Markets surge on US deal, manufacturing growth

Realty, oil & gas lead gains

Markets surged this week to touch their highest in two years following a strong growth in service and manufacturing activity in December 2012. US lawmakers reached a last minute deal to avert the so-called fiscal cliff, which put the global markets on a strong footing.

The Sensex added 339 points or 1.7% at 19,784. Nifty meanwhile soared 108 points or 1.8% at 6,016 - its highest closing level in a year.

Meanwhile, painting to better picture for 2013, Morgan Stanley analysts expect Sensex companies to grow 10.8% on a year on year basis in FY2013 as against the consensus estimates of 8.3%. It also expects Sensex companies to grow 14.2% in FY2014 as against the consensus estimates of 13.9%.

The Reserve Bank of India (RBI) after trading hours on Monday said that India's current account deficit (CAD) worsened to $22.3 billion in Q2 September 2012 from of $16.4 billion in Q1 June 2012. CAD in Q2 September 2012 stood at 5.4% of GDP, higher than 4.2% of GDP in Q2 September 2011.

India's services sector grew at its strongest pace in three months during December, as company order books filled at the quickest rate since last February, a survey showed on Friday, 4 January 2013. The HSBC services Purchasing Managers' Index rose to 55.6 in December from November's 52.1. Services make up nearly 60% of India's economic output. The new business sub-index jumped to 57.1 in December from 54.9 in the previous month. The 50 mark separates growth from contraction and the index has held above that level for over a year now.

Indian companies will start unveiling Q3 December 2012 results from mid-January 2013. Infosys announces Q3 results on 11 January 2013 while HDFC Bank unveils Q3 results on 18 January.

Monday saw the markets slipping as investors remained cautious over global issues. The Sensex recoveerd on Tuesday as US policy makers reached an agreement late on Monday. Markets extended gains to end at their two-year closing highs on Thursday. The good run continued on Friday as Sensex added half a per cent.

BSE IPO index surged 6.2% to 1,980. Broader markets outperformed the benchmark with the mid and small-cap indices Among the sectoral indices, realty index zoomed 5% to 2,198. PSU, oil & gas, power and bankex also edged up.

The Ministry of Agriculture said last week that the sowing of rabi or winter crop is picking up. The sowing of coarse cereals and oilseed crops is higher, the statement from the ministry said. FMCG shares however, slipped 1% at 5,884.

Metal shares gained on upbeat Chinese manufacturing data from HSBC which was announced yesterday. China is the world's largest consumer of copper and aluminum. BSE metal index was up 2.2% at 11,289. IT index was up 2% ahead of the results season.

ONGC soared 7% to Rs 285. Shares of upstream oil companies rose as a committee set up under the chairmanship of Dr. C. Rangarajan, Chairman, Economic Advisory Council to the Prime Minister to look into the Production Sharing Contract Mechanism in petroleum industry, suggested major changes in the current Production Sharing Contract Mechanism and changes in gas pricing. BHEL and GAIL - also from teh PSU pack - rallied 5-6% each. Banks advanced. ICICI Bank and SBI were up 3.5% each.

Dr Reddy's added 3.3% to Rs 1888 after it launched Finasteride Tablets 1 mg in the US market on 2 January 2013. Bajaj Auto was up 3% at Rs 2204. Bajaj Auto's total sales rose 13% to 3.43 lakh shares in December 2012 over December 2011. Motorcycle sales rose 13% to 2.98 lakh units in December 2012 over December 2011.

Meanwhile, ITC shed 2.3% to Rs 282 this week. Among other losers were Sun Pharma and Hero MotoCorp. Hero MotoCorp's total sales rose 8% to 5.41 lakh units in December 2012 over November 2012. Sales remained flat on year-on-year basis.