Shares rally on broader buying support

The Sensex and the Nifty charged ahead to hit the day's high in early afternoon trade. The Nifty traded above 12,250 level and it was just 32 points away from its record high level. Positive global shares and good manufacturing PMI data for December, supported buying in domestic shares.

At 12:31 IST, the barometer index, the S&P BSE Sensex, was up 260.11 points or 0.63% at 41,566.13. The Nifty 50 index was up 78.5 points or 0.64% at 12,261.

The broader market outperformed the benchmark index. The S&P BSE Mid-Cap index was up 0.82% while the S&P BSE Small-Cap index was up 1.29%.

The market breadth was titled in the favour of buyers. On the BSE, 1551 shares rose and 662 shares fell. A total of 127 shares were unchanged. In Nifty 50 index, 40 stocks advanced while 10 stocks declined.

Derivatives:

The NSE's India VIX, a gauge of market's expectation of volatility over the near term, declined 0.79% to 11.505. The Nifty January 2020 futures were trading at 12,319.90, a premium of 60.65 points compared with the spot at 12,259.25.

On the options front, the Nifty option chain for 30 January 2020 expiry showed maximum call open interest (OI) of 23.24 lakh contracts at the 12,500 strike price. Significant call writing was witnessed at 12,700 strike price, which added 1.49 lakh contracts.

Maximum put OI of 36.99 lakh contracts was seen at 12,000 strike price. Significant put writing was seen at the 12,300 strike price, which added 2.92 lakh contracts.

Stocks in Spotlight:

MOIL jumped 5.17% after the company revised the prices of different grades of manganese ore and other products, effective from 1 January 2020.

Steel Authority of India (SAIL) jumped 8.86% to Rs 46.70 after the steel-maker said that it has achieved the highest ever sales in a month during December 2019. With sales of 1.68 million tonnes in December 2019, the company clocked a growth of 47% over corresponding period last year (CPLY), the company said in a press release. Incidentally, SAIL posted a jump of 36% y-o-y in sales during November and the company is consistently maintaining the growth momentum in sales, it said.

Ashok Leyland rose 1.91% to Rs 82.50. Total sales dropped 28% to 11,168 units in December 2019 from 15,490 units in December 2018. Domestic auto sales slumped 29% to 10,378 units in December 2019 from 14,718 units in December 2018.

Macros:

The headline seasonally adjusted IHS Markit India Manufacturing PMI rose to 52.7 in December, from 51.2 in November. The number pointed to the joint-strongest improvement in the health of the sector for ten months. However, owing to a weak performance in October and November, the average quarterly reading for Q3 FY19/20 was the lowest since the three months to September 2017.

Factories benefited from a rebound in demand, and responded by scaling up production to the greatest extent since May. There were also renewed increases in input purchasing and employment during December. However, the degree of optimism signalled at the end of 2019 was the weakest in just under three years, reflecting concerns over market conditions, which could restrict job creation and investment in the early part of 2020. At the same time, price indicators showed accelerated rates of inflation for both input costs and output charges. The latter reflected a combination of improved pricing power, given the favourable demand environment, and efforts to protect margins from cost rises, Pollyanna de Lima, principal economist at IHS Markit, said.

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