Indian equities continue firm trade hovering near highest point of the day

Prolonging its northbound journey, benchmark equity indices are hovering near the highest point of the day as investor’s sentiment remained buoyant tracking the encouraging leads from the global markets. Reports that Moody's reaffirmed India's local and foreign currency bond ratings at Baa3 with a stable outlook, have also 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 global front, all Asian markets were seen trading in green barring Shanghai Composite while the European markets were too trading firm in green on optimistic note. The German business confidence improved in December, alleviating worries of a global economic slowdown.

Back home, stocks of HDFC Bank, SBI, PNB, ICICI Bank and Axis Bank which have heaved the banking sector higher have majorly yanked the markets higher. Meanwhile, Index heavyweight RIL also trading in green with gain of around two percent is providing required impetus to the equity market. Moreover, stocks from Consumer Durable and Oil & Gas counters following the suite have led to the uptrend of the bourses.Back home, the NSE Nifty and BSE Sensex are trading above their psychological 4,600 and 15,500 levels, respectively. The market breadth on the BSE was in favor of advances in the ratio of 1516:1084 while 122 scrips remained unchanged.

The BSE Sensex is currently trading at 15,503.49 up by 328.41 points or 2.16% after trading as high as 15,514.43 and as low as 15,377.04. There were 27 stocks advancing against 3 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap index climbed 0.98% while Small cap gained 0.79%.

On the BSE sectoral space, Consumer Durables up 3.82%, Bankex up 3.22%, Oil & Gas up 2.21%, Power up 2.11% and Auto up 2.08% were the major gainers while there were no losers in the space.

ICICI Bank up 6.54%, Tata Power up 6.13%, M&M up 5.58%, Maruti Suzuki up 3.98% and BHEL up 3.37% were the major gainers on the Sensex, while JP Associates down 0.93%, Cipla down 0.78% and Coal India down 0.12% 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 4,634.70, higher by 90.50 points or 1.99% after trading as high as 4,645.30 and as low as 4,601.95. There were 42 stocks advancing against 8 declines on the index.

The top gainers on the Nifty were Tata Power up 7.10%, ICICI Bank up 6.33%, M&M up 5.75%, RCOM up 5.56% and Sesa Goa up 5.48%.

IDFC down 3.86%, JP Associates down 1.40%, Cipla down 0.90%, Kotak Bank down 0.78% and HCL Tech down 0.26% were the major losers on the index.

Asian markets traded largely on a positive note, Hang Seng surged 1.86%, Jakarta Composite climbed 0.90%, Nikkei 225 soared 1.48%, Straits Times jumped 2.23%, Seoul Composite spurted 3.09% and Taiwan Weighted rocketed 4.56%. On the flipside only Shanghai Composite plunged 1.12%.

The European markets were trading in green, France’s CAC 40 added 0.90%, Germany’s DAX jumped 0.96% and Britain’s FTSE 100 soared 0.74%.