SENSEX 18202.41
+353.84
NIFTY 5531.95
+115.90
USD/INR 0049.19 -00.16
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UPDATEDTIME 09.28 PM 13 FEBRUARY 2012
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The National Stock Exchange's Nifty closed above psychological level of 5500 on
the back of dollar inflows from foreign institutional investors on expectations
of easing monetary stance by theReserve Bank of India and economic
reforms. Rally in global markets after the Bank of Japan announced further
loosening of monetary policy and reports that Bank of China will expand
investments in Europe also lifted investor sentiments.
There have been expectations in the market that with easing inflation, which slipped to 6.6 per cent in January 2012 as against 7.5 per cent a month ago, the central bank may cut interest rates. However, analysts are of the view that RBI may continue to cut CRR further at its next meet but will be wary of touching the policy rates.
"While inflation is likely to close the year at around 6.5%, inter-bank liquidity pressure are likely to remain in place despite consistent OMOs, giving leg room to the RBI for another 50 bps CRR cut in March. This is largely backed by the RBI's change in stance to use CRR as a liquidity tool.
However, we continue to expect the RBI to be little wary of touching the policy rates as yet. The pace of policy rate cut would be contingent on the extent of fiscal consolidation, evolution of the core and headline inflation once base effect wears off and global commodity prices driven imported inflation.
On divestment front, the EGoM has approved 5 per cent stake sale in OnGC via auction route. The government would raise 12000 crore via stake sale. However there was no decision on auction timeline, say reports. The divestment in BHEL is likely to happen in FY13.
"To a large extent, quite a few policy initiatives have been positive for markets, clearly from an India front we are moving from a tightening cycle to an easing monetary cycle, which itself is positive because during a tightening cycle you did see India underperform massively.
In fact India was the worst performing market last year. So in easy monetary policy cycle you would see investors returning back to India. First is we have a few events which are lined up in March one of them is clearly the state elections of Uttar Pradesh where we believe, it could be positive for markets.
Second is the budget that is coming up on March 16th, we do believe it is going to be a constructive budget as far as fiscal consolidation is concerned. And third is the central bank policy which we believe will continue its stance of an easy monetary policy.
So, given this kind of an outlook which we are seeing going forward, it looks that the worst in terms of macro variables could be behind us. We think the economy would bottom out somewhere in the December quarter which has just passed. It could be a slow and gradual recovery but we are clearly in recovery mode right now.
Foreign institutional investors have turned bullish on the Indian markets and continued to pump in dollars in Indian equities. As per provisional data, they bought equities worth 1030.12 crore on Tuesday. The FIIs have invested 9588.68 crore so this month.
"Liquidity actually chases economic fundamentals and if the fundamentals are likely to improve my sense is that liquidity could sustain. But India as I say moves on the principle of economic circularity, so when money really comes in a lot of macroeconomic variables once again get back into shape.
We see momentum building up also on policy, now to take advantage of the liquidity that is coming into India, lot of things will fall in shape and therefore if this continues, you would see the liquidity staying in India," Lobo added.
However, Jim Walker, MD, Asianomics, is of the view that investors should be cautious of the liquidity wave that is pushing the markets higher.
"We get cautious about liquidity waves because waves come and go and that has been the feature of the movement of the course of the last 4 years. We get these liquidity rushes and then they disappear and dissipate and of course the markets are left high and dry and our feeling is that is going to happen again this year.
There have been expectations in the market that with easing inflation, which slipped to 6.6 per cent in January 2012 as against 7.5 per cent a month ago, the central bank may cut interest rates. However, analysts are of the view that RBI may continue to cut CRR further at its next meet but will be wary of touching the policy rates.
"While inflation is likely to close the year at around 6.5%, inter-bank liquidity pressure are likely to remain in place despite consistent OMOs, giving leg room to the RBI for another 50 bps CRR cut in March. This is largely backed by the RBI's change in stance to use CRR as a liquidity tool.
However, we continue to expect the RBI to be little wary of touching the policy rates as yet. The pace of policy rate cut would be contingent on the extent of fiscal consolidation, evolution of the core and headline inflation once base effect wears off and global commodity prices driven imported inflation.
On divestment front, the EGoM has approved 5 per cent stake sale in OnGC via auction route. The government would raise 12000 crore via stake sale. However there was no decision on auction timeline, say reports. The divestment in BHEL is likely to happen in FY13.
"To a large extent, quite a few policy initiatives have been positive for markets, clearly from an India front we are moving from a tightening cycle to an easing monetary cycle, which itself is positive because during a tightening cycle you did see India underperform massively.
In fact India was the worst performing market last year. So in easy monetary policy cycle you would see investors returning back to India. First is we have a few events which are lined up in March one of them is clearly the state elections of Uttar Pradesh where we believe, it could be positive for markets.
Second is the budget that is coming up on March 16th, we do believe it is going to be a constructive budget as far as fiscal consolidation is concerned. And third is the central bank policy which we believe will continue its stance of an easy monetary policy.
So, given this kind of an outlook which we are seeing going forward, it looks that the worst in terms of macro variables could be behind us. We think the economy would bottom out somewhere in the December quarter which has just passed. It could be a slow and gradual recovery but we are clearly in recovery mode right now.
