Markets make gap-up start; Sensex surpasses 24,250 mark

Extending their previous session’s jubilation, Indian equity benchmarks have made a gap up opening and are trading in fine fettle with frontline gauges trading with a gain of over half a percent on first session post the elections result. Some support also came in after Industry body CII expressed hopes that the economic reforms agenda can be taken forward with a stable political dispensation and with a prudent macroeconomic management, the economy could recover to 6.5 per cent GDP growth rate in 2014-15 as against an estimated 4.9 per cent in 2013-14. On the currency front, the rupee is also mirroring the feel-good sentiment prevalent on Dalal Street. The currency has touched a fresh 11-month high in early trade; it opened at 58.55 a dollar - the highest level since June 18, 2013 - up 24 paise compared to Friday’s closing value of 58.79 a dollar.

On the global front, the US stocks had ended higher on Friday amid a volatile trading session with telecom and retailers leading the gains. The Asian markets have made a mixed start and some of the indices are in red led by the Chinese market on reports of reduced home-price gains.

Back home, stocks related to public sector undertakings (PSUs) are on a roll, extending their past week’s rally, after election results suggested the opposition Bharatiya Janata Party (BJP) and its allies won an absolute majority in the recently concluded Lok Sabha polls. On the sectoral front power, capital goods and metal witnessed the maximum gain in trade, while software, technology and fast moving consumer goods remained the top losers on the BSE sectoral space. The broader indices were outperforming benchmarks and were trading with a gain of around two percent, while the market breadth on the BSE was positive; there were 1,209 shares on the gaining side against 449 shares on the losing side while 66 shares remain unchanged.

The BSE Sensex is currently trading at 24276.55, up by 154.81 points or 0.64% after trading in a range of 24427.10 and 24238.29. There were 19 stocks advancing against 11 declines on the index. The broader indices were trading in green; the BSE Mid cap index was up by 1.75% and Small cap index gained 2.20%.

The top gaining sectoral indices on the BSE were, PSU up by 3.97%, Capital Goods up by 3.27%, Power up by 3.14%, Realty up by 2.94% and Metal up by 2.94%, while IT down by 3.30%, TECK down by 2.41%, FMCG down by 1.09%, Health Care down by 0.90% were the top losers.

The top gainers on the Sensex were Coal India up by 7.17%, Tata Power up by 5.63%, ONGC up by 3.71%, SBI up by 3.35% and L&T up by 3.27%. On the flip side, Wipro was down by 4.35%, Infosys was down by 3.72% , TCS was down by 3.22% , Dr Reddys Lab was down by 1.97% and ITC  was down by 1.55%  was the only the loser on the Sensex.

Meanwhile, India’s fiscal deficit is likely to contain at 4.5% of GDP in the financial year 14, as compared to 4.89% of GDP in the FY13. The fiscal deficit figure at 4.5% of GDP is lower than the government’s revised estimates. The government in its interim Budget has estimated fiscal deficit at 4.6% of GDP at Rs 5.24 lakh crore and revenue deficits at 3.3% at Rs 3.70 lakh crore for FY14. The revenue deficit of the government too would be lower at 3.2% of GDP for FY14.

The fiscal deficit, which is the gap between expenditure and revenue, is expected to come down mainly on account of expenditure compression and higher realisation from the 2G spectrum auction. To contain fiscal deficit, Indian government has taken various measures including banning government departments for holding meetings in 5-star hotels among others to cut spending in non-critical areas. As per the Government’s fiscal consolidation roadmap, the deficit will be reduced to 4.2% in FY15 and 3.6% FY16. India’s fiscal deficit widened to a record high level at 4.89% of GDP in FY14.

High fiscal deficit has adverse impact on country’s economy as it leads to three macro economic problems such as a balance of payments crisis, high interest rates because of crowding out and high inflation owing to the currency depreciation.

The CNX Nifty is currently trading at 7,244.40 up by 41.40 points or 0.57% after trading in a range of 7,290.35 and 7,232.05. There were 35 stocks advancing against 15 declines on the index.

The top gainers of the Nifty were Coal India up by 7.32%, Tata Power up by 5.06%, BPCL up by 4.77%, ONGC up by 3.85% and SBI up by 3.36%. On the flip side, HCL Tech down by 5.39%, Wipro down by 4.51%, Infosys down by 4.28% TCS down by 4.07% and DR Reddy down by 2.78% were the top losers on the index.

Asian markets were trading mixed; Shanghai Composite declined by 22.10 points or 1.09% to 2,004.41, Hang Seng slipped 85.64 points or 0.38% to 22,627.27, Nikkei 225 dropped 17.48 points or 0.12% to 14,079.11 and  Seoul Composite was down by 1.41 points or 0.07% to 2,012.03.

On the flip side, Jakarta Composite rose 10.60 points or 0.21% to 5,042.17, KLSE Composite gained by 4.73 points or 0.25% to 1,888.07, Straits Times strengthened by 2.07 points or 0.06% to 3,264.66 and Taiwan Weighted was up by 10.58 points or 0.12% to 8,899.03.