Post Session: Quick Review

Local equity markets ended upbeat ahead of the Vote on Account next week, whereby Finance Minister is expected to beat street’s expectation on current account deficit (CAD) and fiscal deficit numbers. Late hour buying on hopes of narrower than expected fiscal deficit numbers mainly took the markets higher by close to a percent past the psychological 20,350 (Sensex) and 6050 (Nifty) levels respectively, with gains of over 3/4 of a percent. Meanwhile, Friday’s session marked another day of underperformance for broader indices, which ended on mixed note. For the week, while Sensex ended flat, Nifty ended with a cut of two tenths of a percent. Broader indices underperformed front-line indices for the week as well, while CNX midcap index plunged over a percent, BSE Smallcap index ended with a cut of over 3/4 of a percent.

In the volatile session of trade, barometer gauges in a knee-jerk reaction to eight month low inflation data soared to day’s high level in early afternoon deals, but soon gave away all the gains as investors came to terms with higher Core CPI data, which edged higher at 3% as compared to 2.8% in December and renewed concerns of hawkish response from RBI’s chief Raghuram Rajan when he next reviews monetary policy in April 1. India's wholesale price-based inflation eased way lower than street expectation at 5.05% in January as food prices moderated.

On the global front, Asian stock markets saw broad gains on Friday, making a strong finish to the week as they took their lead from Wall Street, which shrugged off lack-lustre US economic data. Additionally, European shares rose early on Friday, up for the seventh time in eight sessions, as data showing better-than-expected economic growth in Germany and France fuelled expectations of a rebound in corporate profits in Europe this year.

Closer home, markets edged higher on the day when earnings from two biggies disappointed the street. While, SBI tanked over a percent and half, on reporting fourth straight consecutive drop in net income as an increase in bad loans clipped profitability, M&M slipped close to half a percent despite reporting 12% rise in Q3 net profit. Sectorally, Information Technology, Oil & Gas and Consumer Durables counters were the top gainers of the session, while stocks from Healthcare and Realty were the only spoil-sports. In other stock-specific action, telecom stocks rang loud, viz, Idea Cellular and Bharti Airtel after a mobile unit of Reliance Industries did not win any spectrum in the premium 900 megahertz in an auction for airwaves, which could help ease competition in the sector. Additionally, all retail stocks, viz, Shoppers Stop, Pantaloons witnessed massive demand after Future Retail reported good set of Q3 numbers. Future Retail has reported a net profit of Rs 21.74 crore for fourth quarter ended December 31, 2013 as compared to net loss of Rs 20.41 crore for the same quarter in the previous year. Besides, Jewellery stocks, namely Gitanjali Gems, Shree Ganesh Jeweller , PC Jeweller  and  Tribhovandas Bhimji Zaveri, etc, shone on the account of Valentine day which is seen as an occasion to gift gold and diamond jewelleries. The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 1232: 1356, while 141 scrips remained unchanged. (Provisional)

The BSE Sensex gained 180.94 points or 0.90% to settle at 20374.29. The index touched a high and a low of 20391.95 and 20149.01 respectively. Among the 30-share Sensex, 21 stocks gained, while 09 stocks declined. (Provisional)

The BSE Mid cap index ended higher by 0.10%, while Small cap index ended lower by 0.03%. (Provisional)

On the BSE Sectoral front, IT up by 1.33%, Teck up by 1.17%, Oil & Gas up by 0.97%, Consumer Durables up by 0.93% and Metal up by 0.83% were the top gainers, while Healthcare down by 0.06% and Realty down by 0.03% were the only losers in the space. (Provisional)

The top gainers on the Sensex were Tata Motors up by 3.47%, Gail India up by 2.05%, Wipro up by 1.86%,  NTPC up by 1.77% and HDFC Bank up by 1.72%, while, Bajaj Auto down by 2.94%, BHEL down by 2.24%, Cipla down by 2.20%, SBI down by 1.79% and Hero MotoCorp down by 1.63% were the top losers in the index. (Provisional)

Meanwhile, in other good news, after Retail inflation numbers India's main inflation gauge, based on monthly WPI, too eased to eight month low at 5.05% in January as compared to 6.16% in December and 7.31% during the corresponding month of the previous. The build up inflation rate in the financial year, so far, stood at 5.17% compared to a build up rate of 5.78% in the corresponding period of the previous year. However, the reading for November WPI inflation was unchanged at 7.52%.

