Markets hold firmly in green; Nifty stays afloat above 7950 level

Although off day’s high, local equity markets continue to hold firmly in green with gains of around three tenths of a percent, which has kept Sensex and Nifty afloat above psychologically crucial 26,550 and 7,950 levels respectively. Recovery which emerged after two sessions of correction on the back of bargain buying activities and stronger regional counterparts, is mainly supporting the sentiment of Indian equity markets amidst optimism that US Federal Reserve will stick to its pledge of keeping interest rates lower. However, broader indices yet again acting contrary to the trend were trading lower in the range of 0.10%-0.45%.

On the global front, Asian markets mostly rose on Wednesday, with Hong Kong leading the way on reports that China's central bank had pumped more than $80 billion into the country's five biggest lenders, while traders also awaited a US Federal Reserve policy decision.

Closer home, most of the sectoral indices were contributing to the underlying strength, nevertheless stocks from Information Technology, Fast Moving Consumer Goods and Auto counters were the top gainers of the session. On the flip side, stocks from Metal, Infrastucture and Public Sector Undertaking counters witnessing much of the drubbing were the top losers of the session. The overall market breadth on BSE was in favour of declines which were outpacing advances in the ratio of 1415:1226; while 102 shares remained unchanged.

The BSE Sensex is currently trading at 26582.62, up by 90.11 points or 0.34% after trading in a range of 26511.71 and 26682.64. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.42%, while Small cap index down by 0.08%.

The gaining sectoral indices on the BSE were IT up by 1.36%, TECK up by 1.05%, FMCG up by 0.45%, Auto up by 0.22%, Power up by 0.17% while, Metal down by 0.82%, INFRA down by 0.67%, PSU down by 0.64%, Consumer Durables down by 0.51%, Oil & Gas down by 0.25% were the losing indices on BSE.

The top gainers on the Sensex were Wipro up by 1.94%, Hero MotoCorp up by 1.85%, Infosys up by 1.82%, Mahindra & Mahindra up by 1.53% and Tata Power up by 1.49%. On the flip side, Cipla down by 2.06%, Sesa Sterlite down by 1.98%, Coal India down by 1.80%, GAIL India down by 1.42% and ONGC down by 0.92% were the top losers.

Meanwhile, cautioning against growing dependence on foreign capital flows, Governor Raghuram Rajan underscored that Reserve Bank of India (RBI) would continue to limit its reliance on foreign debt to finance the country’s current account deficit (CAD). He further added that it was essential that the economy in a way was careful and circumspect about this since financial conditions could change anytime and that the money the economy had gained was largely out of the stimulus offered by some developed countries like United States (US).

Further, he emphasized that financial conditions could change since at some point of time the investors would find greater usage of their money back home and they may want to exit once again, thus funding the Current Account Deficit (CAD) majorly by this external cash flows was an risky option. India’s CAD for the quarter ended June narrowed sharply to $7.8 billion, or 1.7% of gross domestic product, from $21.8 billion (4.8 per cent of GDP) in the same quarter of the previous year.

The governor also had a word of caution on the nature of spending, especially that financed out of foreign resources and added the need to track trade deficit data closely. Moreover, he warned that if this money was mindlessly spent, then there was huge risk of running large deficits based on this foreign borrowing.

The country’s exports during the first five months of this financial year rose 7.31% to $134.79 billion, compared with $12.56 billion in the year-ago period, while Imports fell 2.69% from $196.22 billion to $190.94 billion. As a result, the trade deficit for the April-August period narrowed to $56.15 billion from $70.6 billion a year ago. The decline in CAD was mainly on account of reduction of this trade deficit data.

The CNX Nifty is currently trading at 7961.65, up by 28.75 points or 0.36% after trading in a range of 7936.95 and 7990.65. There were 29 stocks advancing against 21 stocks declining on the index.

The top gainers on Nifty were Infosys up by 1.99%, NMDC up by 1.99%, Wipro up by 1.89%, Hero MotoCorp up by 1.85% and Tata Power up by 1.74%. On the flip side, Jindal Steel & Power down by 4.72%, Cipla down by 2.07%, Coal India down by 1.99%, BPCL down by 1.88% and Sesa Sterlite down by 1.88% were the top losers.

Asian markets were trading mostly into positive terrain; with Shanghai Composite gaining by 5.02 points or 0.22% to 2,301.58; Straits Times rising by 17.09 points or 0.52% to 3,289.71; KOSPI Index adding 19.69 points or 0.96% to 2,062.61; Taiwan Weighted advancing by 61.77 points or 0.68% to 9,195.17; Jakarta Composite rallying by 64.26 points or 1.25% to 5,194.76; Hang Seng spurting by 241.34 points or 1% to 24,377.35.

On the flip side, Nikkei 225 down by 22.86 points or 0.14% to 15,888.67 and  FTSE Bursa Malaysia KLCI down by 3.68 points or 0.2% to 1,843.62 were the only two losers among Asian pack.