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Sensex survives 2G scare...Nifty ends above 5250

BSE Sensex ended at 17,432, up 131 points from the last close. It earlier touched a day's high of 17,504 and hit day's low of 17,308. The Nifty settled at 5,270, up 34 points. It hit a day’s high of 5,290 and day’s low of 5,226.

It was another good session for the Indian market, notwithstanding an intraday interruption sparked by a disruptive Supreme Court verdict on the 2G scam. With this, the main indices have now gained for three successive sessions, more than reversing Monday's big crash. The apex court's ruling on the 2G case didn't have a material impact on the overall sentiment, although shares of few companies hit by that order did feel the heat.

The BSE Sensex ended at 17,432, up 131 points from the last close. It earlier touched a day's high of 17,504 and hit day's low of 17,308. The Nifty settled at 5,270, up 34 points. It hit a day’s high of 5,290 and day’s low of 5,226.

Despite the volatility the market breadth was in favor of the bulls. On the BSE, 1573 stocks advanced as against only 1295 declining stocks and 126 stocks remained unchanged.

The INDIA VIX on the NSE was up ~3.5% to close at 23.69. The index hit day's high of 24.26 and hit day’s low of 21.88.

Among the 30 constituents of the Sensex, Bharti Airtel, DLF, Sterlite, Wipro, Gail and Hindalco were among the major leaders. On the other hand, Cipla, ITC, Jindal Steel, Tata Motors and Sun Pharma ended in the negative terrain.

Among the BSE sectoral indices, the Teck index was the top gainer, up 2%. The IT index gained 1.5%, while the Metal index was up 1.4%. Capital Goods and Realty indexes rose 1.2% or more. On the other hand, BSE Pharma index lost 0.6% and BSE Consumer Durables index fell 0.4%.

The BSE Mid-Cap index rose ~0.6% while the BSE Small-Cap index gained 0.5%.

The markets turned volatile briefly after the Supreme Court scrapped 122 2G licences issued under the tenure of former Telecom Minister A. Raja. However, traders used the dip to buy the market.

The telecom shares of the companies affected by the apex court's verdict tumbled but Bharti Airtel gained on speculation it might benefit from the re-allocation of the 2G licences. Shares of RCOM, DB Realty, Unitech, Videocon Industries and TTML were among the top losers.

"The rising market brings back memories of 2007. Risk appetite is back on the table as global liquidity, unlocked by easy monetary policies, chases high returns after a tumultuous 2011. The trigger for Wednesday’s worldwide ‘risk on’ rally came from upbeat manufacturing data.

How Supreme Court 2G verdict impacts stakeholders

About 7 per cent of over 700m subscribers will get affected by this verdict and will have to switch their service provider. This is around 61 m subscribers. The Supreme Court cancelled 122 licenses for mobile networks issued during A Raja’s tenure as Telecom Minister on Thursday. While consumers have been given a window to change service providers, companies like Uninor and their lenders are worst hit. The Supreme Court has asked the telecom regulator TRAI to make fresh recommendations on 2G licenses allocation.

 Here is what it means for stakeholders:

 • All 22 licences held by Uninor were cancelled by the Supreme Court order. The company’s shares plunged 7 per cent. DB Realty, which partnered with Etisalat to roll out telecom services, tanked over 5 per cent. The court scrapped 13 licenses of Swan.

 • Idea Cellular shares fell over 3 per cent as it saw 9 licences scrapped. Idea’s market share of 6.8 per cent would be affected as a result.

 • Companies could appeal through a review petition. Analysts at CLSA, securities firm, expect most companies to challenge the verdict.

 • Shares of Bharti Airtel rose 4 per cent as the largest player has an opportunity to expand market share. It can lure new subscribers. Vodafone is another beneficiary of this decision.

 • About 7 per cent of over 700m subscribers will get affected by this verdict and will have to switch their service provider. This is around 61 m subscribers.

 • TRAI said that customers less than 90 days old will not be able to move to a new service provider on the same number using number portability. TRAI would have to issue necessary directives for the company to inform their customers and have to devise ways for customers less than 90 days to use number portability, according to TRAI Chairman JS Sharma.

 • Customers will have a window of four months to change the service provider.

 • Shares of public sector banks were largely affected as they had maximum exposure to the telecom sector. Banks like State Bank of India, the nation’s largest lender, said that loan to the tune of Rs 1,000 crore would get affected. Other banks like Punjab National Bank and IDBI Bank have a significant exposure.

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Nifty surges above 4750; Kotak, Tata Steel, DLD gain

MUMBAI: The National Stock Exchange's Nifty extended intraday gains and was near day's highs as investors turned bullish following encouraging Purchase Managers Index data. The Purchasing Managers' Index in India rose to 54.2, the most in six months, from 51 in November. In China, the index was at 50.3 from 49 in November.
According to dealers, if the benchmarks close above intermediate resistance levels then some more upside can be expected in next few sessions.
At 02:45 pm; the Nifty was at 4753.45, up 116.70 points or 2.52 per cent. The broader index touched a high of 4753.75 and low of 4675.80 in trade so far.

