Benchmarks rally on hopes RBI will hold rates

Benchmarks continued to trade firm in late morning tracking firm Asian cues after surprisingly soft employment data out of the U.S. eased concerns that the Federal Reserve will accelerate cuts to stimulus. Traders cite hopes the Reserve Bank of India will keep interest rates on hold for a second consecutive month at its policy review on January 28 after data on Friday showed industrial output in November unexpectedly contracted, while consumer prices data due later in the day is expected to show easing inflation.  Market Sentiments remained boosted as the rupee was trading at 61.55/56 after hitting 61.52 at open, its highest since December 12 and below its close of 61.89/90 on Friday. Some support also come in from report that Foreign investors bought Indian shares worth 681 million rupees on Friday, exchange data showed, after selling in four of the previous five sessions.

On the global front, The Asian equity markets were trading mostly higher at this point of time, the US markets made a mixed closing on getting disappointing jobs data, though wholesale inventories rose, but traders remained concerned about Fed’s further course of action. Back home, traders were buying, IT, Oil & Gas and Teck while, selling was seen in Healthcare on the BSE. Shares of oil and gas companies were trading higher by up to 3 percent after the government has officially notified the new gas pricing policy that would be applicable to all the domestically produced gas from April 2014, which will be effective for five years. As per the new pricing mechanism, the new gas price is likely to be $8.4/mmbtu for FY2015. Currently, the gas prices are in the range of $4.2-5.7/mmbtu for domestically produced gas.

The market breadth on BSE remains positive with advances to declines in the ratio of 1321:644. BSE Sensex and NSE Nifty were comfortably trading near their psychological 20,700 and 6,150 levels respectively. The BSE Sensex is currently trading at 21042.25 up by 283.76 points or 1.37% after trading in a range of 21066.08 and 20850.54. There were 25 stocks advancing against 5 declines on the index. The broader indices were trading in green; the BSE Mid cap index was up by 0.58% and Small cap index gained 0.81%.

The top gaining sectoral indices on the BSE were, IT up by 2.10%, Oil & Gas up by 1.89%, Teck up by 1.83%, Capital Goods up by 1.40% and Bankex up by 1.25%, while  Healthcare down by 0.23% were the only loser on the sectoral index.

The top gainers on the Sensex were Infosys up by 3.01%, Tata Motors up by 2.49%, ONGC up by 2.36%, ICICI Bank up by 2.30% and TCS up by 2.22%. On the flip side, Hindustan Unilever was down by 0.64%,Dr Reddys Lab was down by 0.59%, Sun Pharma was down by 0.52%, Tata Steel was down by 0.13% and Bajaj Auto was down by 0.06% were the top losers on the Sensex.

Meanwhile, In order to allay concerns of domestic exporters over the withdrawal of preferential import duty scheme by European Union (EU), the Commerce Ministry is considering fresh incentives to help these sectors retain their competitiveness. The European Union (EU), India’s largest export market, has removed its preferential import duty scheme for some Indian products from 2014.

Till now, the EU’s generalized system of preferences scheme allowed duty-free or low-duty access for specific products in all 27 of its member countries. The withdrawal of preferential duty scheme is likely to impact country’s exports of various products including chemicals, textiles, minerals, raw hides & leather and automobiles including road vehicles, bicycles, aviation, space, boats and their parts. On becoming globally competitive these products have been removed out of the preferential duty advantage list, which is a big blow for the country. Meanwhile, the Ministry is looking at the option of providing cash incentives to the affected sectors under the existing Market Linked Focus Product Scheme giving cash benefits to exporters of specific products to specific markets, generally ranging between 2 percent and 5 percent.

The European Union (EU) accounts for around 16 per cent of the country’s total exports. During April-November 2013, India exported goods worth $33.27 billion to the 27-member bloc, recording 3.5 percent growth from a year earlier. India along with China were the top beneficiaries of the preferential duty scheme which provides preferential market access to exports from 90 developing and least-developed countries. Further, a number of countries, which have been graduated out of the scheme this year include Argentina, Brazil, Cuba, Uruguay, Venezuela, Russia, Kazakhstan and Malaysia.

The CNX Nifty is currently trading at 6,249.70 up by 78.25 points or 1.27% after trading in a range of 6,259.00 and 6,189.55. There were 42 stocks advancing against 7 stock declines, while 1 stock remained unchanged on the index.

The top gainers of the Nifty were Infosys up by 2.96%, Tata Motors up by 2.87%, ICICI Bank up by 2.55%, ONGC up by 2.45%, and TCS up by 2.30%. On the flip side, Ranbaxy down by 5.14%, Hindustan Unilever down by 0.59%, Dr. Reddy's Laboratories down by 0.37%, Ambuja Cements down by 0.27% and ACC down by 0.15% were the top losers on the index.

Most of the Asian equity indices were trading in green; Jakarta Composite surged 105.84 points or 2.49% to 4,360.81, KLSE Composite rose 8.45 points or 0.46% to 1,835.06, Seoul Composite added 12.03 points or 0.62% to 1,950.57 and Taiwan Weighted was up by 45.34 points or 0.53% to 8,574.69. On the flip side, Shanghai Composite slipped 1.16 points or 0.06% to 2,012.14, Hang Seng dipped 14.22 points or 0.06% to 22,832.03 and Straits Times was down by 5.81 points or 0.18% to 3,138.06.

The Japanese market remained closed on account of ‘Coming of Age Day’ holiday.