Foreign institutional investors have turned bullish on the Indian markets and continued to pump in dollars in Indian equities. As per provisional data, they bought equities worth 1030.12 crore on Tuesday. The FIIs have invested 9588.68 crore so this month.
"Liquidity actually chases economic fundamentals and if the fundamentals are likely to improve my sense is that liquidity could sustain. But India as I say moves on the principle of economic circularity, so when money really comes in a lot of macroeconomic variables once again get back into shape.
We see momentum building up also on policy, now to take advantage of the liquidity that is coming into India, lot of things will fall in shape and therefore if this continues, you would see the liquidity staying in India," Lobo added.
However, Jim Walker, MD, Asianomics, is of the view that investors should be cautious of the liquidity wave that is pushing the markets higher.
"We get cautious about liquidity waves because waves come and go and that has been the feature of the movement of the course of the last 4 years. We get these liquidity rushes and then they disappear and dissipate and of course the markets are left high and dry and our feeling is that is going to happen again this year.
Of course,
would probably get another wave of the LTRO to come over the course of the next
month or 2 and it always loses power after the first round. So, it is just time
to be cautious. There are too many other negatives on the fundamentals..
The Bombay Stock Exchange's Sensex ended at 18202.41, up 353.84 points or 1.98 per cent. It touched high of 18231.35 and low of 18000.30 in trade today.
The National Stock Exchange's Nifty closed at 5531.95, up 115.90 points or 2.14 per cent. The broader index touched intraday high of 5542.10 and low of 5460.60.
BSE Midcap Index was up 2.10 per cent and BSE Smallcap Index moved 1.33 per cent higher.
Amongst the sectoral indices, BSE Realty Index was up 5.01 per cent, BSE Capital Goods Index rallied 4.01 per cent, BSE Power Index gained 3.56 per cent and BSE Bankex moved 3.55 per cent higher. BSE Oil&gas Index slipped 0.32 per cent.
Reliance Power (12.85%), Jaiprakash Associates(8.11%), Tata Motors (7.39%), Axis Bank (7.11%) and DLF (6.46%) were the major Nifty gainers.
Shares of power companies moved higher after reports Coal India would sign long-term fuel supply agreements with private producers.
Tata Motors reported 40.5 per cent jump in consolidated net profit to Rs 3,405 crore for the quarter ended December, 2011 on the back of better performance by British division Jaguar Land Rover. The company crossed the Rs 1-trillion revenue target at Rs 1,14,476.6 crore during the quarter under review.
Reliance Industries (-1.23%), Hindustan Unilever (-0.96%), Cipla (-0.68%), Cairn India (-0.57%) and Sun Pharmaceuticals (-0.24%) and ITC (-0.07%) were the only index losers.
Gas output from Reliance Industries' D6 block is expected to fall by about 10% to 34 million standard cubic metres a day (mmscmd) by April, say reports. The D6 block currently produces about 37 mmscmd of gas.
Market breadth was positive on the NSE with 849 gainers against 311 losers.
The Bombay Stock Exchange's Sensex ended at 18202.41, up 353.84 points or 1.98 per cent. It touched high of 18231.35 and low of 18000.30 in trade today.
The National Stock Exchange's Nifty closed at 5531.95, up 115.90 points or 2.14 per cent. The broader index touched intraday high of 5542.10 and low of 5460.60.
BSE Midcap Index was up 2.10 per cent and BSE Smallcap Index moved 1.33 per cent higher.
Amongst the sectoral indices, BSE Realty Index was up 5.01 per cent, BSE Capital Goods Index rallied 4.01 per cent, BSE Power Index gained 3.56 per cent and BSE Bankex moved 3.55 per cent higher. BSE Oil&gas Index slipped 0.32 per cent.
Reliance Power (12.85%), Jaiprakash Associates(8.11%), Tata Motors (7.39%), Axis Bank (7.11%) and DLF (6.46%) were the major Nifty gainers.
Shares of power companies moved higher after reports Coal India would sign long-term fuel supply agreements with private producers.
Tata Motors reported 40.5 per cent jump in consolidated net profit to Rs 3,405 crore for the quarter ended December, 2011 on the back of better performance by British division Jaguar Land Rover. The company crossed the Rs 1-trillion revenue target at Rs 1,14,476.6 crore during the quarter under review.
Reliance Industries (-1.23%), Hindustan Unilever (-0.96%), Cipla (-0.68%), Cairn India (-0.57%) and Sun Pharmaceuticals (-0.24%) and ITC (-0.07%) were the only index losers.
Gas output from Reliance Industries' D6 block is expected to fall by about 10% to 34 million standard cubic metres a day (mmscmd) by April, say reports. The D6 block currently produces about 37 mmscmd of gas.
Market breadth was positive on the NSE with 849 gainers against 311 losers.
Regards
RAKESH MAKIN
+91,
9041667797(DIRECT), 9915684997
OFF
0172-4657997
PANCHKULA (Haryana).
Email:makin_97@yahoo.com
Group mail id: makin97NSEtips@yahoogroups.co.in
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