Benchmarks end at fresh 2014 closing high

Thursday’s trading session was clearly a day of consolidation as the Indian frontline equity indices appeared a bit fatigued and remained directionless throughout the day. Nevertheless, the benchmarks extended the winning momentum for the fourth consecutive day of trade, as frontline gauges managed to keep their head above water at the end, hitting fresh 2014 closing high. Despite a sluggish opening, markets soon entered into green terrain as some support came with finance minister P Chidambaram’s assured global investors that India is prepared to face the impact of the US Fed tapering and the country is poised to clock 5% growth in 2013-14 and over 6% in 2014-15. Investors also remained optimistic on Moody’s Analytics report that the Indian economy has started to turn the corner and the worst may be over for the Indian economy. It further said that a Narendra Modi-led BJP government, if elected, should offer a more business-friendly policy that will further support confidence and investment.

However, gains remained capped as investors were cautious ahead of Reserve Bank of India’s policy review on January 28, 2014. Negative global set-up also added to the pessimistic milieu. All the Asian equity indices, barring Jakarta Composite, ended in the red terrain as sentiments remained dampened after activity in China’s factory sector contracted in January for the first time in six months, pointing to a weak start for the economy in 2014 as policymakers seek to curb high debt levels to head off financial risks. European markets too made a sluggish opening with DAX and FTSE trading lower in early deals.

Back home, sentiments also remained dampened after Indian rupee depreciated against dollar due to month end dollar demand from importers. Metal stocks like Hindalco Industries, Tata Steel, Hindustan Copper etc. edged lower on decline in China’s manufacturing in January.

Although, buying which emerged in late trade in jewellary related stocks aided the sentiment to some extent. Scrip like, Titan, Rajesh Exports, Shree Ganesh Jewellery, Gitanjali Gems all edged higher on report that Sonia Gandhi has asked government to lower import duty. Additionally, buying in Capital Goods counter too supported the up-move, led by strong Q3 numbers from Larsen & Toubro. Shares of the company surged nearly 3%, as the company’s margins witnessed expansion during the third quarter ended December post the demerger of its hydro carbon business.

The NSE’s 50-share broadly followed index Nifty rose by just seven points to end near its psychological 6,350 level, while Bombay Stock Exchange’s Sensitive Index -- Sensex gained over thirty points to end above its psychological 21,350 mark. However, broader markets struggled to get traction and ended the session in the red. The market breadth remained in favour of decliners, as there were 1255 shares on the gaining side against 1,453 shares on the losing side, while 132 shares remained unchanged.

Finally, the BSE Sensex gained 35.99 points or 0.17%, to settle at 21373.66, while the CNX Nifty added 6.70 points or 0.11% to settle at 6,345.65.

The BSE Sensex touched a high and a low of 21409.66 and 21264.71, respectively. The BSE Mid cap index was down by 0.48%, while the Small cap index lost 0.12%.

The top gainers on the Sensex were L&T up 2.81%, Axis Bank up 2.48%, Gail India up 2.23%, Sun Pharma up 1.90%, and HDFC up by 1.64%, on the flip side Mahindra & Mahindra down 2.82%, ONGC down 1.33%, NTPC down 1.09%, Coal India down 0.99%, and TCS down by 0.89% were the top losers on the index.

On the BSE Sectoral front Consumer Durables up by 2.33%, Capital Goods up by 1.84%, FMCG up by 0.14% and Healthcare up by 0.12% were the only gainers, while Auto down by 1.05%, Metal down by 0.50%, Oil & Gas down by 0.46%, PSU down by 0.41% and Power down by 0.22% were the top losers on the sectoral front.

Meanwhile, ahead of the Reserve Bank of India (RBI) monetary policy meet on January 28, Economic Affairs Secretary Arvind Mayaram has stated that signs of moderation in WPI inflation have strengthened the case for a cut in interest rates to boost economic growth. Arvind Mayaram has emphasized that there could not be a case for rate hike by the central bank at this point of time when industrial growth continues to be in the red, prevailing sluggish investments scenario and low employment opportunities in the country. WPI inflation eased to five-month low at 6.16% in December as compared to 7.52% in November and 7.31% during the corresponding month of the previous year.

Meanwhile, the central bank had already noted the fight to tame inflation would remain its top of agenda and has been continually raising the policy rates over the past few months. Prevailing high interest rates scenario in economy has been adversely impacting the growth of Indian industries. Indian industrial output registered the worst performance in six months with contraction of 2.1% in November on y-o-y basis as compared to 1.8% in October. Indian industrial production growth contracted by 0.2% during the April-November 2013-14 period from a year earlier owing to the high interest rates and prevailing economic downturn.

Earlier, India Inc had also urged the Reserve Bank to lower interest rates in order to provide boost to the growth of Indian industries. India Inc added that achieving a sustained moderation in WPI is an issue for the country, however, the recently released inflation number gives scope for cutting the interest rates in a bid to improve domestic supply response.

The CNX Nifty touched a high and low of 6,355.60 and 6,316.40 respectively.

The top gainers on the Nifty were Larsen & Toubro up by 2.66%, Jindal Steel & Power up by 2.48%, Axis Bank up by 2.19%, Sun Pharmaceuticals Industries up by 2.10%, and GAIL (India) up by 2.07%. On the other hand, Mahindra & Mahindra down by 2.89%, HCL Technologies down by 1.96%, ONGC down by 1.69%, Punjab National Bank down by 1.25%, and Coal India down by 1.22 %, were the top losers.

Most of the European markets were trading in red, Germany's DAX was down by 0.13% and United Kingdom's FTSE 100 was down by 0.13%, while France's CAC 40 was up by 0.17%.

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.