Bulls retaliate on buoyed global cues; Nifty just shy 5,100 mark

Bulls strike back on Friday, after witnessing steep fall in previous session. Markets traded jubilantly throughout the session and garnered gain of over a percentage point with Sensex regaining its psychological 16,800 mark while, Nifty ending a tad below its crucial 5,100 bastion. The sharp rally was triggered by favourable comments from ECB president Mario Draghi, who yesterday pledged support for the common euro currency amid growing worries about the European credit crisis and its impact on the global economy. Draghi’s remarks have set-off speculation about fresh monetary easing measures from the ECB, including another round of LTRO. A couple of positive economic data out of the US also aided the optimism across global markets.

Moreover, private lender ICICI Bank too supported the sentiments after reporting better-than-estimated Q1 numbers. In contrast, PSU banker Punjab National Bank slumped to the bottom of the Nifty index, falling 5%. The lender reported higher provisioning for bad loans, even as non-performing assets rose over last year. In addition, Union Bank, another PSU lender, ended with a cut of about 8% after the bank reported sharp deterioration in asset quality. Meanwhile, retail stocks like, Pantaloon Retail, Shoppers Stop and Trent all edged higher after Trade Minister Anand Sharma said that the government is committed to opening its retail sector to foreign investment and will not reverse its stance.

Touching their high point of the day’s trade, benchmarks trimmed some of their gains triggered by sharp reversal in the European indices in intraday trade, after a positive opening. Moreover, the sentiments also remained subdued after Moody’s Investors Service lowered its rating outlook on 17 German banking groups to ‘negative’ following outlook change on German sovereign and sub-sovereigns. Also, Egan-Jones, the credit rating agency downgraded Italy’s sovereign debt rating to ‘CCC+’. However, Asian stock indices closed sharply higher as ECB president Mario Draghi’s encouraging comments in support of the euro sparked speculation about fresh monetary measures from the central bank to rein in the euro-zone credit crisis.

Back home, markets traded firmly till end supported by metal space, which remained the top gainer after copper prices edged higher in the international market on July 27, 2012. Three-month copper on the London Metal Exchange traded at $7,502 a tonne, up 0.43% and adding to small gains seen in the prior session. Shares of Tata Steel, Hindalco Industries, Sesa Goa and JSW Steel edged higher in the trade. The FMCG sector too provided the strength to the benchmarks. The gains in the space were aided by strong set of Q1 numbers reported by ITC. In addition, HUL, Dabur and Colgate-Palmolive, also registered gains of 112.26%, 30.54% and 16.90% earlier, in its net profit for Q1FY13.

The NSE’s 50-share broadly followed index Nifty, surged by over fifty points to settle tad below its psychological 5,100 support level moreover, Bombay Stock Exchange’s Sensitive Index -Sensex- added over two hundred points to finish well above the psychological 16,800 mark. However, the broader indices snapped the session in deep red. Moreover, the market breadth remained in the favour of declines, as there were 1,064 shares on the gaining side against 1,693 shares on the losing side while 129 shares remained unchanged.

The BSE Sensex surged 199.37 points or 1.20% to settle at 16,839.19, while the S&P CNX Nifty soared by 56.85 points or 1.13 to close at 5,099.85.

The BSE Sensex touched a high and a low of 16,975.03 and 16,760.72 respectively. The BSE Mid cap and Small cap index ended lower by 0.90% and 0.97% respectively.

Tata Steel up 3.94%, Tata Motors up 3.88%, Sterlite Industries up 3.22%, HDFC Bank up 3.13% and Hindalco up 3.12% were top gainers on the Sensex, while SBI down 3.77%, BHEL down 1.93%, Hero MotoCorp down 1.58%, Cipla down 0.37% and Dr Reddys Lab down 0.10% were top losers on the index.

The top gainers on the BSE sectoral space were, Metal up 2.09%, FMCG up 1.35%, IT up 1.28%, TECk up 1.09% and Auto up 0.98%, while Realty down 0.79%, Capital Goods (CG) down 0.61%, PSU down 0.53% and Health Care (HC) down 0.09% were top losers on the BSE sectoral space. 

Meanwhile, given the Competition Commission of India’s (CCI) impose of hefty penalty of Rs 6,300 crore on 11 leading cement manufacturing companies for violating provisions of the Competition Act, 2002 and indulging in anti-competitive practices like price cartelization, the Builders' Association of India (BAI) has sought for an independent regulator for the industry on the lines of insurance regulator - Insurance Regulatory and Development Authority (IRDA).

BAI’s trustee D L Desai suggested that the regulator should be given quasi-judicial authority. He also opined that CCI’s move, which slapped a fine on cement manufacturing leads against price cartelisation was remarkable, but the amount is very low compared to the profits earned by the industry. The cement industry has an installed capacity of 320 million tonnes as against the present demand of 250 MT. He added that CCI's penalty on them was only 0.5 times their profits in 2009-10 and 2010-11.

He also pointed out that Parliamentary Standing Committee, headed by Shantha Kumar has also recommended setting up a regulator in order to control profit-driven price escalation in the cement sector. All free markets need a regulator not only to regulate the sector but to expedite grievances of stakeholders, he added.

The S&P CNX Nifty touched a high and low 5,149.95 and 5,077.50 respectively.

The top gainers on the Nifty were Sterlite Industries up 4.57%, Tata Steel up 4.40%, Tata Motors up 3.78%, HDFC Bank up 3.75% and Sesa Goa up by 3.31%. On the flipside, PNB down 4.95%, SBI down 3.54%, Bank of Baroda down 2.49%, JP Associates down 2.44% and Kotak Bank down 1.98% were top losers on the index. 

The European markets were trading in green, France's CAC 40 was up 0.44%, Germany's DAX was down 0.07% and United Kingdom’s FTSE 100 was up 0.05%.

Asian shares ended higher on Friday after reassurance from European Central Bank President Mario Draghi that the ECB is willing to do whatever it takes to preserve the euro. Investors are hopeful for the quick move from central banks to tackle skyrocketing borrowing costs in countries like Spain. However, Korea was among the strongest performers as Samsung Electronics reported decent profit. In Japan, Nissan Motor gained 2.8%, despite reporting a smaller-than-expected first quarter operating profit, as investors bought scrips amid expectations that the company's earnings are expected to bottom in the first half. Meanwhile in Hong Kong, AIA Group rallied after the insurer reported above-view results for the first half of the year.