UPTREND CONTINUES

Indian frontline equity indices somehow managed to escape the wild swings in the dying hours of trade unaffected as they finished the session with over half a percent gains. Just when it appeared that the benchmarks will conclude another positive session with good gains, hefty bouts of selling pressure emerged abruptly in the last leg of trade, which dragged the key gauges to the lowest point in the session. However, the kneejerk selling pressure was immediately countered before the close of session as it seemed like the bulls had the last say as they stalled the declining momentum of the benchmarks and took the key indices to the highest point in the session. Stocks from the high beta - Realty, Capital Goods and Metal counters led the late recovery for the markets as they rallied in the range of 1.5-4%. Benchmarks carried forward the gaining momentum even after the over two percent rally in the previous week, as sentiments were bolstered early in the session on the back of unexpectedly encouraging US jobs data, signaling that worries over deep recession are making way for economic recovery. Besides, upstream oil companies had more reasons to worry since reports suggested that the government increased subsidy burden on the state-run oil refiners by asking them to compensate around 38% of revenue losses on fuel sales during April-December 2011. Meanwhile, global rating agency S&P's in its latest report has highlighted that India is facing some challenges on a few fronts, and the balance of risk factors for the sovereign credit rating may be shifting slightly toward the negative. On the earnings front, FMCG major announced results for the third quarter, which largely were better than expectations, however the stock got pounded over 3.50% since its personal product segment showed disappointing growth numbers. On the Asian front, initial optimism has petered out and markets in the region settled on a mixed note while European stock markets declined as the outcome of the long awaited Greece debt negotiations was still elusive as the country's political leaders and its private-sector creditors scrambled to complete twin negotiations on an aid package and mammoth debt deal.

Earlier on Dalal Street, the benchmark got off to a gap up opening tracking the impressive leads from Asian markets on the back of encouraging over the weekend leads from the US. Thereafter, the bourses remained in fine fettle through the next two hours. But in late morning trades the optimism in the markets showed signs of petering out. Hefty bouts of selling pressure in mid noon trades even dragged the bourses to the neutral line. However, the resilient indices did not capitulate to the extreme volatility and rebounded to eventually extend the northbound journey for the fifth straight session. The NSE's 50-share broadly followed index Nifty, climbed by over half a percent to settle above the crucial 5,350 support level while Bombay Stock Exchange's Sensitive Index or Sensex garnered little over a hundred points and ended above the psychological 17,700 mark. Moreover, the optimism in broader markets remained intact through the day, which helped the indices settle on a strong note with over a percent gains, outperforming their larger peers. On the BSE sectoral space, rate sensitive Realty counter remained top gainer in the space with hefty gains of about four percent while the Capital Goods sector too gained a lot of traction and finished with two percent gains. On the flipside, defensive-Healthcare counter remained the only chink in the armor with marginal losses. The markets climbed on strong volumes of over Rs 1.40 lakh crore while the turnover for NSE F&O segment remained on the higher side as compared to that on Friday at over Rs 1.18 lakh crore. The market breadth remained optimistic as there were 1,855 shares on the gaining side against 1,054 shares on the losing side while 105 shares remained unchanged.

Finally, the BSE Sensex rose 102.35 points or 0.58% to settle at 17,707.31, while the S&P CNX Nifty surged by 35.80 points or 0.67% to close at 5,361.65.

The BSE Sensex touched a high and a low of 17,829.72 and 17,595.10 respectively. The BSE Mid cap and Small cap indices were up by 1.26% and 1.43% respectively.

The major gainers on the Sensex were Jindal Steel up 3.39%, BHEL up 2.86%, SBI up 2.85%, Cipla up 2.19% and L&T up 2.14%. While, Tata Power down 4.36%, Hindustan Unilever down 3.49%, Sun Pharma down 1.79%, Gail India down 0.74% and Reliance down 0.60%, were the major losers on the index.

