Indian benchmarks stage smart recovery after two sessions of drubbing

Indian equity markets staged a smart recovery after two sessions of drubbing, as value buying of select blue chip stocks activated snoozing bulls. The session was marred by volatility as the rally seemed to be fizzling out when investors started booking partial profits around the psychological 18,750 (Sensex) and 5,700 (Nifty) levels in afternoon trades. However, sanguinity prevailed till the end as investors continued piling- positions in select blue chip stocks. The sentiments also got some boost as private banks viz. ICICI Bank, Kotak Mahindra Bank and HDFC Bank gained on hopes that their quarterly earnings would prove resilient.

The gains came despite a sharp downward revision in India’s 2012 growth forecast by the International Monetary Fund (IMF). It expects India’s GDP for 2012 at 4.9 per cent, perhaps the most pessimistic growth outlook by a global body. IMF lowered its forecast despite the government unleashing a series of reforms to attract foreign investment and boost business sentiment in the country. The government also undertook a series of steps to contain rising fiscal deficit in the hope of thwarting a downgrade by rating agencies.

The main support to the Indian bourses came from Asian counters, which provided the required confidence to the investors with major Asian peers ending the session in the green terrain, led by strength in the Chinese and Hong Kong indices, after the central bank in China injected fresh liquidity into its banking system to ease monetary conditions amid concern about slowing economic growth. However, the European markets gave up early gains and turned negative in early deals on Tuesday as persistent concerns over a slowdown in global growth and its impact on corporate earnings weighed on investors sentiment.

Back home, some amount of support also came in from software counters, which rose to near a percent after the Indian rupee fell to a one-week low on October 8, 2012, and posted its biggest single-day fall in three months. Buying in FMCG space also supported the frontline indices as stocks like Marico, HUL and Gillette India edged higher on favourable outlook for Rabi or winter crop following wide-spread rains in August and September. However, the gains remain capped as Auto stocks ran out of steam after Finance Ministry slashed rebates paid on certain types of exports. Auto makers get refunded a portion of local taxes paid for components used in vehicles, motorcycles or auto parts that are sold overseas. The gains also remain limited as telecom stocks fell up to 4 percent after an Empowered Group of Ministers recommended a one-time fee on existing operators for spectrum they hold beyond 4.4 MHz.

The NSE’s 50-share broadly followed index Nifty fell by about thirty points to end above the psychological 5,700 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex rose by over eighty points to finish near its psychological 18,800 mark. The broader markets also traded in-line with benchmarks and ended the session with a gain of about half a percent. 

The overall volumes stood at over Rs 1.33 lakh crore, which remained on the higher side as compared to that on Monday. The market breadth remained in favor of advances as there were 1,568 shares on the gaining side against 1,305 shares on the losing side while 136 shares remain unchanged.

Finally, the BSE Sensex gained 84.38 points or 0.45% to settle at 18,793.36 while the S&P CNX Nifty rose by 28.60 points or 0.50% to end at 5,704.60.

The BSE Sensex touched a high and a low of 18,885.84 and 18,722.05, respectively. The BSE Mid-cap and Small-cap indices were up by 0.47% and 0.33%, respectively.

L&T up 2.06%, Infosys up 1.85%, Sun Pharma up 1.62%, Sterlite up 1.59% and HUL up 1.46% were the major gainers on the Sensex. On the flip side, GAIL down 2.77%, Bharti Airtel down 1.83%, Hindalco down 1.62%, BHEL down 1.52%, and Tata Motors down 0.95% were the major losers on the index.

The top losers in the BSE sectoral space were Consumer Durables (CD) up 1.47%, Health Care (HC) up 1.14%, IT up 1.10%, FMCG up 1.05% and Capital Goods (CG) up 0.94%, while Oil & Gas down 0.45%, Power down 0.08% and Auto down 0.04% were top gainers on the BSE sectoral space.

Meanwhile, overseas direct investment by Indian companies fell by 30 per cent to $1.36 billion in September over the previous month, as per the RBI’s data on overseas direct investment, both under automatic route and the approval route, for the month of September 2012. The domestic firms invested a sum of $1.95 billion in August.

A total of 406 deals took place during September by the Indian companies to carry out the outward foreign direct investment. Meanwhile, companies namely Bharti Airtel, JK Cement, Dr Reddy's emerged among the major investors.

Telecom major, Bharti Airtel invested $150.02 million in it’s wholly- owned venture in Mauritius, which is involved in transport, storage and communication services. While, major cement manufacturer J K Cement made an investment of $104.30 million in its wholly-owned subsidiary in United Arab Emirates. Last but not the least, drug maker Dr Reddy's Laboratories invested $58.97 million in its wholly-owned company in Cyprus.

The S&P CNX Nifty touched a high and a low of 5,728.65 and 5,677.90, respectively.

The top gainers on the Nifty were Ultra Cement up 2.61%, L&T up 2.41%, Ranbaxy up 2.04%, Sun Pharma up 2.00% and Lupin up 1.88%. The top losers on the index were GAIL down 2.93%, BHEL down 1.93%, Bharti Airtel down 1.83%, NTPC down 1.54% and Hindalco down 1.37%.

European markets were trading mixed. France’s CAC 40 up by 0.04%, Germany’s DAX down 0.48% and Britain’s FTSE 100 down by 0.26%.

Asian markets ended mixed on Tuesday with the Euro zone’s debt worries impact getting limited. The mainland China's shares gained sharply because of rise in iron ore prices, which helped resource companies to great extent. Investor’s sentiments improved amid The People's Bank of China’s (PBOC) step of introducing 265 billion yuan into the money market, in an attempt to ease monetary conditions and strengthen the slowing economy. Hong Kong market ended with fine gains amid oil companies rally. However, Japanese market went home with red mark following a public holiday.