Post Session: Quick Review

Better than expected December Wholesale Price Index (WPI) data, which came at five month low, worked wonders for Indian equity markets and after a session of dismal performance, benchmarks puffed up hefty gains of over a percent and ended past the crucial 21, 250 (Sensex) and 6,300 (Nifty) levels respectively. Further, cementing the case for RBI’s status-quo stance in its upcoming monetary policy review on  January 28, India's main inflation gauge, based on monthly WPI, eased to five month low at 6.16% as compared to 7.52% in November and 7.31% during the corresponding month of the previous year. Reacting to this good news, banking stocks gaining traction lifted the entire markets higher. Gains of the bourses could be attributed to across the board buying activities which coupled with optimistic global set-up. Meanwhile, broader indices, showing a degree of underperformance, ended with gains within the range of quarter of a percent.

On the global front, Asian stock markets rose Wednesday, tracking gains in the US spurred by stronger-than-expected retail sales data. Additionally, European shares rose on Wednesday to fresh 5-1/2 year highs, led by stocks sensitive to the global economic outlook after the World Bank raised its growth forecast for the first time in three years. The World Bank underscored the global economy had come to a 'turning point,' with fiscal austerity and policy uncertainty no longer weighing as heavily on most richer economies. It predicted total global growth of 3.2 percent in 2014.

Closer home, after getting a gap-up start, although benchmarks were trading upbeat right from the trade, a sharp up-move was witnessed after better than expected inflation figures which also bolstered hopes of RBI slashing rates by 25 basis points by March 31, 2014. Besides, banking stocks, Capital Goods, Realty and Auto counters also accumulated lot of steam and ended as sessions’ top performers. Meanwhile, Information Technology stocks too were in focus ahead of TCS’ earnings on Thursday. On the flip side, only Consumer Durable counter was the loser.

Sentiment at local markets was also bolstered on account of better than expected Q3 earnings of Yes Bank. The bank’s stocks rose close to 2% after net profit rose 21.4% to Rs 415.60 crore on 17.4% growth in total net income to Rs 1053.30 crore in Q3 December 2013 over Q3 December 2012.  The market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 1382: 1297, while 159 scrips remained unchanged. (Provisional)

The BSE Sensex gained 240.57 points or 1.14% to settle at 21273.45. The index touched a high and a low of 21302.73 and 21091.46 respectively. Among the 30-share Sensex, 29 stocks gained, while 1 stock declined. (Provisional)

The BSE Mid cap and Small cap indices ended higher by 0.13% and 0.41% respectively. (Provisional)

On the BSE Sectoral front, Capital Goods up by 1.90%, Bankex up by 1.48%, Realty up by 1.34%, Auto up by 1.28% and Metal up by 1.17% were the top gainers, while Consumer Durables down by 0.75% was the only loser in the space. (Provisional)

The top gainers on the Sensex were SSLT up by 2.96%, L&T up by 2.63%, HDFC up by 2.20%, ICICI Bank up by 2.05% and Coal India up by 1.83%, while,  Sun Pharma down by 0.04% was the only loser on the index. (Provisional)

Meanwhile, further cementing the case for RBI’s status-quo stance in its upcoming monetary policy review on January 28, India's main inflation gauge, based on monthly WPI, eased to five month low at 6.16% as compared to 7.52% in November and 7.31% during the corresponding month of the previous year. The figures were also way lower than street’s expectation. Markets after getting three-month low retail inflation figures were expecting WPI to cool down to 7% for the month of November. Surprisingly, October inflation was revised upwards to 7.24% against 7% earlier. Meanwhile, build up inflation rate in the financial year so far was 5.35% compared to a build up rate of 4.84% in the corresponding period of the previous year. Further, higher core inflation continued to remain a cause of worry as its stood at 2.8% for December as against 2.7% in the previous month.

