Post Session: Quick Review

Clocking fresh closing highs for 2014, Indian equity markets ended higher for yet another session, albeit with modest gains of over one tenth of a percent, above the crucial 21,350 (Sensex) and 6,300 (Nifty) levels respectively. Similar to previous trading session, benchmarks gyrated in narrow band for most part of the session, witnessed bit of uptick during the fag end of the trade. However, benchmarks slipped a couple of times before finally ending in green. Good Q3 showing by Index heavyweight L&T provided the support. L&T puffed up gains of over 2.5% after reporting a robust operating performance in the December quarter with all-round growth, after adjusting for the de-merger of its hydrocarbons business.

Today’s session gains came mainly on the back of up-move of select blue-chip stocks which lifted the benchmarks higher. Unlike frontline peers, broader indices ended on a negative note. Bit of caution ahead of RBI’s policy review on January 28, 2014, capped the further upside of the markets after earlier expectations for the RBI to hold rates were thrown into doubt after the central bank recommended making taming high consumer inflation a priority. In a related development, Economic Affairs Secretary Arvind Mayaram, underscored that it was premature to use the consumer price index as anchor since the data has imperfections.

On the global front, Asian stocks ended in red on Thursday, with Hong Kong leading the region lower, following signs of weakness in China's manufacturing sector. The flash Markit/HSBC Purchasing Managers' Index (PMI) fell to 49.6 in January, from December's 50.5, suggesting a mild slowdown at the end of 2013 has continued into the New Year. On the flip side, European shares mostly traded positive on Thursday as a recovery in economic activity in much of the region offset another mixed batch of corporate earnings news and weaker economic data out of China.

Closer home, majority of the sectoral indices on BSE ended in red, barring Consumer Durables, Capital Goods, FMCG and Healthcare counters, which showed some resilience. On the flip side, Auto, Metal and Public Sectoral Undertaking (PSU) counters were the top laggards of the session. Metal stocks edged lower after a private gauge of China's manufacturing in January unexpectedly contracted. Additionally, IT stocks failed to gain any fervor despite Rupee’s depreciation, given that these firms derive lion share of their revenue from exports.  The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 1244: 1454, while 142 scrips remained unchanged. (Provisional)

The BSE Sensex gained 45.34 points or 0.21% to settle at 21383.01. The index touched a high and a low of 21409.66 and 21264.71 respectively. Among the 30-share Sensex, 14 stocks gained, while 16 stocks declined. (Provisional)

The BSE Mid cap and Small cap indices ended lower by 0.50% and 0.16% respectively. (Provisional)

On the BSE Sectoral front, Consumer Durables up by 2.85%, Capital Goods up by 1.70%, FMCG up by 0.22% and Healthcare up by 0.18% were the top gainers, while Auto down by 1.09%, Metal down by 0.54%, PSU down by 0.44%, Oil & Gas down by 0.43% and Power down by 0.27% were the only losers in the space. (Provisional)

The top gainers on the Sensex were L&T up by 2.66%, Axis Bank up by 2.20%, Gail India up by 2.14%, Sun Pharma up by 1.98% and Bharti Airtel up by 1.66%, while, Mahindra & Mahindra down by 2.85%, ONGC down by 1.26%, Tata Steel down by 1.11%, Coal India down by 1.10% and Hindalco Industries down by 0.96% were the top losers in the index. (Provisional)

Meanwhile, the Moody’s Analytic, in its report titled 'India Outlook: Steady Growth, Lower Risk' has noted that the worst is over for the India’s economy with GDP expansion likely to touch 5 to 5.5 percent this year and more than 6 percent in 2015. Presenting a sanguine picture of India's economic outlook, the agency highlighted that the economy has stabilised in recent quarters and downside risks have receded as prospect of better government after the May general elections have boosted business and investor confidence and will be the trigger for the economy. However, Indian economy will slowly improve across 2014 but not hit its potential until 2015, it added. In the previous fiscal, India's economy slowed to a decade low of 5 percent owing to the global slowdown and domestic factors, like high interest rates.

Further, the agency report added that the upturn in growth rate will be led initially by exports, which started to lift from mid-2013, and then later in 2014, by an upturn in the investment cycle. The most notable improvement on the country’s external front over the past few months helped to contain the current account deficit (CAD) at $5.2 billion, or 1.2% of GDP in Q2 FY14 as against the 4.9% of GDP in the Q1 FY14. Referring to domestic currency, Moody’s Analytic has noted that the rupee, which was one of the worst performers among Asian currencies last year, is now less exposed to external worries like the US Fed tapering with the CAD being brought under control. However, it cautioned that such a low CAD may not be sustainable amid probability of further increase of country’s gold imports.

On inflation front, the agency noted that lower inflation will help to lift business confidence and limit downside currency risk. It expect that wholesale price inflation to continue to fall through the first half of 2014 as food inflation eases with better crop yields. WPI inflation eased to five month low at 6.16% in the month of December on y-o-y basis as against 14-month high of 7.52% in November.

India VIX, a gauge for markets short term expectation of marginally gained 1.70% at 15.58 from its previous close of 15.85 on Wednesday. (Provisional)

The CNX Nifty gained 9.00 points or 0.14% to settle at 6,347.95. The index touched high and low of 6,355.60 and 6,316.40 respectively. Out of the 50 stocks on the Nifty, 25 ended in the green, while 25 ended in the red.

The major gainers of the Nifty were L&T up 2.66%, Jindal Steel up by 2.48%, Axis Bank up by 2.19%, Sun Pharma up by 2.10% and Gail up by 2.07%. The key losers were M&M down by 2.89%, HCL Tech down by 1.96%, ONGC down by 1.69%, PNB down by 1.25% and Coal India down by 1.22%. (Provisional)

Most of the European markets were trading in red; Germany’s DAX down by 0.07% and UK’s FTSE 100 down by 0.05%, while France’s CAC 40 was up 0.29%.

The Asian markets barring Jakarta Composite concluded Thursday’s trade in red as sentiments remained dampened after activity in China’s factory sector registered an unexpected contraction in January, albeit a mild one. The flash version of the HSBC/Markit China manufacturing Purchasing Managers’ Index fell to a six-month low of 49.6, down from a final December reading of 50.5. China’s top economic planning body expressed confidence in the country meeting the national economic growth rate target included in its 12th Five-Year (2011-2015) Plan.

Indonesia raised Rp 15 trillion ($1.2 billion) from the sale of bonds, 50% more than its original target of Rp 10 trillion, underscoring investors’ confidence in the country’s fixed-income assets. Bank Indonesia, the country’s central bank, expects inflation to accelerate in January due to floods that have disrupted distribution systems in many areas in the country as well as higher electricity tariffs. Besides, Indonesia’s National Investment Coordinating Board (BKPM) expects investment to grow by some 15 percent in 2014, or from about Rp 398 trillion ($32.64 billion) to between Rp 456 and 457 trillion.