Markets record highest one-day gain in 7 weeks

Markets surged on Monday to end nearly 2% higher recording their highest single-day gain since November 25, 2013 led by IT majors and hopes that the Reserve Bank of India would maintain status quo on key policy rates for the second straight month.

The 30-share Sensex ended up 376 points at 21,134 and the 50-share Nifty ended up 101 points at 6,272.

Further, reports suggest that December consumer price inflation due for release later today is likely to ease. It may be recalled that weak festive demand and sluggish investment activity led to a slump in factory production in November when the output contracted to a six-month low of 2.1%. The fall in index of industrial production in November was sharper than October's decline of 1.6%.

Data released by the stock exchange showed that foreign institutional investors were net buyers in equities on Friday to the tune of Rs 68 crore.

They were net sellers in four of the previous five sessions.

The rupee continued to trade near one-month highs after the US dollar remained under pressure on the back of weak US jobs data. Strong gains in equities also boosted sentiment.
The rupee was trading at Rs 61.55 to the US dollar compared with its previous close of Rs 61.89.

The consumer price inflation data due to be released at 5:30 pm will be crucial for further near-term direction.

Asian markets were trading mixed even as the Tokyo Stock Exchange was closed for trading. The Shanghai Composite ended down 0.2% after China pegged its currency to a record high. Among other shares in the region, Hang Seng pared early gains and ended up 0.2% and Straits Times ended down 0.3%.

European shares firmed up after some corporates announced robust fourth quarter earnings. The CAC-40, DAX and FTSE were up over 0.1-0.3% each.

The BSE IT index was the top gainer among the sectoral indices up 2.9% followed by Oil and Gas, Bankex and Capital Goods indices. Further, the CNX-IT index topped the 10,000 mark to record its highest single-day gain since 11 October 2013. The NSE's sectoral index ended up 396 points or 3% at 10,079.

Infosys was the top Sensex to end 3.3% higher at Rs 3,666 after hitting a record high of Rs 3,675 intra-day. The IT major reported better-than-expected third quarter earnings on Friday and also upped its dollar revenue guidance for the current fiscal.

TCS gained nearly 4% ahead of its third qaurter earnings due this Thursday.

In the Oil and Gas pack, Reliance Industries and ONGC gained over 2.5% each after the government has officially notified the new gas pricing policy that would be applicable to all the domestically produced gas from April 2014 which will be effective for five years.

As per the new pricing mechanism, the new gas price is likely to be US$8.4/mmbtu for FY2015. Currently, gas prices are in the range of US$4.2-5.7/mmbtu for domestically produced gas.

Tata Motors gained 2% after its British subsidiary Jaguar-Land Rover (JLR) has reported a strong 21% year-on-year growth in retail sales at 40,635 units for the month of December 2013.

In the financial space, HDFC, HDFC Bank, SBI and ICICI Bank were up 1-3% each on hopes that the RBI would continue to maintain status quo on key policy rates.

Shares of pharmaceutical company Ranbaxy Laboratories tanked over 5% to end at Rs 438 on back of heavy volumes. According to media report, the US Food and Drug Administration (US FDA) is inspecting Ranbaxy’s active pharmaceutical ingredient or API manufacturing factory at Toansa in Punjab.

Among other shares, Bharat Forge surged 4.2% to end at Rs 346 after the company said its indirect subsidiary in Hong Kong has shed its 51.85% stake in its Chinese joint venture FAW Bharat Forge (Changchun) Company Ltd in favour of its joint venture partner China FAW Corporation Ltd for $28.208 million (Rs 175 crore).

Shares of Gati ended locked in upper circuit of 10% at Rs 62.30, extending its past two week rally on the BSE, after ace investor Radhakishan Damani acquired over 5% stake in the logistics company through open market.

In the financial space, HDFC, HDFC Bank, SBI and ICICI Bank were up 1-2% each.

In the broader market, the BSE Mid-cap index ended up 0.1% and while Small-cap index ended up 0.4%.

Market breadth was marginally negative with 1,396 losers and 1,335 gainers on the BSE.