Market cheers green shoots of economic recovery

Markets held on to the gains scaled in morning deals as investors acknowledged better-than-expected second quarter GDP numbers released on Friday post market hours.

On Monday, an uptick in manufacturing activity for the month of November, according to HSBCs' Markit PMI data, also boosted the sentiment.

After contracting for three months in a row, manufacturing activity saw an uptick in November, latest data from the widely-tracked HSBC Purchasing Managers’ Index (PMI) shows.

The HSBC Manufacturing PMI, compiled by Markit, rose to 51.3 in November from October's 49.6, the highest since March and its first time above the watershed level of 50 that divides growth from contraction in four months.

Consumer goods was the best performer among other sub-sectors.

This data comes few days after the Gross Domestic Product (GDP) data for the second quarter this year pointed to a slight uptick compared to the previous quarter. India's economic activity expanded 4.8% in September quarter from 4.4% in the July quarter, official data had shown on Friday.

The 30-share Sensex ended up 106 points at 20,898 and the 50-share Nifty ended up 42 points at 6,217.

Market participants seem to be betting on an economic turnaround as investors created fresh positions in small caps and mid caps too.

The broader markets outperformed the benchmark indices in noon trades on Monday as investors shifted focus to fundamentally sound mid-cap and small-cap shares available at attractive valuations.

The BSE Mid-cap index ended 0.8% and the Small-cap index was up over 1% at the end of the day's trading session.

"The day's rally was aided by better Chinese PMI data that were declared pre-market and Indian PMI data also surprising on the upside. GDP numbers at 4.80% brought also aided sentiment. December usually sees a year end NAV rally (Santa Claus) rally but December 2013 being event heavy would be more volatile albiet with a positive bias.

"Levels to watch for Nifty would be 6212 (on closing basis, Nifty spot) for an upward breakout. Sustenance of same would lead to a target of 6498.

"On the downside watch 6092 as important support for any weakness that may emerge due to events lined up. Banks, Capital Goods continue to look good, Metals may see a trading bounce," said Ranak Merchant

The rupee rose to a near two-week high against the dollar on Monday as worries about the economy eased after a private survey showed the country's manufacturing sector returned to growth last month.

At 3.51pm, the rupee slipped to Rs 62.26 after gaining to as high 61.9650 against the dollar, its highest since Nov 19. It had closed at 62.44/45 on Friday.

Meanwhile, global brokerage firm Goldman Sachs has predicted that rupee will gradually depreciate to Rs 65 versus dollar by November next year from the present 62 to a dollar.

In a report dated November 28, Goldman said while higher inflation compared to trading partners may keep the Indian currency on a structurally depreciating path, an improving balance of payments may limit the extent of depreciation in the near term.

Asian markets were trading firm on better-than-expected PMI data from China. The government of China said that manufacturing growth stood at 51.4 in November against expectations of just above 51.

Back on the home turf, all indices ended the day with gains barring oil & gas sector which were down 0.3% on BSE sectoral indices. BSE Healthcare index was the top gainer among the sectoral indices on the BSE up 2% followed by Capital Goods, Bankex, Metal, Realty, Auto, IT, Power, FMCG.

Sun Pharma was ended 4% higher while index heavyweights Jindal Steel, Wipro, L&T and BHEL were among the other top gainers contributing the most to Sensex gains.

Engineering major Larsen & Toubro was up 2.2%, extending its past two day’s nearly 4% rally after the company said it is evaluating options for monetisation of assets belonging to its subsidiary L&T Infrastructure Development Projects Ltd (IDPL).

State Bank of India , the country's largest lender, was up 1.5% after it said it will raise up to Rs 9,576 crore through a share sale to institutional investors or a follow-on public offer.

Among other shares, Ranbaxy Laboratories has rallied over 6% to Rs 449 on back of heavy volumes on the bourses.The counter has seen a heavy trading activity with a combined 3.8 million shares have already changed hands till noon deals against an average sub 2 million shares that were traded daily in past two weeks on the BSE and NSE.

Market breadth was positive with 1,464 gainers and 1,006 losers on the BSE.