The top gainers on the BSE sectoral space were Realty up 3.96%, Capital Goods (CG) up 2.00%, Metal up 1.63%, PSU up 1.37% and Bankex up 1.33%, while Health Care (HC) down 0.12% was the only loser on the sectoral space.

Meanwhile, to help the ailing airline industry, a Group of Ministers (GoM) is likely to meet later this week to discuss the issues concerning the aviation sector. The GoM is likely to take a decision on investments limits in Indian carriers by foreign airlines, direct import of jet fuel by Indian carriers and Air India's financial restructuring plan. There is a common consensus on the fact that the ailing Indian aviation industry needs assistance to come out of its financial debt. It had been suggested that the government should allow foreign investments by international carriers in the Indian airline industry to help the industry to survive the current financial crisis.

Earlier, foreign airlines were not allowed to invest in Indian airlines though foreign direct investment (FDI) of up to 49% was allowed. A Committee of Secretaries has proposed a 49% cap on FDI by foreign airlines. But earlier, the Civil Aviation Ministry had suggested 24%, while the Department of Industrial Policy and Promotion (DIPP) had recommended 26%. At present, foreign investment of up to 49% is permitted in the aviation sector, apart from 100% in MRO (maintenance, repair and overhaul), airports, helicopter and sea-plane operations, but foreign carriers are not allowed to invest.

Another topic of discussion would be the direct import of jet fuel by Indian carriers. The expenditure on jet fuel accounts 40-50% of an airline's total operational cost and the airlines have demanded that they be allowed to import fuel to escape the heavy sales tax levied by states. The petroleum ministry is understood to have raised objections to the proposal but the Committee of Secretaries is said to have recommended the direct import.

The GoM shall also be discussing, the cash-strapped, Air India's financial restructuring plan (FRP) and turnaround plan (TAP). A decision on injecting additional equity into the national carrier is also likely to be taken up. The debt-ridden carrier has outstanding loans and dues worth Rs 67,520 crore, of which Rs 21,200 crore is working capital loan, Rs 22,000 crore is long-term loan on fleet acquisition, Rs 4,600 crore is vendor dues besides an accumulated loss of Rs 20,320 crore, according to official figures.

A panel of secretaries has recommended that Rs 23,000 crore be infused into the cash-strapped national carrier over the next 10 years, of which Rs 6,600 crore could be injected in the current fiscal ending March 31. As per its aircraft acquisition plans, Air India has already placed orders for 27 Boeing 787 Dreamliners and decided to take them on sale and leaseback mode. Under the leaseback mode, an airline purchases aircraft from the manufacturer and sells them to a leasing company and then gets the planes back on lease. This erases the aircraft purchase debt from the airline's books. The first of these planes are expected to be delivered by March.

The S&P CNX Nifty touched a high and low of 5,390.05 and 5,327.25 respectively.

The top gainers on the Nifty were ACC up 5.74%, Ambuja Cement up 5.22%, Siemens up 4.01%, Cairn up 3.53% and Jindal Steel up 3.50%.

On the flip side, Tata Power down 4.26%, HUL down 3.20%, Sun Pharma down 2.03%, Dr Reddy down 1.73% and Reliance Infra down 1.71% were the top losers on the index.

The European markets were trading in red as France's CAC 40 was down 1.06%, Britain's FTSE 100 down 0.38% and Germany's DAX down by 0.51%.

Sentiments remained jubilant in Asian region and most of the indices snapped the session in the positive terrain on Monday, tracking gains on Wall Street after strong US jobs data but worries about Greece's unresolved debt crisis capped the gains. A strong US jobs report for January sent Wall Street soaring on Friday as investors celebrated a surge that pointed to new vitality in a fragile recovery for the world's biggest economy. Meanwhile, Hong Kong shares snapped a two-session winning streak on Monday, falling back from early gains after benchmark indexes met chart resistance as investors took profit on some of last week's outperformers. While, mainland markets were mostly flat, with the Shanghai Composite Index closing up 0.03 percent at 2,331.14 after meeting downward trend line resistance at about 2,340-2,360.