The Wholesale Price Index for ‘All Commodities’ (Base: 2004-05 = 100) for the month of December, 2013 declined by 1.3 percent to 179.2 (provisional) from 181.5 (provisional) for the previous month. Out of this, Manufactured Products, the major group with weight of 64.97%, remained unchanged at its previous month's level of 151.9 (provisional). Within the group, index for Food Products group declined by 0.6% to 169.7 (provisional) from 170.8 (provisional) for the previous month due to lower price of gur (7%), tea leaf (unblended), gram powder (besan), tea leaf (blended) and copra oil (5% each), sunflower oil (4%), oil cakes and groundnut oil (3% each), soyabean oil (2%) and khandsari (1%). 

Meanwhile, Primary Articles, the group having a weightage of 20.12% in overall index, declined by 5.0% to 243.6 (provisional) from 256.3 (provisional) in November. The index for Food Articles group declined by 6.4% to 240.1 (provisional) from 256.4 (provisional) for the previous month due to lower price of fruits & vegetables (21%), fish-inland (8%), coffee (7%), tea and ragi (3% each) and gram, rice and mutton (1% each). 

Further, Fuel & Power, having weight of 14.91%, too rose by 0.8% to 211.3 (provisional) from 209.6  (provisional) for the previous month due to higher price of electricity (industry) (3%),  LPG (2%), high speed diesel, electricity (commercial), electricity (railway traction), aviation turbine fuel, bitumen and electricity (domestic) (1% each). However, the price of furnace oil (1%) declined.

The latest data print further bolsters the case for RBI keeping its key interest rates on hold for a second successive month at its policy review on January 28, after the dismal factory output data and three-month low Retail inflation figure. Bringing some relief to the policymakers who have an arduous task of pulling the economy out of a stagflation-like situation, the provisional annual inflation rate based on all India general Consumer Price Index (CPI) (Combined) eased more than the street's expectation, at a three-month low level of 9.87% for December 2013. Nevertheless, the latest data print also has partially built in the hopes of RBI slashing key policy rates by 25 basis points atleast by March 31, 2014.

India VIX, a gauge for markets short term expectation of volatility lost 2.03% at 15.42  from its previous close of 15.74 on Tuesday. (Provisional)

The CNX Nifty gained 78.30 points or 1.25 % to settle at 6,320.15. The index touched high and low of 6,325.20 and 6,265.30 respectively. Out of the 50 stocks on the Nifty, 45 ended in the green, while 5 ended in the red.

The major gainers of the Nifty were UltraTech Cement up 3.76%, Bank of Baroda up by 3.63%, SSLT up by 2.96%, NMDC up by 2.78% and PNB up by 2.64%. The key losers were Ranbaxy down by 2.30%, Cairn down by 1.35%, Lupin down by 0.70%, BPCL down by 0.29% and Sun Pharmaceuticals down by 0.27%. (Provisional)

Most of the European markets were trading in green with, France’s CAC 40 up by 0.37%, the United Kingdom’s FTSE 100 up by 0.29% and Germany’s DAX up by 0.81%.

All the Asian markets barring Shanghai Composite and KLSE Composite, concluded Wednesday’s trade in green following a lead from Wall Street after better-than-expected US retail sales data. Hong Kong’s Hang Seng Index picked up, but came off stronger levels following data showing a decline in the issuance of new yuan loans by Chinese financial institutions in December from November. The World Bank has raised its growth forecasts for the global economy, but warned of potential volatility in capital flows as the United States withdraws its monetary stimulus. China’s growth was seen maintaining a 7.7 percent pace for the third year in a row this year as the government engineers a restructuring of the economy.

At least seven Chinese provinces are setting lower growth targets for this year than in 2013, adding to signs that expansion will slow as the government focuses on policies to sustain the economy in the long term. Singapore’s property market is stabilizing and the country isn’t facing a credit bubble that puts the island or its banking system at risk of a crisis, the central bank stated. Singaporean Retail Sales rose to a seasonally adjusted -8.7%, from -9.4% in the preceding month. South Korean Unemployment Rate rose to a seasonally adjusted annual rate of 3.0%, from 2.9% in the preceding month.