Spectacular turnaround take the markets higher by around a percent

Friday session proved to be a day of spectacular recovery for the Indian markets, which after remaining in a tight range for most part of the session, bounced back in the final hour and benchmark indices that have overlooked the gains in the global markets and good macro data of WPI inflation coming down to eight months low, suddenly moved higher by around a percent, with traders lapping up shares from all across the space ahead of the ‘Vote on Accounts’ scheduled to be presented in the parliament on Monday, and expectation of Finance Minister P Chidambaram projecting a lower fiscal deficit before elections.

The global cues gave a positive lead to the Indian markets after the US bourses ended higher overnight with traders shrugged off decline in retail sales in January and initial claims for unemployment benefits increasing more than expected. The Asian markets barring Japan, posted good gains for the session to snap the week on a high note, while the European markets too made a good start.

Back home, the Indian markets after a positive start following a sharp plunge in last session seemed losing strength on profit booking in the very first hour of trade and slipped into red, the trade remained choppy and traders were seen avoiding any serious bet, but there was sudden spurt in the markets after the Whole Sale Price index inflation, India’s main inflation gauge 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 year. Though, the enthusiasm did not last long as investors came to terms with higher Core CPI data, which moved up at 3% as compared to 2.8% in December. It was the closing day of official earnings season and some result disappointment too weighed on the sentiments, with PSU banking major SBI reporting below estimates number for the third quarter with 34.2% fall in net profit, while it’s Net NPAs too increased substantially to 3.24% for the quarter from 2.59% in the same quarter last year. However, there was dramatic turnaround in the markets in the final hour of trade, though there was sudden across the board buying at lower levels but banking along with tech stocks moved higher after SBI chief clarified that the PAT decline was mainly due to onetime pension provisions and MTM losses. Telecom stocks like, Idea Cellular and Bharti Airtel gained on retaining their spectrum and after a mobile unit of Reliance Industries did not bid aggressively and was unable to win any spectrum in the premium 900 megahertz in an auction, easing the competition in the sector. There was spillover effect on all the retail stocks after good Q3 numbers by Future Retail which posted a turnaround with a net profit of Rs 21.74 crore for the quarter ended Dec 31, 2013.The oil and gas stocks, especially Reliance Industries remained in jubilant mood after Petroleum Minister Veerappa Moily categorically ruled out stalling the process of increasing the price of gas from April 1. Delhi chief minister Arvind Kejriwal had sought a stay on the hike in prices. The markets finally ended with gains of around a percent, though the broader indices remained under pressure and ended flat. The trade turnover was on the higher side at 2.90 lakh crore.

The market breadth remained in favor of decliners, as there were 1,225 shares on the gaining side against 1,354 shares on the losing side, while 150 shares remained unchanged.

Finally, the BSE Sensex gained 173.47 points or 0.86%, to settle at 20,366.82, while the CNX Nifty added 47.25 points or 0.79% to settle at 6,048.35.

The BSE Sensex touched a high and a low of 20,391.95 and 20,149.01, respectively. The BSE Mid cap index was up by 0.11%, while the Small cap index down by 0.04%.

The top gainers on the Sensex were Tata Motors up by 3.25%, Gail India up by 2.56%, RIL up by 1.74%, HDFC Bank up by 1.72% and Infosys up by 1.65%, while, Bajaj Auto down by 3.42%, BHEL down by 2.21%, Cipla down by 2.01%, Hero MotoCorp down by 1.79% and SBI down by 1.64% were the top losers in the index.

On the BSE Sectoral front, IT up by 1.39%, Teck up by 1.22%, Oil & Gas up by 1.21%, Consumer Durables up by 0.94% and Metal up by 0.70% were the top gainers, while Healthcare down by 0.12% was the only loser in the space.

Meanwhile, in a major overhaul of corporate governance norms, market regulator Securities and Exchange Board of India (SEBI) has approved a new corporate governance code, aimed at improving transparency and disclosure standards of listed companies in India. The norms, which are consistent with the new companies’ law ratified last year to enhance shareholder rights, would come into effect from October 1,2014 and cover a wide range of subjects like CEO salaries, women on board, succession plans and mandatory whistle-blower policy.

Market regulator’s norms come against the backdrop of demands for clear information on the way Indian firms operate. The norms are expected to make stocks attractive to retail investors again, who have been selling heavily since 2008 due to trust deficit.

As per the new norms, companies will now have to disclose remuneration policies of CEOs and executive directors, related-party transactions and appointment and resignations of independent directors, a move which is likely to invite huge criticism from corporate.

Further, SEBI has recommended tax incentives for mutual funds and proposed that the Employee Provident Fund Organization (EPFO) should invest 15% of its corpus in equities and MF schemes. Besides, it added that members of EPFO, who are earning more than Rs 6,500 a month, be given an  option that a part of their corpus could be invested in a MF product.

Additionally, the market watchdog announced higher net worth for asset management companies, apparently aimed at weeding out smaller funds. It upped the minimum capital requirement for an asset management company from Rs 10 crore to Rs 50 crore.

The CNX Nifty touched a high and low of 6,056.40 and 5,984.60 respectively.

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%. On the other hand, 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% were the top losers.

The European markets were trading in green, France's CAC 40 was up by 0.31%, Germany's DAX was up by 0.56% and United Kingdom's FTSE 100 was up by 0.14%.

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%.