Bulls begin 2013 on a high; realty, banks lift Sensex 154
01 January 2013
The market began the calendar on an upbeat note, as sentiment was boosted by the fiscal deal in US which helped avoid the much talked about ''cliff'' for now.
The Senate approved a last-minute deal early Tuesday morning to scale back USD 600 billion in scheduled tax hikes and government spending cuts that threatened to push the economy into recession.
Investors chased metal and banking shares, lifting the Sensex by 154 points to 19580. The Nifty rose 46 points to close at 5950. Hindalco, Jindal Steel, Tata Steel, ICICI Bank and SBI were among the big gainers, rising 2-3 percent.
Laggards were mostly from the IT, pharma and FMCG sectors.
Realty shares were the star performers among midcaps as investors are betting that a likely reduction in interest rates will boost demand for residential property. Shares of DLF, Unitech, HDIL, Parvsnath Developers, Indiabulls Real Estate and Oberoi Realty gained 2-4 percent.
"Given the expectations of 50 basis point-cut (100 basis points equals 1 percent) in interest rates in the next one year, we expect demand (for real estate) to improve on higher affordability,'' said a recent report by Crisil Independent Equity Research ''This will also provide some respite from the high interest costs and boost earnings. As a result, we expect valuation multiples to improve and return to historical levels of FY09-10," the report said.
A section of the market is skeptical if the market can sustain its recent gains, given the worsening macro-economic environment.
"We expect Current Account Deficit to print 4.3% of GDP in FY2013 (previous estimate 4.2%). With stable risk conditions globally, we expect the BoP (Balance of Payment) deficit to be restricted to USD 5.6 billion," said a report by Kotak Securities today.
"The risk however emanates from (1) global risks of a US fiscal cliff and uncertainties regarding the European sovereign debt crisis leading to lower capital flows to India and (2) domestic uncertainties-political and economic (Union Budget 2013-14)," the report added.
Domestic institutions were net sellers of equities in 2012, making foreign funds critical if the market has to build on its recent gains. And some economists worry that the rupee could slowly start coming under pressure.
"Unless the government takes solid steps to tackle the fiscal deficit and improve the investment climate on which we are skeptical given it is a pre-election year our bias in 2013 (particularly in H2) will be to build on a long USD/INR(Indian rupee) position. We expect USD/INR at 54.5 by March 2013, 56.0 in June 2013 and 59.0 by December 2013," said a note by Nomura.
Indian equity benchmarks gained more than 0.8 percent after the US Senate passed the fiscal cliff Bill. The broader markets too participated in the rally with the BSE Midcap and Smallcap indices rising 1 percent each.
The 30-share BSE Sensex rallied 165.42 points to 19,592.13 while the 50-share NSE Nifty was up 49.40 points to 5,954.50.
In the second line shares, Punjab & Sind Bank, Amtek India, Delta Corp, Birla Corp and Central Bank of India surged 7-11 percent while among smallcaps, Timex Group, OnMobile Global, Astral Poly, Suprajit Engg and SPML Infra were up 7-17 percent.
Country's largest lenders State Bank of India and ICICI Bank moved up over 1.6 percent while their rival HDFC Bank rose 0.76 percent.
Engineering conglomerate Larsen & Toubro, FMCG major Hindustan Unilever, top telecom operator Bharti Airtel and utility vehicle major Mahindra & Mahindra were up 1 percent each.
Metals stocks maintained their uptrend; Tata Steel, Hindalco, Jindal Steel and Sterlite climbed 2-3 percent.
Top car maker Maruti Suzuki and state-controlled power equipment maker BHEL gained 2 percent each.
Housing finance company HDFC was up 0.7 percent while private oil & gas producer Reliance Industries and software services exporter TCS went up 0.4 percent each.
However, shares of Infosys and NTPC underperformed, falling marginally.
Nifty lodged itself on top on 5900 after Washington averted fiscal cliff by agreeing to raise taxes of the rich for the first time in two decades. The news was well received by Indian stock markets. At 1 PM, the 30-share BSE benchmark Sensex was up 177.08 points or 0.91% at 19603.79, and the Nifty was trading 53.30 points or 0.90% higher at 5958.40.
