50 remains well above the traumatic levels recorded in 2008 and the first half of 2009, however, emerging economies are not expanding at the rapid rates recorded before the onset of the global financial crisis. Meanwhile, Stephen King added that in the longer term, prospects for the emerging world remain encouraging.

Among the largest emerging markets, the composite PMI numbers for China and Brazil witnessed a slight decline in December over November, but remained above the crucial 50 mark. The composite PMI for China declined from 52.3 in November to 51.2 in December and Brazil also witnessed similar trend and dropped slightly from 51.8 in November to 51.7 in December.

However, for India, the HSBC composite index was recorded at 48.1 for December, down from 48.5 in November. Meanwhile, the HSBC Emerging Markets Future Output Index that reflects firms' expectations for activity in next 12 months fell to a six-month low in the reported month, reflecting weaker sentiment in both manufacturing and services. In major emerging markets, Brazil continued to post the strongest sentiment regarding anticipated output growth in 2014, while, Russian firms remained less optimistic than their counterparts in China and India. The CNX Nifty touched a high and low of 6,192.10 and 6,160.35 respectively.

The top gainers on the Nifty were Coal India up by 4.92%, Cipla up by 3.36%, GAIL (India) up by 2.41%, Bank of Baroda up by 2.14%, and Tata Power Company up by 1.95%, On the other hand, Axis Bank down by 2.12%, BPCL down by 2.09%, Larsen & Toubro down by 2.03%, Ranbaxy Laboratories down by 1.54%, and BHEL down by 1.48%, were the top losers.

The European markets were trading in red, France's CAC 40 was down by 0.26%, Germany's DAX was down by 0.21%, and United Kingdom's FTSE 100 was down by 0.39%.

The Asian markets barring Shanghai Composite and Seoul Composite concluded Wednesday’s trade in green, helped by positive US economic news. Indonesia raised $4 billion from a sale of dollar-denominated bonds, seeking to draw global capital and shore up Asia’s worst-performing currency, as the Federal Reserve begins to cut stimulus. Bank Indonesia’s board of governors will hold its monthly monetary policy meeting on Thursday in Jakarta. China’s consumer confidence rose for five straight months as of December amid increasing optimism over future personal finances. The monthly measure of consumer sentiment in China hit 97.5 in December, the highest since June 2012.

The number of properties sold in Hong Kong fell by more than a third last year to a 17-year low as a drastic increase in tax on home sales, introduced to tackle rising prices, easily outweighed discounts offered by the city’s property developers. The total number of sale and purchase agreements concluded in 2013 was 70,503, down 39% from 2012’s level. The value of deals dropped 30% from a year earlier to HK$456 billion ($59 billion). Malaysian Trade Balance rose to 9.70B, from 8.20B in the preceding month.