Markets come off day’s high; momentum still strong

Indian equity markets have started coming off their high as market-participants increasingly indulge in booking profits at higher levels. Nevertheless, the underlying tone still continues to be fairly strong on hopes that the Reserve Bank of India (RBI) 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. Additionally, local shares drawing support from Asian counterparts, also edged higher after a surprisingly weak U.S. jobs report on Friday revived speculation that the Federal Reserve could keep policy loose for longer. Back home, although off day’s high, Sensex and Nifty, are holding above the crucial 21,000 and 6,200 levels respectively, with strong gains of over a percent. On the flip side, broader indices paring early gains are now trading on a mixed note, with Mid-cap index edging lower and Smallcap index edging higher with gains of close to half a percent.

On the BSE sectoral front, most of the sectoral indices are trading in green, stocks from Information Technology, Oil & Gas and banking shares are featuring in the list of top gainers. On the flip side, Healthcare, FMCG, Realty and Power counters remain downbeat. While, IT stocks are up after Infosys reported better-than-expected quarterly results on Friday, banking shares are upbeat on prospects of another status-quo stance of RBI in its upcoming third monetary policy review. Additionally, shares of oil and gas companies, ONGC and Reliance Industries (RIL), gained after the government officially notified a decision taken last year to change the pricing formula for domestic natural gas from April 1, thereby removing the uncertainty on what effectively constitutes a price hike. Accordingly, gas from April will be priced at an average price of liquefied natural gas (LNG) imports into India and benchmark global gas rates. This formula will be applicable for five years i.e. till March 31, 2019. The overall market breadth on BSE is in the favour of advances which have thumped declines in the ratio of 1249:1129; while 146 shares remained unchanged.

The BSE Sensex is currently trading at 21007.12, up by 248.63 points or 1.20% after trading in a range of 21,066.08 and 21,850.54. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading mixed; with BSE Mid cap index edging lower by 0.03% and Small cap index nudging up by 0.54%.

The gaining sectoral indices on the BSE were IT up by 2.3%, Teck up by 2.11%, Oil and Gas up by 1.48%, Bankex up by 0.96% and Capital Goods up by 0.82%. While, Healthcare down by 0.89%, FMCG down by 0.03%, Realty down by 0.22% and Power down by 0.24% were the only losing indices on BSE.  

The top gainers on the Sensex were Infosys up by 3.36%, TCS up by 2.80%, ONGC up by 2.22%, ICICI Bank up by 1.85% and RIL up by 1.77%. On the flip side, Tata Power down by 2.18%, Sun Pharma down by 1.07%, Hindustan Unilever down by 0.87%, SSLT down by 0.64% and Maruti Suzuki down by 0.62%.

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 6,235.15, up by 63.70 points or 1.03% after trading in a range of 6,259 and 6,189.55. There were 28 stocks advancing against 21 declining on the index, while 1 stock remained unchanged.

The top gainers of the Nifty were Infosys up by 3.40%, HCL Technologies up by 3.22%, TCS up by 2.74%, ONGC up by 2.15% and Tata Motors up by 1.95%. On the flip side, Ranbaxy down by 7.71%, JP Associates down by 2.71%, Tata Power down by 2.30%, Jindal Steel down by 1.28% and Sun Pharma down by 1.07% were the major losers on the index.

The Asian equity indices were trading mixed; Nikkei 225 up by 0.20%, Seoul Composite up by 0.54%, KLSE Composite up by 0.48%, Taiwan Weighted up by 0.43%, Jakarta Composite up by 0.76% and Hang Seng up by 0.18%.. While, Shanghai Composite and Straits Times were down by 0.53% and 0.15% respectively.