Late hour buying help benchmarks to recover all their losses

Indian equity benchmarks staged a smart recovery in last leg of trade on Tuesday and ended the session flat, pairing all their early losses, supported by short-covering in beaten down but fundamentally strong stocks. The benchmark got off to a negative start on the back of feeble global cues and extended their downfall to touch intraday lows. Investors also remained concerned, as the global credit rating agency and consulting firm Fitch on Monday called on the top brass of the Finance Ministry and raised concerns about country’s fiscal deficit. The indices even went on to test important psychological 20,200 (Sensex) and 5,930 (Nifty) levels, but the key gauges got solid support around those intraday low levels and convalesced from thereon.

Sentiments remained down-beat since morning after global markets witnessed a sell-off on lower-than-expected manufacturing data in the US. Asian markets also ended lower led by over four percent fall in Japanese market, as yen strengthened and hit strongest level in more than two months. European markets too made a choppy start, with CAC, DAX and FTSE all trading with a cut of around half a percent.

Back home, buying which emerged in late trade acted as saving grace for domestic equity markets and helped Nifty to re-conquer its crucial 6,000 mark, while Sensex regained 20,000 mark. Decent pull-back in Indian rupee, after a weak start, too supported the sentiments. The rupee was trading at 62.54 per dollar mark at the time of equity markets closing as compared with previous close of 62.58 per dollar. Recovery in banking space too aided the sentiments. The revival in banking shares was led by index heavyweight, State Bank of India (SBI), which rallied over 1.5% for the session. Telecom stocks remained on buyers’ radar with Bharti Airtel, Idea Cellular and Reliance Communication edging higher, as the third round of the telecom spectrum auction opened on a positive note on February 3, 2014. On the flip side, software and technology stocks like, Wipro, TCS and Infosys edged lower after data showed factory activity in the US expanded in January at the weakest pace in eight months, as orders slumped, a sign manufacturing cooled at the start of the year along with the weather.

The NSE’s 50-share broadly followed index Nifty declined by just one point and managed to end above the psychological 6,000 support level, however Bombay Stock Exchange’s Sensitive Index -- Sensex rose by two points to finish above the psychological 20,200 mark. Broader markets too witnessed late hour recovery and managed to end in the green with a gain of around half a percent. The market breadth remained in favor of advances, as there were 1,271 shares on the gaining side against 1,237 shares on the losing side while 145 shares remain unchanged.

Finally, the BSE Sensex gained 2.67 points or 0.01%, to settle at 20211.93, while the CNX Nifty lost 0.90 points or 0.01% to settle at 6,000.90.

The BSE Sensex touched a high and a low of 20255.52 and 19963.12, respectively. The BSE Mid cap index was up by 0.39%, while the Small cap index gained 0.19%.

The top gainers on the Sensex were Bharti Airtel up 3.43%, NTPC up 3.37%, Tata Motors up 2.76%, Bajaj Auto up 1.96% and SBI up by 1.76%, on the flip side Mahindra & Mahindra down 3.47%, Gail India down 3.01%, BHEL down 2.45%, Dr Reddys Lab down 2.02%, and TCS down by 1.89% were the top losers on the index.

On the BSE Sectoral front Bankex up by 0.90%, FMCG up by 0.78%, Power up by 0.70%, Realty up by 0.57% and Auto up by 0.57% were the top gainers. While, IT down by 1.78%, Teck down by 0.98%, Healthcare down by 0.62% Metal down by 0.50% and Oil & Gas down by 0.12% were the top losers on the sectoral front.

Meanwhile, the Department of Economic Affairs (DEA) Secretary Arvind Mayaram has asserted that representatives of Fitch expressed satisfaction on the country’s overall macroeconomic situation. As international rating agencies are to take a call on the country’s economic situation soon, Finance Ministry met with global rating agency Fitch and reviewed the country’s economic scenario. The rating agency affirmed India's sovereign rating at 'BBB-', which is at the lowest investment grade with stable outlook.

Mayaram further added that the rating agency has expressed concerns over the banks' non-performing assets (NPAs), which is below the benchmark and has become a matter of concern for the country. The ratio of gross NPA to advances for banks increased significantly to 3.92 percent in June 2013 from 2.36 percent in March 2011. The rating agency also raised issues over the country’s fiscal deficit, which touched Rs 5,16,390 crore or 95.2 per cent of the Rs 5,42,499 crore fiscal target during April-December FY14. Meanwhile, Finance Ministry has allayed concerns raised by Fitch on the fiscal deficit front and expressed confidence to contain it at 4.8 percent of GDP in current fiscal year.

Further, the Ministry has also assured the rating agency that the current account deficit (CAD) would be narrowed to below $50 billion, or less than 2.5 percent of GDP, in the current financial year on the back of curbs on gold imports and a range-bound rupee. Ministry also asserted that infrastructure investments would increase in coming future following approval of projects by the Cabinet Committee on Investment (CCI) and the Project Monitoring Group. So far this fiscal, around 287 stalled projects worth Rs 5.5 lakh crore have already been cleared and 250 such projects worth Rs 10 lakh crore are expected to be approved shortly.

The CNX Nifty touched a high and low of 6,017.80 and 5,933.30 respectively.

The top gainers on the Nifty were NTPC up by 3.65%, PNB up by 3.53%, Bharti Airtel up by 2.99%, Tata Motors up by 2.88%, and Ranbaxy Laboratories up by 2.49%. On the other hand, HCL Technologies down by 3.47%, NMDC down by 3.23%, Mahindra & Mahindra down by 3.03%, GAIL (India) down by 2.52%, and Dr. Reddy's Laboratories down by 2.28% were the top losers.

The European markets were trading in red, France's CAC 40 was down by 0.25%, Germany's DAX was down by 0.85% and United Kingdom's FTSE 100 was down by 0.21%.

The Asian markets concluded Tuesday’s trade in red, tracking weak cues from Wall Street where the major averages tumbled on disappointing economic data. Markets in Shanghai and Taiwan remained closed for Lunar New Year holidays. Japan’s Nikkei fell to a four-month low as the yen’s rise hurt sentiment. The currency-sensitive Japanese market suffered as the US dollar reached more than two-month low against the yen, and even lost grip of the ¥101-handle before slightly recovering.

Indonesia’s government aims to raise Rp 10 trillion ($816 million) from selling bonds and bills on Thursday, in what would be the third of such sales this year as part of the country’s efforts to raise funds to plug the budget deficit. Hong Kong Retail Sales fell to a seasonally adjusted annual rate of 5.7%, from 8.5% in the preceding month. South Korean CPI remained unchanged at a seasonally adjusted annual rate of 1.1%, from 1.1% in the preceding month.