Nifty On 19-Month High

Today was an extremely favourable day for the Indian markets, which saw a healthy upswing. Optimism over the fiscal cliff deal in the US created an encouraging backdrop, while on the home front, hopes of an end to the logjam in Parliament provided positive stimulus. With these cues in play, the Sensex ended the day higher by 328.83 points or 1.75% at 19170.91 and Nifty was up by 97.55 points or 1.70% at 5825.

The global indices have seen an upward trend after US President Barack Obama said that he hoped to have a deal by Christmas in order to avoid the more than USD 600 billion in tax raises and spending cuts, which would otherwise have kicked off in Jan 2013. To add to the optimism, House Speaker John Boehner voiced his optimism on working together to avert this crisis "sooner rather than later". These comments led to renewed optimism of the US coming to a consensus soon, also reflected in the country's stock futures. As this is a global area of concern, an upswing of 0.74%-1.1% was seen in Europe and of around 1% in Asia.

The markets are now looking forward to picking up cues as Bank of England Governor Mervyn King and the US Federal Open Market Committee (FOMC) member Richard Fischer are scheduled to speak today. Important economic data from the US is also slated to be released later today, which includes the GDP and Initial Jobless Claims. Investors would be watching these factors closely.

On the domestic front, the government agreed to vote on multi-brand retail in the in Parliament, sparking hopes of reforms and an end to the legislative logjam. Adding to the positive sentiment, Goldman Sachs raised the outlook on Indian equities from ‘market-weight’ to ‘overweight’ on account of growth recovery and inflation moderation.

These factors cumulatively resulted in a positive market breadth, with 1684 (55%) advances and 1260 (41.15%) declines. There was an overall upward move seen today. The BSE midcap and smallcap indices saw an appreciation of 1.39% and 0.52% respectively.

Of the 13 sectoral indices, only 2 ended the day negative. The BSE Teck and IT indices saw a fall of 0.05% and 0.36% respectively. These losses were on account of the rupee breaching the 55 level, reaching highs not seen this week.

Among the top gaining sectors were Realty, Banking and Auto, which moved up by 3.38%, 2.76% and 2.08% respectively. Among the highest gaining stocks were Bajaj Auto, ICICI Bank and Tata Motors, which rose by 5.01%, 4.59% and 4.45% respectively.

Other gainers included Cinemax India and PVR, higher by 4.99% and 7.83% respectively. This upward trend in both these stocks resulted out of a definitive agreement entered by Cinemax to sell a 69.27% stake to PVR for approximately Rs 395 crore.

The stock price of Tata Teleservices moved up by 13.10% today, sparket by reports of a possible merger of the company with Telenor.

As a result of the development in the House on the retail FDI issue, the stock prices of Pantaloon Retail and Trent moved up by 1.76% and 2.07% respectively.

Global equity movement is likely to be decided by the GDP and employment data released in the US. Domestic movement would be determined by a combination of global factors and the developments in the Parliament.