Greece, Moody’s Take Sensex 300 Points Higher

The global indices have turned positive today, putting an end to the uncertainty seen since last week over the issue of Greece. The Euro zone finance ministers, the European Central Bank (ECB) and the International Monetary Fund (IMF) all approved the last tranche of funding to Greece. This would enable the country to receive 44 billion euros of financial aid in an effort to bring down its debt levels. The Euro zone members are also considering various other ways to support Greece, which vary from cutting guarantee costs to deferring interest payments. This resulted in an upside in the European stocks, which are currently trading in the range of 0.47%-0.64%.

Though the global indices were expected to see an obvious upward push due to this development, the Shanghai index ended the day lower by 1.31%. This downfall came in although the data released by the National Bureau of Statistics showed a jump in industrial profits by 20.5% YoY, which is much stronger than the 7.8% increase in Sept 2012.

Following the positive sentiment that has seeped in due to the Greek deal, the Sensex ended the day higher by 305.07 points or 1.65% at 18842.08 and Nifty ended the day higher by 91.55 points or 1.62% at 5727.45.

Apart from global factors setting a favourable backdrop for the Indian markets to rise, global ratings agency Moody’s said it had a stable outlook on India’s rating (Baa3). This was part due to country’s high savings and investment rates, as a debate rages in the country over whether it can avoid credit downgrades from other rating agencies.

This announcement further improved the sentiment in the Indian markets. The market breadth was positive today, with 1745 (57.84%) advances and 1146 (37.98%) declines. Gains in the broader indices were wider as compared to those in the midcaps and smallcaps. The BSE midcap and smallcap indices appreciated by 1.18% and 0.93% respectively.

All the 13 sectoral indices ended the day with gains. The highest gains were seen in Realty, Consumer Durables and FMCG, which surged by 3.20%, 3.18% and 2.12% respectively. In these sectors, Unitech, Videocon Industries and United Spirits were the major movers, seeing an upswing of 11.13%, 19.99% and 6.94% respectively. Among other gainers in the markets today were Bharti Airtel, Sterlite Industries and HDFC, which gained 5.22%, 3.56% and 2.79% respectively.

The government also saw the support of allies over FDI in retail, which saw cheers all around. However, this resulted in a mixed reaction in retail stocks due to drastic movements that have been taking place over the last few days. The stock prices of Pantaloon Retail, Shoppers Stop and Trent moved by 3.62%, -0.20% and -0.07% respectively.

Among the top losers for the day were NTPC and ONGC, which were down 0.38% and 0.08% respectively.

We expect the markets to continue moving directionally based on domestic developments in the winter session of Parliament and on international cues. The markets would remain closed tomorrow on account of Gurunanak Jayanti.