Markets surge as fiscal cliff resolved

Realty, Banks and Metals shine

Markets ended higher on Tuesday after US policy makers reached an agreement late on Monday, 31 December 2012, to avert the imminent fiscal cliff of wide-reaching tax hikes and deep spending cuts in the world's biggest economy. The Sensex, after opening at 19,513 touched a high of 19,624. The BSE benchmark index finally ended up 154 points at 19,581. Nifty meanwhile ended up 46 points at 5,951.

"The pychological mark of 6000 has been a stern resistance for markets. On closing basis 5949 if held onto for next couple of sessions, it would pave way for a rally towards 6181," said Ranak Merchant, Technical Analyst - Strategies, Sushil Financial Services. Option traders see a probability of Nifty inching closer to 6,200 levels in the January derivative series which ends on January 31.

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.

Markit Economics will unveil HSBC India Manufacturing PMI, which gauges the business activity of India's factories, for December 2012 tomorrow, 2 January 2013. Investor focus is on the guidance provided by the management for the year ending March 2013 to gauge the earnings outlook. Infosys will be announcing results on January 11, 2013.

Markets in Asia remained closed as will the US markets today. The US Senate on Tuesday, two hours after a December 31 deadline had lapsed, approved legislation aimed at averting the "fiscal cliff" by stopping most tax hikes and across-the-board spending cuts that were due to begin with the new year. The House of Representatives still must approve the measure, possibly on Tuesday. The agreement would raise taxes on wealthy Americans, extend unemployment benefits, and delay across-the-board spending cuts but would let a 2% payroll-tax cut lapse and do nothing to address the US borrowing limit.

The rupee stabilised further against the American currency in the late morning trade by surging 24 paise to 54.75 per dollar on persistent selling of dollar by banks and exporters on the back of sustained capital inflows despite firm dollar overseas.

All the sectoral indices traded in the positive zone. BSE realty index gained 2.7% at 2,169. Metal, bankex and capital goods added 1-2% each. Shares of interest rate sensitive sectors mainly banking and real estate are in focus on optimism of Reserve Bank of India (RBI) easing monetary policy this month. Capital goods shares rose on renewed buying.

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. JSPL is the top Sensex gainer, up over 3% at Rs 462. Hindalco, Sterlite, Tata Steel and Coal India have surged between 1-2.5%. BHEL was up 2%, followed by banking names such as SBI and ICICI Bank. HUL, Coal India, Bharti Airtel were some of the other key gainers.

However, NTPC slipped 0.7% at Rs 155.

Shares of companies operating in the railway sector edged higher. Kalindee Rail was up 2%, Coromandel Engineering added 5% and Titagarh Wagons advanced 2.8%.

The year-on-year inflation measured by monthly consumer price index-industrial workers (CPI-IW) eased to 9.55% for November 2012, from 9.6% for October 2012, the Ministry of Labour & Employment said after trading hours on Monday. FMCG shares ....

Tyre stocks were in demand. MRF rallied 3.5%,JK Tyre was up 2.5% and Ceat Tyres added 1.8% in trades.

HDFC Bank added 1% after lowering its base rate--or the minimum rate of interest it can charge borrowers--by 0.1 percentage point, factoring in a reduction in its funding cost.

TVS Motor Company rose 2% at Rs 42.60 after its total sales declined 8.33% to 1.56 lakh units in December 2012 over December 2011.

BSE market breadth was positive. Out of 3,041 stocks traded, 1,930 shares advanced while 977 shares declined.