Benchmarks trade with traction in early deals, Sensex surpasses 22,400 mark

Indian equity benchmarks have made a gap up opening and are trading with traction in early deals on Wednesday with frontline gauges recapturing their crucial 22,400 (Sensex) and 6,700 (Nifty) bastion. Sentiments remained up-beat as traders remained bullish about corporate India’s improvement in new orders and sales growth on a slew of project clearances undertaken by the government in recent months and the possibility of a stable government at the centre, post the Lok Sabha elections. Marketmen also remained optimistic on International Monetary Fund’s (IMF) latest edition of the World Economic Outlook, stating that India's growth is expected to recover from 4.4 percent in 2013 to 5.4 percent in 2014 supported by slightly stronger global growth, improving export competitiveness and implementation of recently approved investment projects.

Global cues too remained supportive with the US markets ending modestly higher on an IMF report saying that Stronger US growth this year and next will help the world economy withstand weaker recoveries in emerging markets. The Asian markets outside Japan were trading with traction at this point of time, the Japanese Nikkei fell over one and half a percent after the yen rose the most since August. 

Back home, on the sectoral front, healthcare, realty and consumer durables witnessed the maximum gain in trade, while software and technology remained the only losers on the BSE sectoral space. The broader indices too were trading in-line with benchmarks, while the market breadth on the BSE was positive; there were 923 shares on the gaining side against 430 shares on the losing side while 66 shares remain unchanged.

The BSE Sensex opened at 22,389.21; about 45 points higher compared to its previous closing of 22,343.45, and touched a high and a low of 22,479.07 and 22,389.21 respectively. The index is currently trading at 22,442.74, up by 99.29 points or 0.44%. There were 23 stocks advancing against 7 declines on the index.

The overall market breadth has made a strong start with 65.05% stocks advancing against 30.30% declines. The broader indices too were trading in green; the BSE Mid cap index up was by 0.80% and Small cap gained 0.60%. 

The top gaining sectoral indices on the BSE were, Healthcare up by 1.68%, Realty up by 1.45%, Consumer Durables up by 1.22%, Metal up by 1.14% and Power up by 0.70%, while IT down by 0.58% and Teck down by 0.36% were the top losers on the sectoral index.T

The top gainers on the Sensex were Sun Pharma up by 4.98%, Hindalco up by 2.95%, Tata Motors up by 1.50%, Tata Steel up by 1.47% and Cipla up by 1.21%. On the flip side, Infosys was down by 0.50%, TCS was down by 0.49%, ONGC was down by 0.43%, BHEL was down by 0.25% and Maruti Suzuki was down by 0.11% were the top losers on the Sensex.

Meanwhile, the growth in credit demand from industries slowed down to 12.2% to 19,970 crore in the month of February as compared to 18.9% growth in the same month of previous year. Prevailing economic slowdown coupled with political uncertainty associated with an election year have made corporates reluctant to launch any greenfield projects, resulting in declining credit demand from industrial sector. Slow credit flow to industrial sector has been adversely impacting domestic banks which are now pushing retail credit to boost credit growth.

High borrowing cost and delays in environmental clearances for industrial and infrastructure projects has forced the big infrastructure players to defer their investment decisions. Indian large infrastructure companies such as HCC, Lanco and Gammon India are struggling with high debt and have restructured them to avoid loan default.

The gross non-performing assets (NPAs) of banks would rise to 4.2-4.4% by March, from 4.1% reported in December 2013. Rising NPA levels have become an issue for growth of the banking industry, which is the most dominant segment of the financial sector and plays an important role in the economic development of the country. Banks help to channel savings into investments and encourage economic growth by allocating savings to investments that have potential to yield higher returns.

Meanwhile, risk appetite of industrial firms is likely to improve after the formation of new government, which could provide a boost to credit growth.  

The CNX Nifty opened at 6,722.00; about 27 point higher as compared to its previous closing of 6,695.05, and has touched a high and a low of 6,733.60 and 6,711.70 respectively. The index is currently trading at 6,719.15, up by 24.10 points or 0.36%. There were 38 stocks advancing against 12 declines on the index.

The top gainers of the Nifty were Sun Pharma up by 4.39%, Hindalco up by 2.95%, DLF up by 2.31%, Bank of Baroda up by 2.21% and Tata Steel up by 1.43%. On the flip side, Tech Mahindra down by 1.95%, HCL Tech down by 1.33%, TCS down by 0.64%, Infosys down by 0.58% and ONGC down by 0.51% were the top losers on the index.

Most of the Asian equity indices were trading in green; Shanghai Composite increased by 2.60 points or 0.12% to 2,100.89, Hang Seng rose 228.43 points or 1.01% to 22,825.40, Jakarta Composite gained by 0.37 points or 0.01% to 4,921.40, Straits Times soared 3.13 points or 0.10% to 3,207.22, and Taiwan Weighted was up by 34.90 points or 0.39% to 8,923.15.

On the flip side, KOSPI Composite down 0.12 points or 0.01% to 1,992.91 and Nikkei 225 down by 286.38 points or 1.96% to 14,320.50.