Markets extend early gains; trade near intra-day high level

Indian equity benchmarks extended early gains and were trading near the intra-day high levels in the afternoon session on the back of buying witnessed in infra, realty and consumer durables stocks. Sustained capital inflows buoyed by positive macro-economic data enthused the domestic markets to extend gains and most of the sectoral indices were trading in green with infra as a top gaining index. Sentiments got a boost as India’s current account deficit narrowed sharply to 1.7% of GDP in the first quarter of current fiscal from 4.8% of GDP in Q1FY14. Further, better than expected GDP growth for Q1FY15 and Prime Minister Narendra Modi’s statement that his government is determined to push tax and financial sector reforms to improve business environment also added to the optimistic sentiments. Sector wise, stocks of auto companies continued their rising streak on the back of healthy growth in domestic car sales in August. Investors were also seen piling up position in mid cap and small cap stocks.

Bharti Airtel, extending its previous day’s rally moved higher by around 4% to Rs 392, after the company's arm signed an agreement to acquire over 2.7 million subscribers of yuMobile. Further, shares of Hero MotoCorp were up nearly 2% at Rs 2,803 as the company reported 21% rise in its total sales during August 2014 at 5,58,609 units.

The NSE Nifty and BSE Sensex were trading above their psychological 8,000 and 26,500 levels respectively. The market breadth on BSE was positive, out of 2,591 stocks traded, 1,669 stocks advanced, while 805 stocks declined on the BSE.

The BSE Sensex is currently trading at 26949.67, up by 82.12 points or 0.31% after trading in a range of 26886.22 and 26982.63. There were 16 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.82%, while Small cap index up by 1.10%.

The gaining sectoral indices on the BSE were INFRA up by 1.00%, Realty up by 0.97%, Consumer Durables up by 0.71%, TECK up by 0.50% and Bankex up by 0.42%. On the flip side, Metal down by 0.73%, Capital Goods down by 0.09%, IT down by 0.08% and PSU down by 0.06% were the losing indices on BSE.

The top gainers on the Sensex were Cipla up by 6.70%, Bharti Airtel up by 3.13%, Sun Pharma Inds up by 2.55%, Hero MotoCorp up by 1.66% and Bajaj Auto up by 1.55%. On the flip side, Hindustan Unilever down by 1.30%, Sesa Sterlite down by 1.17%, Tata Motors down by 1.03%, Wipro down by 0.95% and Infosys down by 0.74% were the top losers.

Meanwhile,  easing pressure on country’s external sector as well as domestic currency, India’s current account deficit (CAD) narrowed sharply to $7.8 billion (1.7% of GDP) in the first quarter of current fiscal from $21.8 billion (4.8% of GDP) in Q1FY14. The lower CAD was primarily on account of a contraction in trade deficit driven by both a rise in exports and a decline in imports. However, the CAD in Q1FY15 was higher than $1.2 billion (0.2 per cent of GDP) recorded in Q4FY14.

Merchandise exports grew by 10.6% y-o-y to $81.7 billion in Q1FY15 as against a decline of 1.5% in Q1FY14. Conversely, merchandise imports declined by 6.5% to $116.4 billion as against an increase of 4.7% in Q1FY14 primarily led by a steep drop of 57.2% in gold imports, which amounted to $7 billion in the reported quarter, significantly lower than $16.5 billion in the same quarter of previous fiscal. Consequently, trade deficit contracted by about 31.4% to $34.6 billion in Q1FY15 from $50.5 billion in Q1FY14.

Net services receipts recorded a growth of 1.2% y-o-y to $17.1 billion in Q1FY15 on account of higher exports of services. However, net outflow on account of primary income (profit, dividend and interest) recorded at $6.7 billion was higher than that of $4.8 billion in Q1FY14 as well as in the preceding quarter at $6.4 billion. In Q1 FY15, gross private transfer receipts at $17.5 billion were marginally lower as compared to Q1FY14, which witnessed a significant increase of around 6% over the preceding quarter due to rupee depreciation. Net portfolio investment inflow was recorded at $12.4 billion in Q1FY15 as against an outflow of $0.2 billion in Q1FY14.

The significant curtailing of country’s CAD has eased pressure on macro-economic front as it is a major macro-economic problem that creates huge volatility in the domestic equity markets and currency. The improvement in CAD is likely to continue in the new fiscal year mainly on the back of contracting trade deficit and increasing foreign exchange reserves.

The CNX Nifty is currently trading at 8060.45, up by 32.75 points or 0.41% after trading in a range of 8036.55 and 8067.75. There were 29 stocks advancing against 20 stocks declining on the index.

The top gainers on Nifty were Cipla up by 6.78%, Bharti Airtel up by 3.25%,  Ultratech Cement up by 3.20%, Grasim Industries up by 2.81% and Sun Pharma Inds. up by 2.53%. On the flip side, Jindal Steel & Power down by 1.77%, Hindustan Unilever down by 1.30%, Sesa Sterlite down by 1.25%, BPCL down by 1.18% and Tata Motors down by 1.06% were the top losers.

Asian equity indices were trading mixed; Straits Times up by13.97 points or 0.42% to 3,328.10, Jakarta Composite up by14.45 points or 0.28% to 5,192.07, Shanghai Composite up by20.09 points or 0.9% to 2,255.60, Nikkei 225 up by199.02 points or 1.29% to 15,675.62. While, Taiwan Weighted down 113.34 points or 1.19% to 9,399.72, Hang Seng down 35.2 points or 0.14% to 24,716.89 and KOSPI Index down 16.28 points or 0.79% to 2,051.58.