The decline in headline inflation figure was on account of ease in food articles, which declined by 2.7 percent to 233.6 (provisional) from 240.1 (provisional) for the previous month that dragged Primary article index, which occupies 20.12% weight in the overall headline index, lower by 1.9 percent to 238.9 (provisional) from 243.6 (provisional) for the previous month. Meanwhile, the index for ‘Non-Food Articles’  group rose by 0.1 percent to 216.0 (provisional) from 215.8 (provisional) for the previous month.

Further, Fuel & Power, having weight of 14.91%, too rose by 0.7 percent to 212.8 (provisional) from 211.3 (provisional) for the previous month due to higher price of LPG (5%), aviation turbine fuel and petrol (2% each) and furnace oil, kerosene, high speed diesel and bitumen (1% each).

The index of Manufactured Products, which occupies 64.97% of weight in the overall index, rose by 0.5 percent to 152.6 (provisional) from 151.9 (provisional) for the previous month, which took the inflation of manufacture products at three months high level.

However, in a sign of worry, Core WPI, edged higher at 3% as compared to 2.8% (M-o-M basis). Nevertheless, eight months low January WPI, besides bringing some relief to RBI would bring some cheer to Congress party-led ruling alliance, which faces an uphill battle in a general election due by May. Notably, the government in its Mid-Year review terming high inflation as biggest risk to India’s growth outlook, pressed the need for bringing down the headline inflation below 6%.

Thus, the latest reading makes a case for RBI maintaining a status quo stance in its upcoming monetary policy review on April 1, 2014. Persistently high inflation prompted RBI Governor Raghuram Rajan to raise interest rates last month, the third hike since September, even though economic growth has been stuck around a decade-low of 4.5 percent for four quarters.

India VIX, a gauge for markets short term expectation of volatility lost 6.40% at 16.66 from its previous close of 17.80 on Thursday. (Provisional)

The CNX Nifty gained 51.00 points or 0.85% to settle at 6,052.10 (Provisional). The index touched high and low of 6,056.40 and 5,984.60 respectively. Out of the 50 stocks on the Nifty, 34 ended in the green, while 16 ended in the red.

The major gainers of the Nifty were Tata Motors up 3.64%, Gail up by 2.43%, NTPC up by 1.96%, Infosys up by 1.93% and Reliance Industries up by 1.80%. The key losers were Bajaj-Auto down by 3.05%, BHEL down by 2.34%, Ambuja Cements down by 2.30%, UltraTech Cement down by 2.10% and Cipla down by 1.97%. (Provisional)

Most of the European markets were trading in green; Germany’s DAX up by 0.56%, UK’s FTSE 100 up by 0.06% and France’s CAC 40 was up 0.43%.

All the Asian markets barring Nikkei 225 and Straits Times, concluded Friday’s trade in green making a strong finish to the week, as they took their lead from Wall Street, which shrugged off lackluster economic data. The global markets have rallied this week, after a tumultuous period caused by the US Federal Reserve’s decision to reduce its stimulus program for a second time in two months. Indonesia’s shrinking current-account deficit has turned the rupiah into the world’s best-performing emerging-market currency this year, after it weakened in 2013 by more than any other peer apart from Argentina’s peso.

China’s consumer inflation rate held steady in January, coming in slightly higher than forecasts. The consumer price index jumped 2.5% from a year earlier or 1% on a monthly basis, as beef, pork and vegetable prices all increased. The year-on-year result was identical to that in December, but the month-on-month gain was higher than a 0.3% climb in the previous month. Chinese PPI fell to an annual rate of -1.6%, from -1.4% in the preceding month. Singaporean Retail Sales rose to a seasonally adjusted -5.5%, from -8.6% in the preceding month whose figure was revised up from -8.7%.