Benchmarks extend previous session’s jubilation

Extending their winning streak to fourth straight session, Indian equity benchmarks are trading in fine fettle in early deals on Tuesday with frontline gauges surpassing their crucial 26,900 (Sensex) and 8,050 (Nifty) levels. Sentiments remained up-beat after current account deficit narrowed sharply to 1.7% of GDP in the Apr-June quarter of 2014-15 compared to 4.8% of GDP in the same quarter of 2013-14. Some support also came in with Prime Minister Narendra Modi’s statement that his government is determined to push tax and financial sector reforms to improve business environment. However, up-side remained capped as the growth in eight core industries slowed down to 2.7 per cent in July after surging to a nine- month high of 7.3 per cent in June due to decline in production of crude oil, natural gas, refinery products, fertilisers and steel.

On the global front, Asian markets were trading mostly in the green at this point of time led by Japanese market, up by around one and a half percent on weakening yen. Though, the US markets remained closed, unable to give any cues to the other global markets.

Back home, on the sectoral front, infrastructure, realty and consumer durables witnessed the maximum gain in trade, while capital goods, software and power remained the top losers on the BSE sectoral space. The broader indices however were outperforming benchmarks, while the market breadth on the BSE was positive; there were 1379 shares on the gaining side against 628 shares on the losing side while 74 shares remain unchanged.

The BSE Sensex opened at 26888.21; around 21 points higher as compared to its previous closing of 26867.55, and has touched a high and a low of 26960.52 and 26886.22 respectively. The BSE Sensex is currently trading at 26932.24, up by 64.69 points or 0.24%. There were 19 stocks advancing against 11 stocks declining on the index.

The overall market breadth remained in the favour of advances with 66.27% stocks advancing against 30.18% declines. The broader indices were trading in green; the BSE Mid cap index was up by 0.65%, while Small cap index up by 0.84%.

The gaining sectoral indices on the BSE were Infrastructure up by 0.90%, Realty up by 0.58%, Consumer Durables up by 0.50%, Bankex up by 0.43% and Auto was up by 0.38% while, Capital Goods down by 0.42%, IT down by 0.39%, Power down by 0.11%, PSU down by 0.09% and Metal was down by 0.06% were the losing indices on BSE.

The top gainers on the Sensex were Cipla up by 6.85%, Bharti Airtel up by 3.59%, Sun PharmaIndustries up by 1.83%, Bajaj Auto up by 1.60% and Axis Bank was up by 1.26%. On the flip side, Hindustan Unilever down by 1.02%, Infosys down by 0.98%, Larsen & Toubro down by 0.95%, ONGC down by 0.90% and Wipro was down by 0.71% were the top losers.

Meanwhile, buoyant over India’s economic growth recovery, the Reserve Bank of India (RBI) Governor Raghuram Rajan has asserted that India is better prepared to handle the impact of interest rate increases in the US as foreign funds are not likely to exit the country due to signs of an upturn in economic growth.

Since December 2008, Federal Reserve kept interest rate near zero to improve the country’s economic growth. Improving US macro-economic data has raised expectations that the Federal Reserve will soon increase the interest rates. Any decision by the Fed to raise rates will have implications for economies like India, as it could lead to capital outflows from emerging markets particularly those running with high current account deficits.

Meanwhile, India has taken a lot of measures to contain the CAD. Curbs on gold imports, such as higher duties and 80/20 rule, have dramatically helped narrow India's current account deficit to $32.4 billion in the FY14 from $87.8 billion a year earlier. On the other hand, India also built up its foreign exchange reserves driven by recently taken measures which helped banks to raise around $34 billion in overseas loans and deposits from the Indian diaspora. Improving trade deficit coupled with the falling global crude prices leading to decline in government's fuel subsidy bill also improved the country’s overall economic situation. As per the economic survey 2014, Indian economy is likely to grow in the range of 5.4 to 5.9 percent in FY15 overcoming the sub-5 percent GDP growth over the past two fiscal years.

The CNX Nifty opened at 8,038.60; around 11 points higher as compared to its previous closing of 8,027.70, and has touched a high and a low of 8,062.25 and 8,036.55 respectively.

The CNX Nifty is currently trading at 8,055.40, up by 27.70 points or 0.35%. There were 32 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were Cipla up by 6.95%, Bharti Airtel up by 3.75%, Ultratech Cement up by 2.78%, Grasim Industries up by 2.18% and Sun Pharma Industries was up by 2.04%. On the flip side, Jindal Steel & Power down by 1.05%, Hindustan Unilever down by 0.95%, Kotak Mahindra Bank down by 0.91%, Larsen & Toubro down by 0.89% and ONGC was down by 0.88% were the top losers.

Asian markets were trading mostly in the green; Shanghai Composite increased 6.73 points or 0.30% to 2,242.24, FTSE Bursa Malaysia KLCI rose 0.76 points or 0.04% to 1,866.87, Straits Times gained 9.99 points or 0.30% to 3,324.12, Jakarta Composite increased 18.3 points or 0.35% to 5,195.91 and Nikkei 225 was up 213.91 points or 1.38% to 15,690.51.

Hang Seng decreased 138.26 points or 0.56% to 24,613.83, Taiwan Weighted declined 94.83 points or 1% to 9,418.23 and KOSPI Index was down 16.96 points or 0.82% to 2,050.90