Buying in late hour help benchmarks end at 2014 record high levels

Indian equity benchmarks, coming out from their consolidation mood, snapped the session near intraday highs, with Sensex and Nifty coming close to their psychological 21,350 and 6,350 levels respectively, led by buying in select blue-chip stocks. Buying which emerged in late trade helped the markets close at 2014 record high levels. Earlier, markets made a negative start and traders remained concerned about the report that foreign institutional investors (FIIs) sold shares worth a net Rs 43.74 crore on January 21, 2014. Some pessimism also came in from Urjit Patel committee’s report, which suggested that inflation should be the nominal anchor as far as the policy framework is concerned. The committee suggested that the RBI should adopt the new CPI (consumer price index) as the measure of the nominal anchor for policy communication and the target for inflation should be set at 4 percent with a band of +/- 2 percent around it.

However, the later half turned out to be a game changer for Indian markets, with market-participants drawing some positive cues from the Asian share markets, which pared their initial losses and ended mostly in the green, led by gains in Chinese shares after China’s central bank poured funds into money markets, easing immediate credit strains ahead of the lunar New Year. Though, European counter exhibited mixed trade in early deals.

Back home, some strength to the bourses came after Housing Development Finance Corporation (HDFC) announce good set of third quarter numbers. The mortgage lender reported 12.07% rise in its net profit at Rs 1277.71 crore for the quarter as compared to Rs 1140.10 crore for the same quarter in the previous year. Total income from operations of the company increased by 14.87% at Rs 6030.93 crore for quarter under review as compared to Rs 5250.40 crore for the quarter ended December 31, 2012. Rally in metal stocks too supported the sentiments with stocks like Tata Steel, Hindalco Industries, Sesa Sterlite, Hindustan Zinc etc. edging higher for the second day in a row after China’s central bank on January 21, 2014, said it provided emergency funding support for commercial banks as they gear up to meet demands for cash ahead of the Lunar New Year.

However, gains were capped as traders remained cautious with the International Monetary Fund’s (IMF) World Economic Outlook update, highlighted that India is likely to clock an economic growth rate of 4.6 percent this financial year and the expansion may improve to 5.4 percent in 2014-15.

The NSE’s 50-share broadly followed index Nifty rose by over twenty points to end above its psychological 6,300 level, while Bombay Stock Exchange’s Sensitive Index -- Sensex gained over eighty points to end above its psychological 21,350 mark. Broader markets too traded with traction and ended the session in the green with gain of around quarter a percent. The market breadth remained in favour of advances, as there were 1,407 shares on the gaining side against 1,272 shares on the losing side, while 158 shares remained unchanged.

Finally, the BSE Sensex surged by 86.55 points or 0.41%, to settle at 21337.67, while the CNX Nifty gained 25.15 points or 0.40% to settle at 6,338.95.

The BSE Sensex touched a high and a low of 21377.91 and 21168.43, respectively. The BSE Mid cap index was up by 0.20%, while the Small cap index gained 0.28%.

The top gainers on the Sensex were Sun Pharma up 2.85%, Tata Steel up 2.28%, Hindalco Inds up 2.04%, Bharti Airtel up 1.56%, and NTPC up by 1.38%, on the flip side SBI down 0.77%, L&T down 0.65%, Hero MotoCorp down 0.60%, ITC down 0.49%, and BHEL down by 0.47% were the top losers on the index.

On the BSE Sectoral front Healthcare up by 1.31%, Metal up by 0.93%, Oil & Gas up by 0.76%, Realty up by 0.55% and Power up by 0.40%, were the top gainers, while Capital Goods down by 0.52%, FMCG down by 0.14% were the only losers on the sectoral front.

Meanwhile, after approving several long-stalled investment projects worth Rs 1.5 lakh crore in the first three weeks, the new environment and forest minister Veerappa Moily stated that 55 other projects facing environmental approval backlog to be cleared by mid-February. In order to ensure more predictability for prospective investors, Moily, who is also the Oil Minister, has asserted the need for quick decision-making in environmental clearance and stated that environment ministry will clear all pending projects in the next 20 days.

Among various approved projects, Veerappa Moily has cleared the Posco project, which had been pending for 8 years. South Korean giant Posco got environmental clearance on January 7 to build the Rs 52,000-crore steel plant in Odisha, the largest foreign direct investment (FDI) in India. However, Vedanta's Niyamgiri project was rejected due to the opposition by the majority of village bodies.

Presently, the forest clearance procedures are considered by industry as the single-biggest drag on India's investment momentum. Meanwhile, the government is hopeful of putting in place a simplified forest clearance system before its term ends in a few months. In order to bring comprehensive policy for inspection, verification and monitoring in the forest clearance procedure, the Environment Ministry has kicked off a fast-track review of the cumbersome procedures involving green clearances that often take years. Now, the ministry has sought for India Inc's views on its revised draft policy to grant of forest clearance.

The CNX Nifty touched a high and low of 6,349.95 and 6,287.45 respectively.

The top gainers on the Nifty were Sun Pharmaceuticals Industries up by 3.17%, BPCL up by 2.55%, Tata Steel up by 2.41%, Lupin up by 2.31%, and Hindalco Industries up by 2.08%. On the other hand, Asian Paints down by 0.93%, State Bank of India down by 0.93%, ACC down by 0.79%, ITC down by 0.77%, and Cairn India down by 0.71%, were the top losers.

Most of the European markets were trading in red, France's CAC 40 was down by 0.23% and Germany's DAX was down by 0.20%, while United Kingdom's FTSE 100 was up by 0.02%.

The Asian markets barring KLSE Composite and Straits Times, concluded Wednesday’s trade in green while Hong Kong and Shanghai posted good gains, extending their upmove from the previous session after China’s central bank injected fresh capital into financial markets to avert a cash crunch. The Thai government declared a state of emergency in its capital in response to anti government protests that have paralyzed the city and stirred up increasingly violent attacks. Investment in Indonesia reached a record high in 2013, exceeding the government’s own target but the pace of growth is likely to slow down this year amid a tighter monetary policy. Separately, the International Monetary Fund raised its global growth forecast for the first time in nearly two years amid rising demand and inventories in advanced economies, which picked up the mantle of growth from emerging markets. The IMF predicted 3.7 % global economic growth this year, 0.1% point higher than its October projections, and sees growth of 3.9% in 2015.

Japan’s All Industries Activity Index rose to a seasonally adjusted 0.3%, from -0.2% in the preceding month. The Bank of Japan left its economic views unchanged while also keeping its policy interest rate and asset-purchase program steady, as widely expected. Some of the numerical forecasts were tweaked slightly, with the policy board now indicating a median economic growth forecast of 1.4% for fiscal 2014, compared to October’s median projection of 1.5%.