Markets End High, FDI Hopes Push Retail Stocks Up

The Indian markets ended the day higher today, with significant strength seen in the stock prices of ICICI Bank, ITC and Reliance Industries. The Sensex closed higher by 131.60 points or 0.72% at 18460.38 and Nifty was higher by 43.25 points or 0.78% at 5614.80. 

The movement seen in the broader indices was larger than that in the BSE midcap and smallcap indices. Midcaps and smallcaps ended the day higher by 0.37% and 0.39% respectively. The overall market breadth, however, was skewed slightly towards the positive, with 1487 advances (49.83%) and 1361 declines (45.61%).

Only 3 of the 13 sectoral indices closed negative. These were PSU, Auto and Power, which saw a decline of 0.19%, 0.24% and 0.99% respectively. BHEL and NTPC heavily weighed the power sector down, witnessing losses of 2.70% and 3.46% respectively. Ashok Leyland and Hero MotoCorp also traded lower by 1.55% and 1.00% respectively, pushing the automobile sector lower.

Among other big losers was Honeywell Automation, dropping by a staggering 20% by day's end as the promoter shareholding is going to reduce in the Indian subsidiary HAIL via an offer sale. This move is being undertaken in order to comply with the Securities Contracts Rules, which requires public shareholding to be at least 25% by Jun 02, 2013.

On the other hand, there were significant gains in Real Estate, FMCG and Banking ahead of the winter session of Parliament scheduled to begin tomorrow. Hopes of the FDI issue being resolved saw the retail stocks booming today. Pantaloon Retail, Shoppers Stop and Trend saw an upswing of 4.62%, 2.44% and 2.31% respectively. The BSE Realty, FMCG and Bankex gained 2.47%, 1.41% and 1.27% respectively. Real estate, in particular, had some major movement, with a 9.49% gain in DB Realty. This upswing was a result of media reports suggesting that Bharti Group’s realty arm is in talks with DB Realty’s hospitality arm to buy a stake in the SPV. Among other gainers in the sector were HDIL and Indiabulls Real Estate, higher by 4.55% and 2.98% respectively.

Though Indian equity indices managed to end the day positive supported by gains in individual stocks and sectors, the global mood turned quite uncertain. European stocks saw early losses as the Euro zone finance ministers failed to come to an agreement on the conditions for Greece’s next tranche of bailout funds. They also said they would resume talks on Monday, thrusting markets into a phase of uncertainty.

We expect the markets to remain volatile due to domestic uncertainty hinged around the winter session of Parliament and on international worries around Greece.