Markets eke out gains of around a quarter percent on bargain buying

Snapping two days downfall, Indian equity benchmarks got sigh of relief on Wednesday with frontline gauges recapturing crucial 6,000 (Nifty) and 20,250 bastions with a gain of around quarter of a percent, as investors opted to buy beaten down but fundamentally strong stocks. Earlier, key domestic bourses made a sluggish opening amid lingering worries about the outlook for the global economy on the back of recent weak data from the US and China. Sentiments also remained dampened on report that foreign institutional investors (FIIs) sold shares worth a net Rs 1234.02 crore on February 4, 2014.

But, markets staged a smart recovery in second half of the session and turned green, paring all of their initial losses, as some support came from Reserve Bank of India’s Governor Raghuram Rajan’s statement that the country is better prepared for ‘any eventuality’ in the economy now than it was six months ago. Sentiments also got some support from currency front where Indian rupee was trading strong against dollar on the back of appreciation of other currencies against the dollar. The rupee was at Rs 62.42 at the time of equity markets closing as compared with previous close of Rs 62.54 per dollar.

Firm opening in European markets too aided the sentiments with CAC, DAX and FTSE all trading higher in early deals on the back of good economic data. Euro zone’s Composite PMI, which gauges business activity across thousands of companies and is seen as a good guide to economic health, climbed to 52.9 in January from 52.1 the previous month. That was the highest final reading since June 2011. Asian markets ended mostly in the green, with Japanese index ending higher by over a percentage point showing good momentum on getting some good earnings announcements.

Back home, software and technology counters remained on buyers’ radar on news that Satya Nadella has been named the third CEO of Microsoft Corp. Stocks of export oriented companies too edged higher, as the RBI liberalised the third party payment norms for import of goods by removing the ceiling of $100,000. It has also simplified certain documentation norms related with third party payments for export and import transactions. Pharma stocks too edged higher, led by rally in Ranbaxy after the company reported narrower than expected net loss in December quarter.

Additionally, Auto stocks viz. Tata Motors, Bajaj Auto, Mahindra & Mahindra, Bajaj Auto etc. edged higher, as the 12th Auto Expo started on the outskirts of New Delhi on February 5, 2014. On the flip side, stocks related to sugar space like, Shree Renuka Sugars, Bajaj Hindusthan, Balrampur Chini, Triveni Engineering etc. remained under pressure, as the Cabinet Committee on Economic Affairs (CCEA) deferred a decision on fixing subsidy for exports of raw sugar, amid differences between food and agriculture ministries.

The NSE’s 50-share broadly followed index Nifty rose by over twenty points and ended above the psychological 6,000 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex rose by around fifty points to finish above the psychological 20,250 mark. Broader markets too were traded with traction and ended the session with a gain of around half a percent. The market breadth remained in favor of advances, as there were 1,460 shares on the gaining side against 1,110 shares on the losing side while 151 shares remain unchanged.

Finally, the BSE Sensex gained 49.10 points or 0.24%, to settle at 20261.03, while the CNX Nifty added 21.50 points or 0.36% to settle at 6,022.40.

The BSE Sensex touched a high and a low of 20289.33 and 20076.10, respectively. The BSE Mid cap index was up by 0.46%, while the Small cap index gained 0.96%.

The top gainers on the Sensex were Tata Steel up 4.69%, Tata Motors up 2.86%, Mahindra & Mahindra up 2.51%, Coal India up 2.37% and NTPC up by 1.77%, on the flip side ITC down 1.86%, BHEL down 1.71%, Maruti Suzuki down 0.82%, Sun Pharma down 0.77%, and RIL down by 0.71% were the top losers on the index.

On the BSE Sectoral front Auto up by 1.63%, Metal up by 1.60%, Realty up by 1.59%, IT up by 0.95% and Power up by 0.90% were the top gainers. While, FMCG down by 0.90%, Oil & Gas down by 0.27% and Consumer Durables down by 0.03% were the only losers on the sectoral front.

Meanwhile, with an aim to resolve the difficulties faced by exporters and importers, the Reserve Bank of India (RBI) has liberalised the third party payment norms for import of goods by removing the ceiling of $100,000. Earlier, the amount of third party payment import transaction was capped at $100,000.

The apex bank also simplified certain documentation norms related with third party payments for exports and imports transactions. The RBI further noted that firm irrevocable order backed by a tripartite agreement for overseas transactions may not be insisted upon in certain cases by banks. RBI further stated that third party payment made to a Financial Action Task Force (FATF) compliant country should be through the banking channel only. Further, concerned bank should be satisfied with the bona-fides of the transaction and export documents, such as, invoice and should also consider the FATF statements while handling such transaction.

The CNX Nifty touched a high and low of 6,028.05 and 5,962.05 respectively.

The top gainers on the Nifty were Ranbaxy Laboratories up by 5.75%, Tata Steel up by 5.12%, DLF up by 2.76%, Tata Motors up by 2.65%, and Mahindra & Mahindra up by 2.61%. On the other hand, ITC down by 1.89%, BHEL down by 1.50%, PNB down by 1.22%, Maruti Suzuki India down by 0.84%, and HCL Technologies down by 0.78% were the top losers.

The European markets were trading in green, France's CAC 40 was up by 0.33%, Germany's DAX was up by 0.08% and United Kingdom's FTSE 100 was up by 0.45%.

The Asian markets concluded Wednesday’s trade mostly in green with a rally on Wall Street giving Tokyo the impetus to claw back some of its losses in the previous session. Markets around the world have been sent into a tailspin in recent days following worse than expected manufacturing activity data from China and the United States, suggesting softness in the global economy. Taiwan January manufacturing expanded at its quickest in nearly three years as output and new orders rose. The HSBC Purchasing Managers’ Index was 55.5 in January compared with 55.2 in December--improving for the fourth straight month. Japan’s Average Cash Earnings rose to a seasonally adjusted 0.8%, from 0.6% in the preceding quarter whose figure was revised up from 0.5%.

Indonesia’s economy expanded at the slowest pace in four years in 2013, as investment weakened and imports of machinery and petroleum products eroded earnings from exports. Gross domestic product rose 5.78% from a year earlier. Growth was slower than last year’s 6.23% pace and the slowest since the 4.63% rate in 2009. Indonesia’s finance ministry raised 15 trillion rupiah ($1.23 billion) at a bond auction, well above an indicative target of 10 trillion rupiah. The country sold all offered government securities with the yields mixed compared with the previous auction on January 21.