The Bombay Stock Exchange's Sensex was at 15882.81, up 364.89 points or 2.35 per cent. The 30-share index touched intraday low of 15640.56 and high of 15906.60. BSE Midcap Index was up 2.28 per cent and BSE Smallcap Index moved 2.12 per cent higher. Amongst the sectoral indices, BSE Metal Index rallied 4.59 per cent, BSE Realty Index gained 3.79 per cent, BSE Bankex moved 3.75 per cent higher and BSE Capital Goods advanced 3.71 per cent. Kotak Bank (6.79%), Tata Steel (5.76%), DLF (5.55%),Tata Motors (5.27%) and IDFC (5.11%) were the major Nifty gainers. Bajaj Auto has unveiled its low cost cast RE60 today. The stock was up 0.51 per cent on the NSE. BPCL (-2.31%), Mahindra & Mahindra (-1.65%), Ambuja Cement (-1.06%) and Hero Moto Corp (-1.03%) were the major index losers. Market breadth was positive on the NSE with 1814 gainers against 673 losers. 

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Bullish on Commodities : Gold can go down to $1200

ET Now: The EU debt crisis, rating downgrades and higher volatility dominated the year 2011. What to your mind will dominate the year 2012? 
Jim Rogers: What will dominate 2012? Well, we have several elections. There are 40 elections in 2012 -- America, France, Korea, Taiwan - lots of places, countries in Africa. So you are going to see a lot of government spending as governments try to buy elections. So a lot of people are going to have a very good 2012 because government is going to pour money into their pockets and their friends and they are going to have a good time. The overall situation, however, in the world is getting worst. This means higher debt. So when 2013 comes, we better be careful. 

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Sensex hits 17,000; Wipro, JP Asso, Sterlite Industries up

MUMBAI: The Bombay Stock Exchange's Sensex was firmly placed in the green as positive opening of European markets boosted sentiments. All the sectoral indices, barring the pharmaceuticals space, were in the positive terrain. 

At 02:45 pm; the Sensex was at 16948.48, up 143.15 points or 0.85 per cent. The 30-share index touched intraday low of 16781.62 and high of 17003.71. 

The National Stock Exchange's Nifty was at 5080.80, up 41.65 points or 0.83 per cent. The broader index touched a high of 5099.25 and low of 5032.25 in trade so far. 

BSE Midcap Index was up 0.44 per cent and BSE Smallcap Index gained 0.40 per cent. 

Amongst the sectoral indices, BSE IT Index moved 1.71 per cent higher, BSE FMCG Index gained 1 per cent, BSE Metal Index advanced 0.98 per cent and BSE Oil7gas Index was 0.95 per cent up. BSE Healthcare Index slipped 0.93 per cent. 

Wipro (3.40%), Jaiprakash Associates (2.68%), Sterlite Industries (2.55%) Infosys Technologies (2.29%) and Jindal Steel (2.17%) were the top Sensex gainers. 
Wipro Technologies is consolidating its quality and information systems, global delivery and business application services functions into a single business operations unit. The company is combining these functions to streamline delivery and simultaneously bring in greater automation at the backend. 

Wipro Infrastructure Engineering has signed a joint venture contract with Kawasaki Heavy Industries in India to set-up a manufacturing facility for hydraulic pumps for excavators. 
Bharti Airtel (-2.90%), Coal India (-2.38%), Sun Pharmaceuticals (-2.38%), NTPC (-2.16%) and Cipla (-1.26%) were amongst the losers. 

Market breadth was positive on the BSE with 1462 gainers against 1236 losers. 

The European markets opened higher on expectations of strong bail out plans for euro-zone. FTSE 100 was up 1.02 per cent, CAC 40 gained 1.60 per cent and DAX moved 1.48 per cent higher.

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Sensex in December 2011

Sensex may surge 16% to 18,741 by December 2012: 

The BSE Sensex index could surge by as much as 16 per cent next year, but the rise will be marked by "volatility".

"The probability-weighted outcome for the BSE Sensex is 18,741 for December, 2012, 16 per cent above the current level," Morgan Stanley said.

The BSE benchmark Sensex has lost over 19 per cent so far this year and closed at 16,542.62 points on December 1. The Sensex is down by nearly 22 per cent from an all-time high of 21,206.77 points scaled on January 10, 2008.

On the domestic front, factors like comforting inflation data and the government's recent bold policy announcements are likely to act as a boost for the market. However, economic turmoil in the developed world is likely to act as a dampener.

"Inflation data is already moderating, setting the stage for monetary easing. The bad news on policy has stopped, although the volatility emanating from a weak developed world could keep pegging back Indian equities,".

As per the latest data, food inflation stood at a four-month low of 8 per cent for the week ended November 19. Food inflation was in double digits for five consecutive weeks in October and early November.

"The positive side effect of any decline in inflation expectations will be a relative transfer of savings from gold to equities," the report said.

Given the decline in seasonally adjusted inflation, "The RBI is set to change policy direction via the liquidity injection, CRR cuts and rate cuts path over the coming months," it added.

However, excessive monetary easing in Europe or the US to address anemic growth could trigger a rise in commodity prices, resulting in inflation across India all over again.

In addition, unrest in the Middle East has the potential to create pain via higher oil prices. A substantial depreciation in the rupee value poses the same risk to inflation, Morgan Stanley said.

On the policy front, recent action on FDI in pension funds and retail and power tariff revisions suggest that the bad news has stopped. However, multiple state elections in the coming months could imply continuing policy stalemates.

India is in a difficult position with respect to its fiscal deficit and the global crisis could cause the fiscal deficit to rise further, which in turn could pose a "problem" for the market, the report said.
Moreover, India's current account deficit and the way it is funded (largely by capital market flows) exposes India to a global financial crisis. This was the very reason for which the Indian equity market significantly underperformed in 2008-09 even though Indian corporate earnings outperformed the rest of the world.

The report, however, cautioned that a "significant global stimulus or a breakdown in capital markets would hurt India a la 2008."

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