SHORT COVERING

Indian equity markets are gradually gaining momentum as the January series Futures and Options contract expiry nears in the session. The January series has already been one of the best performing series in around a year's time and with the benchmarks continuing to capitalize on the momentum the gains at the end of series are only going to be higher. The psychological 5,150 (Nifty) and 17,050 (Sensex) levels proved as strong supports as the frontline gauges got a technical bounce from those levels and are steadily heading towards the 5,200 (Nifty) and 17,150 (Sensex) resistances. Sentiments remain sanguine as investors are covering hefty short positions not only in heavyweight stocks but largely across the board a day after the RBI kept key policy rates unchanged but by cutting the CRR to 5.5% from 6% the central bank infused Rs 32,000 core into the Indian banking system. The PSU counter on BSE remained the top gainer in the sectoral space with over a percent gains followed by the TECk sector which too soared with similar gains. Though there appeared no sectoral laggard, however some profit booking was evident in Banking and Capital Goods counters which were top sectoral performers in the previous session as majors like ICICI Bank, HDFC Bank and L&T have shed some part of the gains they amassed yesterday. Meanwhile, investors commended Bank of Baroda for announcing encouraging quarterly earnings while Union Bank of India got punished for reporting a decline in profits and sharp increase in provisioning. In the global space, stock markets in Asia largely exhibited sanguine trends on getting support from the rally in technology shares after Apple Inc reported record-smashing quarterly earnings that saw the company double its profits and sell more products than ever before. The European stock futures too are indicating a higher opening for the markets there as investors await US Federal Reserve's monetary policy and interest rate forecasts announcement scheduled later in the global day.

Moreover, the broader markets capitalized on the momentum and traded on a strong note with over a percent gains, outperforming their larger peers by a fat margin. The bourses rose on extremely strong volumes of over Rs 1 lakh crore ahead of January series futures and options contract expiry later in the day owing to a national holiday on the last Thursday of the month. The market breadth on BSE was in favor of advances in the ratio of 1642:873 while 116 scrips remained unchanged.

The BSE Sensex is currently trading at 17,093.82 up by 98.05 points or 0.58% after trading as high as 17,110.02 and as low as 17,016.69. There were 20 stocks advancing against 10 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap index surged 1.13% and Small cap soared 1.32%.

On the BSE sectoral space, PSU up 1.26%, TECk up 1.19%, Metal up 1.15%, IT up 1.15% and Auto up 0.99% were the major gainers while there were no losers in the space.

Tata Motors up 2.48%, Coal India up 2.38%, Maruti Suzuki up 2.32%, Tata Steel up 2.28% and Sterlite up 2.11% were the major gainers on the Sensex, while Jindal Steel down 1.99%, Tata Power down 0.88%, Cipla down 0.80%, ICICI Bank down 0.69% and L&T down 0.57% were the major losers in the index.

Meanwhile, in its annual report, Global Employment Trends 2012, the International Labour Organisation (ILO) has said that in the backdrop of a global slowdown, South Asia region has witnessed the most robust growth. Growth in India, Sri Lanka and Bangladesh has been by 7.8, 7.0 and 6.1% in 2011, respectively as compared to the world average of 4%. With its large domestic economy, India is likely to weather the latest global slowdown better than most, but it is struggling with stubborn levels of inflation despite monetary tightening. The growth in the region has been attributed to the rapid rise in labour productivity rather than an expansion in employment. Until the 2000s, employment and labour productivity grew at similar rates. However, in the past decade, increased labour productivity has taken over as the driver of growth in the South Asia.

 This situation is prominent in India, where total employment grew by only 0.1 % from 2005-2010 (from 457.9 million in to 458.4 million),while labour productivity grew by more than 34% in total over this period. A major reason for the slow growth in employment in recent years is the fall in female labour force participation. This has been the most pronounced in India, where the participation rate for women fell from 49.4 % in 2004-05 to 37.8 % in 2009-10 for rural females and from 24.4 % to 19.4 % for urban females. This drop in participation can only partly be explained by the strong increase in enrolment in education, because it has been evident across all age groups.The report further says that far more important in the South Asian context, is the persistence of low-productivity, low-pay jobs, which are mostly located in the agricultural and urban informal sectors.

ILO has said that some countries like India, are however showing a structural shift where the share of employment in agriculture has decreased from 59.8% in 2000 to 51.1 % in 2010.India has also witnessed a rise in real wages between 2004-05 and 2009-10 for males and females in both rural and urban areas in India. Moreover, wages have improved not only for regular wage and salaried workers but also for casual ones. Working poverty, however, based on the $2 a day international poverty line, persists at the highest  levels in South Asia. South Asia still accounts for almost half of the world's working poor (46.2 % in 2011).Overall, the worsening economic conditions will make it more challenging for the South Asia region to promote the creation of productive jobs in the non-farm sector and continue the battle against the persistence of informality, vulnerable employment and specific barriers for women and youth in the labour market, the report said.

On its overall global view, ILO has said that global economy will need to create 600 million jobs over the next decade to meet the ''urgent challenge'' of tackling the legacy of unemployment left by recession and to find work for those entering the labour force. ILO said that three years of ''continuous crisis conditions'' had left 200 million jobless. It estimated that a further 400 million jobs - 40 million a year - would be needed over the next decade to absorb growth in the international labour force.

The S&P CNX Nifty is currently trading at 5,156.45, higher by 29.10 points or 0.57% after trading as high as 5,160.30 and as low as 5,130.25. There were 31 stocks advancing against 19 declines on the index.

The top gainers on the Nifty were BPCL up 3.49%, JP Associates up 3.48%, Tata Motors up 2.70%, SAIL up 2.63% and Coal India up 2.52%.

Jindal Steel down 2.25%, Kotak Bank down 1.98%, Siemens down 1.41%, Tata Power down 1.11% and ICICI Bank down 1.03% were the major losers on the index.

In the Asian space, Nikkei 225 surged 1.12%, Strait Times soared 1.24% and Seoul Composite rose 0.12%

On the flipside only Jakarta Composite sank 0.72%.

Stock markets in China, Hong Kong and Taiwan remained closed in observance of Lunar New Year holiday.