The equity market and the rupee made a good start in 2013. The first trading session of the year ended on a positive note with the decision on the US ‘fiscal cliff’. The BSE Sensex closed at 19580, up 0.8 per cent from its previous close while the NSE Nifty ended the day at 5950, up 0.8 per cent as well from its previous close, led by realty and banking stocks.
The rupee gained 31 paise to hit a nearly two-week high of 54.68 against the dollar on fresh selling. It closed at 55 on Monday.
Spending cut issues
“While the fiscal cliff has been likely averted, the deal has only postponed the spending cuts by two months, while implementing higher taxes on incomes of individuals earning above a threshold. Further negotiations will be needed to resolve the spending cut issues and even the existing agreement has to be passed by the House of Representatives, which will likely happen,” said Dipen Shah, Head – PCG Research Kotak Securities.
“The markets overlooked the worse-than-expected domestic data on current account deficit, core sector growth and fiscal deficit. With stability possibly returning in the developed markets, the focus will now shift to corporate results and also to the domestic reforms initiatives which, we believe, should be taken up and implemented, for the markets to move up in a sustained manner,” he added.
An Edelweiss Financial Services report expects India’s current account deficit for FY13 at $74 billion (4 per cent of GDP). Foreign investors bought equities worth Rs 665 crore in the net and DIIs offloaded equities worth Rs 406 crore. Retail investors on the BSE also sold net equity worth Rs 48 crore.
Nifty futures
Nifty futures premium widened to 56.5 points to the spot close, signalling bullish bets by traders. It, in fact, closed above the 6000-mark at 6007.50. Nifty futures open interest also rose 3.9 per cent to 17 million. The premium of Nifty futures has been ruling around 40-50 points till recently.
Beaten-down stocks from Anil-Ambani group pack, realty and infrastructure stocks have attracted market attention, signalling investors are willing to take risks.