Sensex posts its biggest single-day gain so far in December n Capital goods top gainer
Indian equities gained nearly 1% on Wednesday led by sizeable gains in cyclical and high-beta stocks such as capital goods, realty and banks, and strong buying by overseas institutional investors.
As per the stock exchange data, Sensex advanced 0.84% or 162.37 points on Wednesday to close at 19,417.46. The 30-share Sensex posted its biggest single-day gain so far in December. The 50-share Nifty, too, advanced 0.85% or 49.85 points to settle at 5,905.60. However, broader markets trailed front line stocks. BSE Midcap and BSE Smallcap index gained 0.66% and 0.36%, respectively.
Among sectoral indices, BSE Capital Goods index was the biggest gainer, rising 1.68%. BSE Realty index advanced 1.22%, while CNX Nifty gained 1.31%. BSE IT index was the sole loser on Wednesday, declining 0.17%.
Experts attributed on Wednesday?s gains to December derivatives (F&O) expiry, which is due on Thursday and resilient buying of Indian equities by foreign institutional investors (FIIs) on hopes of continued reforms and increasing expectations of interest rate cut by the Reserve Bank of India.
Among its peers, all major Asian indices ended marginally in the green on Wednesday. Hang Seng was up 0.16%, while Shanghai Composite rose 0.25%. Nikkei 225 climbed the most at 1.49%.
On Wednesday, the government approved 12 foreign direct investment (FDI) proposals, including that of Ratnakar Bank, totalling over R802 crore. In addition, the proposal of Swedish furniture major IKEA has been recommended for consideration of cabinet committee on economic affairs.
According to a JP Morgan report on Asia Pacific asset allocation, the global I-bank major remains overweight on India, with focus on cyclical portfolio. ?More cyclical Indian portfolio is the investment theme driving the transactions,? stated the JP Morgan report.
Among the front line stocks, Bharti Airtel, Larsen & Toubro, ICICI Bank, and JP Associates were among the top gainers ?each rising in the range of 2-3%. Reliance Industries also advanced 1% on hopes the government-appointed panel looking at oil and gas exploration contracts would recommend a pricing formula that could sharply raise the price of natural gas.
?In our view, capping of natural gas price at $7-8 per mmbtu along with the proposed formula will be easier to implement and is likely to find favour with the price-sensitive fertilizer and power sectors. We note that a higher natural gas price will be positive for the earnings of RIL. However, an accelerated decline in gas production from KG D-6 block may largely offset the positive impact of higher prices,? said Sanjeev Prasad of Kotak Institutional Equities.
Credit Analysis and Research (CARE Rating) was another top gainer for the day, with the scrip rising over 23% on its trading debut on the bourses on Wednesday. The stock closed at R922.55 from its IPO price of R750.
FIIs continued to remain net buyers in Indian equities, with year-to-date inflows crossing $24 billion. According to Bloomberg data, overseas funds net bought domestic stocks for the 29th consecutive session as on December 26 ? the longest stretch of net purchases since the record 41-day streak through October 27, 2010.
