Benchmarks end near day’s high; Sensex regains 20,800 mark

Indian equity benchmarks, despite negative opening, snapped the session near their high point of day and extended their rally for second straight day. Domestic bourses garnered gains of over half a percent, recapturing their crucial 20,800 (Sensex) and 6,180 (Nifty) bastions. Earlier markets made a negative opening as some cautiousness crept in, after the global rating agency Moody’s indicated that forthcoming elections will delay the reform process and hurt growth, it also said that it expects growth to pick up to only 5.5 per cent in FY15. The agency also gave a negative outlook for non-financial corporates in 2014 on weak economy, political uncertainty and effects of the tapering by US Fed.

But sentiments took U-turn as some support came in by data showing that foreign funds remained buyers of Indian stocks on February 21 2014. Foreign institutional investors (FIIs) bought shares worth a net Rs 603.41 crore on Friday, as per provisional data from the stock exchanges. Sentiments also got some boost with Prime Minister’s Economic Advisory Council (PMEAC) Chairman C Rangarajan’s statement that India's Current Account Deficit (CAD) is expected to be around two percent of GDP during the current fiscal on the back of slackening imports and increased shipments. Meanwhile, RBI Governor Raghuram Rajan has said that the central banks of developed nations must also keep in mind emerging nations while framing monetary policies, though he asserted that India is well placed to weather financial crisis.

On the global front, European shares were trading weak in early trades after discouraging outlook for 2014 by German auto major Volkswagen and tracking weakness in China's stocks. Asian markets too ended lower led by Hong Kong and Chinese indices which fell around a percent with property stocks losing the most amid talk that raised concerns banks have halted extending credit to real estate firms. Meanwhile, the Nikkei ended lower amid a volatile trading session on the back of a stronger yen.

Back home, sentiments remained up-beat supported by appreciation in Indian rupee which extended their gains and was trading higher at Rs 61.98 at the time of equity market closing as against the US dollar compared to its previous close of Rs 62.12. On the sectoral front, Capital Goods sector remained the top gainer led by L&T which ended higher by nearly 3%, after the company received Foreign Investment Promotion Board (FIPB) approval for foreign direct investment (FDI) in L&T Infrastructure Development Projects (L&T IDPL). Meanwhile, power sector remained in limelight, with power distribution company Tata Power witnessed surge of over 5%, while the producer NTPC declined by over 11% after the Central Electricity Regulatory Commission (CERC), the electricity regulator allowed Tata Power to raise tariffs and receive compensation to make up for losses incurred at its flagship Mundra plant in Gujarat.

The NSE’s 50-share broadly followed index Nifty rose by over thirty points and ended above the psychological 6,180 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex rose by over one hundred and ten points to finish above the psychological 20,800 mark. Broader markets too were traded with traction and ended the session with a gain of over quarter a percent. The market breadth remained in favor of advances, as there were 1,371 shares on the gaining side against 1,293 shares on the losing side while 145 shares remain unchanged.

Finally, the BSE Sensex surged by 110.69 points or 0.53%, to settle at 20811.44, while the CNX Nifty added 30.65 points or 0.50% to settle at 6,186.10.

The BSE Sensex touched a high and a low of 20828.63 and 20637.30, respectively. The BSE Mid cap index was up by 0.30%, while the Small cap index gained 0.35%.

The top gainers on the Sensex were Tata Power up by 5.02%, BHEL up by 3.95%, Axis Bank up by 3.85%, L&T up by 2.85% and Dr Reddys Lab up by 2.42%, while NTPC down by 11.43%, Bharti Airtel down by 1.84%, Tata Steel down by 1.26%, TCS down by 1.23% and SSLT down by 1.16% were the top losers in the index.

On the BSE Sectoral front, Capital Goods up by 2.53%, Bankex up by 1.19%, Healthcare up by 1.11%, Auto up by 0.68% and Oil & Gas up by 0.59% were the top gainers, while Power down by 1.45%, Metal down by 0.91%, Teck down by 0.51%, IT down by 0.38% and PSU down by 0.32% were the top losers in the space.

Meanwhile, the Reserve Bank of India (RBI) Governor Raghuram Rajan has asserted that central banks of developed nations must also consider emerging nations while framing monetary policies. Underscoring that India is well placed to weather any financial crisis, RBI Governor has highlighted that advanced nations must recognize the impact of their monetary policy decisions on other economies.

Referring to the US Federal Reserve tapering, Raghuram Rajan emphasized that the US needs to take heed of countries vulnerable to the stimulus withdrawal. As the US Fed has started gradual withdrawal of its fiscal stimulus, India and other emerging economies have been asking the US to be more predictable in monetary policy. The US Fed has reduced its monthly bond purchases by $20 billion to $65 billion amid signs of an improving US economy. However, its recent move has caused flight of capital out of emerging economies, which has in turn affected their currencies.

Meanwhile, at the conclusion of two-day summit of G20 on February 22-23, all central banks maintain their commitment that monetary policy settings will continue to be carefully calibrated and communicated, in the context of continuing exchange of information and being mindful of impacts on the global economy .

The CNX Nifty touched a high and low of 6,191.85 and 6,130.80 respectively.

The top gainers of the Nifty were Tata Power Company up 5.20%, BHEL up by 4.05%, Axis Bank up by 3.62%, Ranbaxy Laboratories up by 2.95% and Larsen & Toubro up by 2.59%. On the other hand, NTPC down by 11.48%, Bharti Airtel down by 1.75%, Tata Steel down by 1.36%, NMDC down by 1.28% and TCS down by 1.26% were the top losers.

The European markets were trading in red, France's CAC 40 was down by 0.05%, Germany's DAX was down by 0.22% and United Kingdom's FTSE 100 was down by 0.51%.

The Asian markets barring Straits Times concluded Monday’s trade in red, with Japan’s Nikkei average easing from a three-week high in an erratic session as a firmer yen and weak Asian markets triggered profit-taking following recent sharp gains. Many investors stayed on the sidelines looking for clearer signs of improvement in Japanese corporate earnings, giving no more than a passing nod to the Group of 20’s latest commitment to spur faster global growth. Taiwanese Industrial Production fell to a seasonally adjusted annual rate of -1.78%, from 5.07% in the preceding month.

The rate of increase in China’s new home prices eased in January, pointing to more stabilization in the country’s property market. Average new home prices in China’s 70 major cities climbed 9.6% in January from a year earlier, easing from December’s 9.9% rise. It was the first time in 14 months that the country’s home price rises eased, and the most recent sign that the government’s four-year-plus campaign to rein in property risk may finally be working.