Global cues help the markets to end with gains

Indian markets after a gap-up opening just managed to hold their gains for the session on Wednesday. The gains were mainly induced by the cheerful global cues and it missed the further push from the domestic interim rail budget. Though, facing a revenue shortfall, Railway Minister Mallikarjun Kharge in his maiden budget was not expected to make any big-bang announcement, but was expected to make changes in the fuel adjustment component for minimum impact on ticket prices. The extremely short budget presentation, marred by interruptions caused by MPs protesting creation of Telangana remained a non event and most of the railways related stocks turned lower after the budget.

Earlier the markets made a good start taking cues from the overnight surge in the US markets after Federal Reserve Chair Janet Yellen in her first Congressional testimony said that Fed would continue to reduce the pace of asset purchases but reiterated that a highly accommodative policy will remain appropriate for a considerable time after the asset purchases end. The Asian markets followed the trend and all the major indices posted good gains, also supported by widening trade surplus in China. The European markets too continued their bull run and made a positive start with major indices gaining for the sixth straight session, ahead of the Bank of England’s quarterly economic outlook.

Back home, the markets more or less remained in upbeat mood throughout the day, some selling was seen soon after the Railway budget, but the markets stabilized after minor hiccups. Railway Minister Mallikarjun Kharge kept passenger fares and freight rates unchanged, introduced 72 new trains and said that train services will also start for Vaishno Devi shrine at Katra in Jammu and Kashmir. He also promised a new tariff-setting body and said work on eastern and western freight corridors was progressing well. However, there was some cautiousness too in the market ahead of the Industrial Production and Consumer price index inflation data. Though, the IIP likely contracted for the second consecutive month in December, on weak manufacturing demand after falling by 2.1 percent in November, traders were mainly eyeing the CPI data, as the RBI’s next policy will majorly depend on it. Sensing some positive news, most of the rate sensitives’ remained in upbeat mood since beginning, though realty ended in red. IT sector, one of the top gainers of last session, added to the gains on industry body Nasscom’s forecast that Indian IT-BPM exports will grow 13%-15 % in 2014-15 to touch $97- $99 billion.Defensive sectors like FMCG and healthcare took a back seat, while the metal stocks too remained in somber mood since beginning. The non sectoral gauge of sugar came under pressure after Cabinet Committee on Economic Affairs (CCEA), for the third time in row, yet again deferred a decision on subsidy for export of raw sugar on account of unresolved difference between the Agriculture and Food Ministry on quantum of subsidy. Broader markets too lost their momentum and managed just a flat closing. The overall volume was once again on the lower side with total trade worth of 1.30 lakh crore.  

The market breadth remained in favor of decliners, as there were 1,282 shares on the gaining side against 1,343 shares on the losing side while 137 shares remain unchanged.

Finally, the BSE Sensex surged by 85.12 points or 0.42%, to settle at 20448.49, while the CNX Nifty added 21.30 points or 0.35% to settle at 6,084.00.

The BSE Sensex touched a high and a low of 20516.60 and 20427.23, respectively. The BSE Mid cap index ended flat, while the Small cap index gained 0.04%.

The top gainers on the Sensex were ICICI Bank up by 3.11%, Gail India up by 2.57%, ONGC up by 2.50%, L&T up by 1.72% and BHEL up by 1.48%, while Tata Steel down by 4.05%, Maruti Suzuki down by 1.67%, Dr Reddys Lab down by 1.62%, ITC down by 1.46% and NTPC down by 1.21% were the top losers in the index.

On the BSE Sectoral front, Capital Goods up by 1.51%, Oil & Gas up by 1.27%, Bankex up by 0.95%, PSU up by 0.49% and Teck up by 0.30% were the top gainers, while Metal down by 1.33%, FMCG down by 0.85%, Realty down by 0.32%, Consumer Durables down by 0.31% and Healthcare down by 0.27% were the only losers in the space.

Meanwhile, the Cabinet Committee on Economic Affairs (CCEA), for the third time in row has yet again deferred a decision on subsidy for export of raw sugar on account of unresolved difference between the Agriculture and Food Ministry on quantum of subsidy. While food Ministry had originally proposed a subsidy of Rs 2,000 per tonne on export of four million tones (mt) of raw sugar for two years, the Agriculture Ministry has proposed higher subsidy of Rs 3,500 per tone.

No unanimity on quantum of subsidy made CCEA defer its decision on the matter twice the last week. It then requested the concerned ministries to rework the subsidy. Accordingly, an informal group of ministries (IGoM), which met last week agreed on giving a subsidy of Rs 3,500 per tonne on export of 4 million tonnes of raw sugar, costing the exchequer Rs 1,400 crore. Contrary to the IGoM's decision, the Food Ministry moved a proposal suggesting Rs 2,800 per tonne as subsidy.

Back in December 2013, the government had approved Rs 6,600 crore interest-free loan to the sugar industry for making payment to sugarcane farmers.

The CNX Nifty touched a high and low of 6,106.60 and 6,077.40 respectively.

The top gainers of the Nifty were ICICI Bank up 2.98%, Gail up by 2.79%, ONGC up by 2.41%, L&T up by 2.15% and BHEL up by 1.61%. On the other hand, Tata Steel down by 4.09%, Cairn down by 2.90%, Maruti Suzuki down by 1.98%, ITC down by 1.63% and Dr. Reddy's Laboratories down by 1.53% were the top losers.

The European markets were trading in green, France's CAC 40 was up by 0.54%, Germany's DAX was up by 0.82% and United Kingdom's FTSE 100 was up by 0.27%.

The Asian markets concluded Wednesday’s trade in green with Japan’s Nikkei share average climbing to a 1-1/2 week high after strong Chinese trade data lifted investors’ risk appetites and the Federal Reserve’s new chief signaled no change in its policies. Chinese trade data printed much stronger than expected, with a sharp gain for exports, but markets largely ignored the result. Chinese Trade Balance rose to 31.86B, from 25.60B in the preceding month. China’s exports rose 10.6% in January compared to a year earlier, accelerating from a 4.3% advance the previous month.

Japan’s Core Machinery Orders fell to -15.7% from 9.3% in the preceding month while Japan’s M2 Money Stock rose to a seasonally adjusted 4.4%, from 4.3% in the preceding month whose figure was revised up from 4.2%. South Korean Unemployment Rate rose to a seasonally adjusted annual rate of 3.2%, from 3.1% in the preceding month whose figure was revised up from 3.0%.