Indian benchmarks trade firm; stay above crucial levels in noon trades

Indian equity markets are trading on an optimistic note in Wednesday afternoon trades as sentiments remained buoyant tracking the encouraging leads from the global markets. Market participants piled up hefty positions across the board as they hunted for undervalued but fundamentally strong bargains after witnessing five straight sessions of mayhem. The important psychological 4,600 (Nifty) and 15,400 (Sensex) levels were proving as strong supports for the frontline gauges as they stayed above those bastions, gyrating in a narrow range. The unexpectedly encouraging US housing market report coupled with easing Euro-zone debt woes boosted sentiments across the globe as most Asian equity indices exhibited optimistic trends while the European futures too suggested that the markets there will open on a positive note. Investors globally rejoiced on getting cheering economic reports from both sides of Atlantic, as on one hand US housing starts unexpectedly jumped in November while on the other the German business confidence improved in December, alleviating worries of a global economic slowdown. Back home, reports that Moody's reaffirmed India's local and foreign currency bond ratings at Baa3 with a stable outlook, underpinned sentiments. The agency also said the India’s rating being considered for an upgrade provided Indian government finances improve, investment climate enhances and infrastructure bottlenecks reduce. On the BSE sectoral space, there appeared absolutely no laggards and Consumer Durables index remained the top gainer with close to three percent gains. The beaten down rate sensitive counters managed to garner some traction and traded with notable gains while the Oil & Gas pocket too made its presence felt by surging over one and half a percent.

Moreover, the broader markets too traded on a positive note but with moderate gains of over half a percent, underperforming their larger peers by a quite a margin. The bourses surged on strong volumes of over Rs 0.60 lakh core. The market breadth on BSE was in favor of advances in the ratio of 1416:1050 while 113 scrips remained unchanged.

The BSE Sensex is currently trading at 15,413.60 up by 238.52 points or 1.57% after trading as high as 15,495.18 and as low as 15,377.04. There were 23 stocks advancing against 7 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap index climbed 0.73% and Small cap gained 0.62%.

On the BSE sectoral space, Consumer Durables up 2.94%, Bankex up 2.36%, Oil & Gas up 1.68%, Power up 1.58% and Metal up 1.53% were the major gainers while there were no losers in the space.

ICICI Bank up 5.10%, M&M up 3.41%, BHEL up 3.26%, Bharti Airtel up 3.19% and Hindalco up 2.98% were the major gainers on the Sensex, while Bajaj Auto down 0.90%, Coal India down 0.65%, TCS down 0.51%, Wipro down 0.43% and JP Associates down 0.28% were the major losers in the index.

Meanwhile, India’s headline inflation is likely to cool around the seven percent levels by March 2012, owing to the sharp moderation in food inflation in the recent past, said C Rangarajan, the chairman of the Prime Minister's Economic Advisory Council (PMEAC). On the sidelines of a Bangalore Chamber of Industry and Commerce function, Ranagarajan stated that 'one of the reasons for inflation to settle down at around seven per cent in March 2012 is dwindling food inflation which has come down to 4.3% at the beginning of December this year.'

C Rangarajan, noted that food inflation is exhibiting definitive signs of decline, plunging from 11.81% in October to 4.35% in early December 2011 and added this would lead to a moderation in wholesale price index (WPI) inflation. The PMEAC chairman is also of the belief that the Reserve Bank of India (RBI) may abstain from its hawkish monetary tightening measures as the WPI inflation has primarily been on a declining trend.

Acknowledging that inflation remains at highly uncomfortable levels, Rangarajan also opined that high growth does not warrant a higher level of inflation which calls for policy instruments like interventions in foodgrains market, monetary and fiscal policies, to bring down current inflation and re-anchor inflationary expectations to the five per cent comfort zone.

He also said that the a series of policymaking decisions, including increasing investment limit of Foreign Institutional Investors have been taken to encourage capital inflows in the country in order to curtail rupee’s depreciation.

The S&P CNX Nifty is currently trading at 4,607.90, higher by 63.70 points or 1.40% after trading as high as 4,641.30 and as low as 4,601.95. There were 40 stocks advancing against 10 declines on the index.

The top gainers on the Nifty were ICICI Bank up 5.23%, SESA Goa up 4.68%, Tata Power up 3.64%, BHEL up 3.61% and M&M up 3.61%.

IDFC down 3.71%, Kotak Bank down 2.07%, Ranbaxy down 1.13%, HCL Tech down 0.97% and Coal India down 0.66% were the major losers on the index.

Asian markets traded largely on a positive note, Hang Seng surged 1.27%, Jakarta Composite climbed 0.85%, Nikkei 225 soared 1.48%, Straits Times jumped 1.90%, Seoul Composite spurted 3.09% and Taiwan Weighted rocketed 4.56%.

On the flipside only Shanghai Composite plunged 0.91%.