Sensex snaps 5-day losing streak; fertiliser stocks rally

Buoyed by a slew of reform measures announced by the government and lower-than-expected inflation data , key equity benchmarks closed Friday's session in the green, snapping a five-day losing streak, though for the week the market more or less remained in a tight range.

The 30-share Sensex gained 92 points to close at 19322.22, and the 50-share Nifty added 32 points to close at 5882.65.

In a big push for the reforms process, the Cabinet last evening decided on a slew of key policy issues. The Cabinet cleared the Land Acquisition bill. The bill now needs the consent of the Parliament. It also agreed to set up a cabinet committee on investment to fast-track large infrastructure projects.

Key policymakers, including the finance minister, expressed hope that these decisions will bear fruit.

Stocks in rate-sensitive sectors such as banks and real estate did well on rising hopes the Reserve Bank of India will move towards easing interest rates starting early next year.

Inflation declined to 7.24 percent in November mainly on account of lower prices of some vegetables, giving a cue to RBI to consider interest rate cut next week to promote sagging growth.

ICICI Bank provisionally rose 1.5 percent, while State Bank of India gained 2.8 percent.

Fertiliser shares rallied after the government approved a new policy to encourage investment in urea manufacturing, in a move seen expediting USD 6.5 billion in projects that have been held back. The top gainer was FACT (up 16.12 percent) followed by National Fertilizers (up 1.62 percent), Rashtriya Chemicals & Fertilizers (up 2.39 percent) and Chambal Fertilisers (0.81 percent).

Key benchmarks remained in a consolidation phase due to lack of trigger. The gains in SBI, ICICI Bank, TCS and Tata Motors were offset by fall in HDFC, HDFC Bank, Bharti, ITC and Infosys.

The 30-share BSE Sensex rose 34.45 points to 19,263.71 while the 50-share NSE Nifty moved up 9.20 points to 5,860.70.

Metals stocks retained their top positions in the buying list; Sterlite Industries shot up 4 percent and Hindalco Industries was up 3 percent.

Country's largest lenders State Bank of India and ICICI Bank gained 1.76 percent and 0.9 percent, respectively. However, HDFC and HDFC Bank were down 0.5 percent and 0.8 percent.

Tata group stocks like Tata Motors, Tata Consultancy Services and Tata Steel were up nearly 1.5 percent.

Engineering conglomerate Larsen & Toubro and index heavyweight Reliance Industries advanced 0.4 percent each.

Top telecom operator Bharti Airtel and state-owned power equipment maker BHEL fell more than 1 percent.

Shares of ITC, Hindustan Unilever, Infosys, ONGC, Dr Reddy's Labs, Cipla, Maruti and Tata Power were down 0.3-0.8 percent.

On the global front, European markets too were flat while Asian markets closed mixed. Shanghai rallied 4.32 percent and Hang Seng gained 0.7 percent whereas Nikkei, Kospi and Taiwan ended lower.

Indian equity benchmarks were trading higher with marginal gains following lower than expected inflation in November, helped by banks stocks. The Bank Nifty rose 0.94 percent as country's largest lender State Bank of India rallied 2 percent while its rival ICICI Bank was up 0.92 percent.

The 30-share BSE Sensex went up 63.74 points to 19,293 and the 50-share NSE Nifty was up 20.75 points to 5,872.25.

WPI inflation slipped to 7.24 percent in November from 7.45 percent in previous month. Core inflation too declined to 4.5 percent from 5.2 during the same period.

Experts feel the RBI is unlikely to cut policy rates in December policy though inflation has been falling for the third consecutive month.

"Going ahead, we believe that the moderation in commodity prices and a higher base effect coming into play are likely to bring down headline inflation as well as that in manufactured products. The momentum of core inflation too is stabilizing close to the Reserve Bank's comfort level," Bhupali Gursale, economist at Angel Broking says.

Despite demand-side moderation in inflation, the headline inflation rate still remains above the 5% comfort zone and retail inflation remains elevated.

However, Gursale expects a 25 bp cut in the CRR rate as advance tax outflows and seasonal demand are likely to keep the liquidity situation tight.

 Private oil & gas producer Reliance Industries and engineering conglomerate Larsen & Toubro were up 0.86 percent each.

Metals stocks too were on buyers' radar. Sterlite Industries topped the buying list, rising nearly 3 percent while Hindalco, Tata Steel and Jindal Steel gained 1-2 percent.

Commercial vehicle major Tata Motors rose 1.9 percent and top software services exporter TCS moved up 1.5 percent.

Meanwhile, telecom operator Bharti Airtel dropped 1.66 percent. State-controlled oil & gas producer ONGC and top car maker Maruti Suzuki were down 1 percent each.

Shares of HDFC Bank, HDFC, ITC and Infosys slipped 0.2-0.5 percent.

Equity benchmarks, which barely moved despite a slew of measures announced by the government on Thursday, reacted positively to November inflation (WPI) number, which came in lower at 7.24% against an expectation of 7.6%. Broader markets moved up with significant gains.

At 11.52 AM, the Sensex was up 53.23 points or 0.28% at 19282.49, and the Nifty up 15.10 points or 0.26% to trade at 5866.60. Rupee too appreciated with significant movement in yields. Banking stocks like SBI, ICICI, Axis Bank and Kotak Mahindra moved up over 1%.

Top gainers were Tata Motors (up 1.58%), Jindal Steel (1.36%), SBI (1.34%), Reliance (1.27%) and TCS (1.10). Speaking to CNBC-TV18, C Rangarajan said the Reserve Bank of India may look at cutting rates if inflation falls for one more month now.

Capital goods maker, Larsen & Toubro gained over 1 percent after Cabinet approved the creation of a special panel on Thursday to speed up the implementation of big-ticket infrastructure projects.

ITC fell 1.6 percent, down for a second day after FTSE lowered its free float weighting for the cigarette maker in its global equity index series.

Fertiliser shares gained after the government approved a new policy to encourage investment in urea manufacturing, in a move seen expediting $6.5 billion in projects that have been held back. National Fertilizers was up 3.2 percent, Rashtriya Chemicals and Fertilizers gains 2.8 percent, while Chambal Fertilisers and Chemicals rise 1.7 percent.

Fertiliser shares were up in morning trade Friday even as key equity benchmarks Sensex and Nifty struggled for direction.

Brokers attributed the rally in fertiliser shares to news of the government clearing the urea investment policy, which could attract much need investments in the sector.

The 30-share Sensex was flat at 19, 228 and the 50-share Nifty flat at 5851.

Fertilisers and Chemicals Travancore led gainers in fertiliser space, rallying over 15 percent to Rs 31.80. Other notable gainers included Rashtriya Chemicals and Fertilisers, Liberty Phosphate, SPIC, National Fertilisers and GNFC, all of which were up 3-4 per cent.

However, the broader market was listless, as investors appear to have discounted the major policy announcements by the government yesterday.

Among other things, the Cabinet has approved the Land Bill, which will be placed in Parliament for approval next week. To speed-up execution of infrastructure projects above Rs 1000 crore, a cabinet panel headed by the Prime Minister will be set up.

Realty and capital goods shares were up slightly on this development, but brokers said upsides could be limited.

FMCG and banking shares were the major laggards, with stocks like Titan Industries, Canara Bank and J&K Bank down 1-2 percent.