The market picked up momentum after opening in the green and the news that Senate has reached an agreement to avoid fiscal cliff added to the positive sentiment. Accordingly, United States will see a sharp rise in income taxes of those individuals who earn more than $450,000 per year.
Sensex is driven by metal names like Jindal Steel, Tata Steel, Hindalco and Sterlite which are up 2.63%, 2.36%, 2.30% and 1.93% respectively. Reliance Infra is the top gainer on the Nifty with a 4.55% rise. Among the banking stocks, SBI (up 1.92%), ICICI Bank (1.43%), and HDFC (1.09%) were withnessing strong buying interest. Yield for 10-year paper was quoting below 8%.
The BSE benchmark Sensex surged by 152 points on the first trading session of 2013 on the back of buying after US policymakers reached an agreement to avert the imminent fiscal cliff of wide-reaching tax hikes and deep spending cuts in the world's biggest economy.
Persistent capital inflows from foreign funds into equity market also boosted the market sentiment. Foreign institutional investors (FIIs) bought shares worth a net Rs 826.34 crore yesterday as per provisional data from the stock exchanges.
Shares of realty, consumer durable, metal, capital goods and banking sectors firmed up sharply on good buying support.
The BSE benchmark Sensex resumed higher at 19,573.45 and shot up further to a high of 19,588.46 before quoting at 19,578.92 at 1020 hrs, showing a net gain of 155.21 points or 0.78 per cent from its last close.
The NSE 50-Share Nifty also firmed up by 43.90 points or 0.74 pct to 5,949.00 at 1020 hrs. Major gainers were Hindalco (1.99 pct), SBI (1.88 pct),
Jindal Steel (1.72 pct), Sterlite Ind (1.41 pct), Tata Steel (1.40 pct) and Larsen (1.40 pct).
Equities began New Year on a buoyant note, with the Sensex rallying 150 points in early trade. Brokers said the trigger for the upmove was news that White House and congressional lawmakers have reached a deal to avoid the "fiscal cliff" that would delay harsh spending cuts by two months. Realty, metal and banking shares figured among the early gainers.
The Sensex climbed 137 to 19564, and the Nifty was up 39 points at 5944 .
SBI, Bharti Airtel, HDFC and BHEL were among the notable gainers, climbing around 1 percent each.
There was good interest in mid and small cap shares as well.
Brokers say traders are taking up bullish positions in the hopes that foreign funds will continue to be big buyers of Indian equities. In 2012, foreign institutional investors net bought over USD 22 billion of Indian shares despite the economic downturn. Latest data shows that a recovery could still be some way off.
Data released Monday shows the country's current account deficit at a whopping 5.4 percent of GDP during the second quarter. Fiscal deficit till November is now 80 percent of the Budget estimate, and in all probability looks set to exceed its target, notwithstanding the Finance Minister's assurances. Core sector growth declined to 1.8 percent in November from 6.5 percent in October.
BPCL and rating agency CRISIL figured among the laggards, down around a percent each.
Stock markets opened on a promising note on the first trading day of 2013 with the BSE benchmark Sensex rising over 132 points in early trade on increased buying by funds as well as retail investors.
The 30-share index rose by 132.22 points, or 0.68 percent, to trade higher at 19,558.93 points with all the sectoral indices led by realty and metal, trading in positive zone with gains up to 1.23 per cent.
The Sensex had shed 18.13 points in the previous session in two-way movements. The broad-based National Stock Exchange index Nifty rose by 37.90 points, or 0.64 per cent, to 5,943.00.
Brokers said sentiments buoyed largely in tandem with overnight gains on the US markets on fresh hopes for a last-minute deal to avoid the economy-crunching fiscal cliff.
Besides, expectations of rate cut by the RBI later this month also triggered buying by participants, they said. The US Dow Jones Industrial Average ended 1.28 per cent higher in yesterday's trade, while most of Asian markets are closed today for a public holiday.