Sensex ekes out modest gains…Cement shares recover

Indian stock indices closed with slender gains in a rather dull session, as investors chose to remain cautious ahead of the important announcement by the Federal Reserve. The broader market out-performed the frontline indices today, leading to a positive market breadth. However, the Nifty managed to climb up and close above 5100 for a second straight day. The BSE Sensex ended at 16,840 gaining by 0.2% or 37 points. It had earlier touched a day’s high of 16,962 and a day’s low of 16,840. It opened at 16,903. The NSE Nifty settled at 5120 up by 16 points or 0.3%. It touched a day’s low of 5,100 and day’s high of 5,142. ACC, Sterlite Industries, HCL Tech, Tata Motors, Jindal Steel, Dr Reddy’s, Sesa Goa, Tata Power and JP Associates were the notable gainers on the Sensex and the Nifty today. TCS, Bharti Airtel, DLF, Coal India, Maruti, IDFC, ITC and Power Grid were among the losers on the Nifty. The INDIA VIX on the NSE lost by 2% to close at 21.03. It hit days high of 21.72. It hit a low of 20.11. The market breadth on the BSE was positive, 1617 stocks advanced and 1090 stocks declined. The BSE Mid-Cap index and the BSE Small Cap index added ~0.8% each. Among the sectoral indices, IT and Teck were the only noteworthy losers, down 0.4%. Leading the rise were Metals, Capital Goods and Pharma, all up over 1% each. Power, Auto, Consumer Durables, Oil & Gas, PSU and Bankex were other sectoral gainers. The INDIA VIX was down nearly 2% at ~21 after dipping to almost 20. On the BSE-500, Usha Martin, Educomp Solutions, Aqua Logistics, AP Paper, Gulf Oil Corp, MVL, Hindustan Oil, Kingfisher Airlines, Shoppers Stop and Astra Zeneca Pharma were the top gainers. Meanwhile, Shree Global Trading, AIA Engineering and Tree House Education were the top losers on the broader index. World markets are upbeat about more stimulus coming their way from the Federal Reserve later on Wednesday. Investors are also betting on monetary easing from ECB, Bank of England, Bank of Japan and even China’s central bank. It is anybody’s guess which of the central banks will blink first, if at all they will. One problem with keeping high expectations is the risk of some of them not being met. So, while the global economic conditions do merit urgent policy action, it ought to come from the fiscal side and not from the monetary side,” says Amar Ambani, Head of Research, IIFL. Cement shares were in the limelight following reports that the Competition Commission of India (CCI) had found top companies in the sector guilty of price cartelisation. The competition watchdog could impose a fine of 5-8% of the past three years' average turnover, according to a financial newspaper. India's Serious Fraud Investigation Office (SFIO) has probed the top three cement manufacturers and has shared its findings with the CCI. Still, most of the cement majors managed to claw their way back into the positive territory after the initial knee-jerk reaction. India Cement rose 6%, ACC gained 3.5%, Ambuja Cements advanced 1.5% and Jaiprakash Associates climbed 2%. UltraTech Cement was down ~1% while Grasim closed marginally higher. Madras Cements declined slightly while Heidelberg Cement and Shree Cement closed higher. Indian stock indices picked up some pace in late afternoon trade after being stuck in a tight trading range for most part of the session. The acceleration came in the wake of a smart recovery in the European markets, which turned higher after minutes from the Bank of England's latest meeting showed that the Monetary Policy Committee considered expanding its asset purchase program. The undertone remained positive on hope of fresh monetary easing by the Federal Reserve and other top central banks in a bid to give a fillip to the global economy. The Federal Open Market Committee (FOMC), the Fed's policy-setting body, is slated to wrap up a two-day meeting on Wednesday, with many economists expecting the central bank policy makers to announce an extension of its “Operation Twist” program. The Fed could extend Operation Twist by a few more months. The FOMC will also review new economic forecasts as it contends with continuing financial stress in Europe and a US unemployment rate that has stayed above 8% for 40 consecutive months. India Equity Funds enjoyed their best week since mid-February in the week ended June 13, as cheap valuations and a weak rupee attracted foreign investors, according to global funds flow tracker EPFR Global. Shares of Educomp Solutions surged after the company said that it has raised US$155mn via external commercial borrowings (ECB), of which it plans to pay off foreign currency convertible bonds (FCCBs) worth US$78.5mn. The July repayment due on its FCCBs had been an overhang on the stock for quite some time. Asian shares rose to a one-month high and the won strengthened for a sixth day on growing expectations of fresh monetary stimulus from the Federal Reserve to accelerate growth in the world's largest economy. Japanese exporters appeared to shrug off data released ahead of the market open showing trade deficit widening by a larger-than-expected margin in May.