Benchmarks eke out modest gains; Nifty regains 6,200 level

Key domestic benchmarks managed to keep their head above water on penultimate day of February F&O expiry, prolonging gaining streak for the third straight day. The bourses went through volatility where benchmarks after making a gap-up opening, slipped into red for a couple of times during the session. Buying which emerged in late trade mainly acted as saving grace for domestic equity markets and helped them to regain their crucial 6,200 (Nifty) and 20850 (Sensex) bastion.

Overall, sentiments remained up-beat on the back of latest survey of National Council of Applied Economic Research (NCAER), which said that after a slide in the second quarter of the current fiscal, higher exports, enhanced farm produce and moderation in inflation improved business confidence during the October-December period. The Business Confidence Index (BCI) rose by about 21.8 percent to 122.3 points from 100.4 in July-September quarter, 2013-14. Also, the Reserve Bank of India (RBI) Governor Raghuram Rajan has said that the central bank’s focus is to bring down inflation to boost investor confidence.

On the global front, supportive cues from US markets provided some support to local markets and sentiments remained up-beat on hopes that Fed Chair Janet Yellen may not continue tapering in the face of the weak economic data. Asian markets ended mixed with Chinese market ending lower by over two percent on report of drop in property sales last week, while the Japanese Nikkei ended higher by around one and a half percent on weakening yen. However, disappointing start of European markets took their toll on domestic sentiments and capped the gains on the up-side.

Back home, gains also remained capped as investors offloaded positions in metal stocks tailing the weakness in the Chinese market where the currency tumbled the most in more than a year on speculation the central bank wants an end to the currency’s steady appreciation. Market participants also turned cautious as international rating agency Moody’s expects only marginal increase in Indian economic growth at 5.5 percent during FY15 citing that the forthcoming elections will delay the reform process and hurt growth.

However, NBFC stocks traded with traction on reports that the Jalan committee, which is scrutinizing applications for new bank licences, will submit its report by the weekend. Stocks related to realty sector too remained on buyers’ radar on report that PE investments in the country’s real estate sector during 2013 registered a 13-per cent increase to Rs 7,000 crore ($1.2 billion), over the Rs 6,200 crore ($1.1 billion) done in 2012. Additionally, sugar stocks like Dwarikesh Sugar Industries, EID Parry (India), Balrampur Chini Mills, Sakthi Sugars, Rana Sugars, Bajaj Hindusthan etc. edged higher, after raw sugar futures on ICE soared to three-month highs on February 25, 2014.

The NSE’s 50-share broadly followed index Nifty rose by over ten points and ended above the psychological 6,200 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex rose by over forty points to finish above the psychological 20,850 mark. Broader markets too were traded with traction and ended the session with a gain of around quarter a percent. The market breadth remained in favor of decliners, as there were 1,317 shares on the gaining side against 1,341 shares on the losing side while 162 shares remain unchanged.

Finally, the BSE Sensex gained 41.03 points or 0.20%, to settle at 20852.47, while the CNX Nifty added 13.95 points or 0.23% to settle at 6,200.05.

The BSE Sensex touched a high and a low of 20912.54 and 20777.73, respectively. The BSE Mid cap index was up by 0.32%, while the Small cap index gained 0.09%.

The top gainers on the Sensex were Wipro up by 2.95%, Bajaj Auto up by 2.14%, BHEL up by 1.92%, Cipla up by 1.90% and Bharti Airtel up by 1.57%, while SSLT down by 2.26%, Coal India down by 2.26%, Tata Steel down by 2.25%, Tata Power down by 2.06% and Gail India down by 1.50% were the top losers in the index.

On the BSE Sectoral front, Consumer Durables up by 2.96%, IT up by 0.90%, Teck up by 0.89%, Auto up by 0.59% and Capital Goods up by 0.57% were the top gainers, while Metal down by 1.75%, PSU down by 0.50%, Power down by 0.42%, Oil & Gas down by 0.09% and Bankex down by 0.08% were the top losers in the space.

Meanwhile, keeping inflation battle at the top of agenda, the Reserve Bank of India (RBI) Governor Raghuram Rajan has asserted that the central bank's focus is to bring down inflation to boost investor confidence. Emphasizing the need for India to strengthen its fundamentals like inflation rate, the Governor has stated that if investors have a sense that inflation rate is going to come down, both domestic and international investors would be more prepared to take a bet on the rupee.

RBI had already highlighted that persistence high Inflation has been impacting the economic fundamentals particularly domestic currency. WPI inflation eased to eight-month low at 5.05% in January as compared to 6.16% in December. Meanwhile, the domestic currency has depreciated over 15% during 2013 mainly on account of high gold imports and high capital outflow. 

Regarding the prospect of new government after the May general elections, Raghuram Rajan expressed hope that a stable government after the Lok Sabha elections will continue the broad fiscal policies of the current regime and India may finally get the Goods and Services Tax (GST), an ambitious indirect tax reform measure.

The CNX Nifty touched a high and low of 6,216.85 and 6,176.60 respectively.

The top gainers of the Nifty were Wipro up by 3.00%, Bajaj Auto up by 2.40%, Ambuja Cements up by 2.12%, BPCL up by 2.02% and BHEL up by 1.88%. On the other hand, NMDC down by 2.99%, SSLT down by 2.50%, Tata Steel down by 2.46%, Coal India down by 2.44% and Tata Power Company down by 2.35% were the top losers.

The European markets were trading in red, France's CAC 40 was down by 0.46%, Germany's DAX was down by 0.42% and United Kingdom's FTSE 100 was down by 0.56%.

The Asian markets concluded Tuesday’s trade on a mixed note, with Nikkei average advancing to a four-week closing high after a rally in Wall Street shares. Indonesia’s rupiah advanced to the strongest level since November as a rally in Asian stocks fueled optimism that capital inflows into the region are increasing. Foreign holdings of local-currency government debt climbed 12.3 trillion rupiah ($1.1 billion) this month through February 20, set for the biggest increase since October. Hong Kong Trade Balance rose to a seasonally adjusted -20.0B, from -54.4B in the preceding month. Japan’s Corporate Services Price Index fell to a seasonally adjusted annual rate of 0.8%, from 1.1% in the preceding month whose figure was revised down from 1.3%.

China’s commerce ministry stated that the country is cautiously optimistic about expanding its trade this year after both exports and imports performed well in January. In US dollar terms, China’s trade jumped 10.3% from a year earlier in January, with exports rising 10.6% and imports up 10%. The per capita disposable income in China grew 10.9% from a year earlier to 18,311 yuan ($2,993) in 2013. Excluding price factors, the income rose 8.1% year on year.