Benchmarks trade higher in early deals on firm global cues

Extending their northward journey for fourth straight session, Indian equity benchmarks have made a positive start and are trading in fine fettle in early deals on the back of firm global cues. The US markets ended mostly higher overnight despite a subdued trade in last session, as traders seemed reluctant to make significant moves amid a lack of major US economic data. Tech stocks provided the major support to the sentiments. Most of the major Asian markets were trading higher at this point of time, rebounding from a one-month low as the yen weakened.

Back home, there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too were participating in the rally. Investors continued buying in blue chip stocks on hopes that a Modi-led disposition would mark a paradigm shift in governance and herald a new era in economic reforms. Sentiments also remained up-beat on report that foreign institutional investors (FIIs) bought shares worth a net Rs 1350.04 crore on May 19, 2014, as per provisional data from the stock exchanges.

On the sectoral front, realty, consumer durable and software witnessed the maximum gains in trade, while oil and gas and capital goods remained the only losers on the BSE sectoral space. The broader indices, however, were outperforming benchmarks, while the market breadth on the BSE was positive; there were 1,424 shares on the gaining side against 382 shares on the losing side while 52 shares remain unchanged.

The BSE Sensex is currently trading at 24426.19, up by 63.14 points or 0.26% after trading in a range of 24587.16 and 24353.03. There were 22 stocks advancing against 8 declines on the index. The broader indices were trading in green; the BSE Mid cap index was up by 1.97% and Small cap index gained 2.42%.

The top gaining sectoral indices on the BSE were, Realty up by 3.70%, Consumer Durables up by 2.38%, IT up by 2.14%, TECK up by 2.06% and Power up by 1.30%, while Oil & Gas down by 1.82%, PSU down by 0.50%, Capital Goods down by 0.43% and Bankex down by 0.11% were the top losers.

The top gainers on the Sensex were SSLT up by 2.99%, Wipro up by 2.80%, Hindalco Industries up by 2.76%, Dr Reddys Lab up by 2.49% and Tata Steel up by 2.45%. On the flip side, ONGC was down by 2.92%, Coal India was down by 2.48%, RIL was down by 1.95% , Hero MotoCorp was down by 1.67% and L&T was down by 1.53%  were the losers on the Sensex.

Meanwhile, in a positive development for the economy, Global Rating agency, Moody's Investors Service underscored that the landslide victory by the Bharatiya Janata Party (BJP) in elections is ‘credit positive’ for country’s sovereign profile and corporate sector. It further added that this strong mandate increases the possibility of a stable central government pursuing a shared economic agenda for addressing country’s macroeconomic challenges since intra-coalition differences around economic priorities in the past had derailed measures to improve India’s operating environment.

However, the rating agency sounded a word of caution on expecting any immediate change in economic situation as it highlighted that though the policy measures to revive the economy would emerge in the coming months, but growth, fiscal and inflation metrics were unlikely to improve any time soon. The agency said although market indicators have shifted rapidly in response to sentiment, economic trends will reverse more slowly, given that economic data still shows that growth remains weak and inflation high.

Additionally, it pointed that though India’s GDP growth rate was higher than that of several peer countries, even during its economic slowdown, its fiscal metrics, inflation levels and infrastructure for long had remained weaker than those of other ‘Baa’-rated countries.

Also, the rating agency averred that the extent to which these metrics improve would depend upon the measures which the government adopts to address country’s weak fiscal position, the regulatory conditions on investment and output and the lack of adequate social and physical infrastructure.

However, it did acknowledge the incremental portfolio capital flows into India this year on hopes of a BJP-led coalition forming the next government and pursuing policies conducive to investment and economic growth, which in turn led to rupee appreciating by 5% against the US dollar since the beginning of the year.

The CNX Nifty is currently trading at 7,290.80 up by 27.25 points or 0.38% after trading in a range of 7,353.65 and 7,262.30. There were 29 stocks advancing against 20 declines while 1 stock remained unchanged on the index.

The top gainers of the Nifty were IDFC up by 3.89%, Hindalco up by 3.03%, SSLT up by 2.94%, Power Grid up by 2.86% and Tata Steel up by 2.74%. On the flip side, ONGC down by 2.83%, Coal India down by 2.29%, PNB down by 1.89% Reliance down by 1.79% and Hero Moto Co down by 1.65% were the top losers on the index.

Asian markets were trading mixed; Shanghai Composite rose 3.25 points or 0.16% to 2,008.43,  Hang Seng increased by 174.18 points or 0.77% to 22,878.68, Nikkei 225 spurted by 134.97 points or 0.96% to 14,141.41 and Taiwan Weighted was up by 3.47 points or 0.04% to 8,903.37.

On the flip side, Jakarta Composite slipped 100.57 points or 2.01% to 4,914.43, KLSE Composite dropped 2.43 points or 0.13% to 1,884.64, Straits Times decreased by 0.51 points or 0.02% to 3,261.92 and Seoul Composite was down by 6.59 points or 0.33% to 2,008.55.