Benchmarks continue firm trade; IT, TECK pull

Indian equity benchmarks continued its firm trade in the late afternoon session on account of buying in frontline blue chip counters and taking cues from global counterparts. Global sentiment was buoyed on speculation that the Federal Reserve would maintain a pledge on low interest rates when a two-day policy meeting ends later in the day. Traders were seen piling positions in IT, TECK and Power while selling was witnessed in Consumer Durables, Infra and Metal sector stocks. In scrip specific development, Apollo Tyres was trading in green after its wholly owned subsidiary in South Africa - Apollo Tyres Africa Proprietary, has voluntarily initiated business rescue proceedings. Apollo Hospitals Enterprise was trading in green on acquisition of Hyderbad-based pharmacy chain Hetero Med Solutions for a consideration of Rs 146 crore.

On the global front, the Asian markets were trading mostly in green while the European markets were too trading on optimistic note. Back home, the NSE Nifty and BSE Sensex were trading above psychological 7,950 and 26,500 levels respectively. The market breadth on BSE was negative in the ratio of 1204:1683 while 92 scrips remained unchanged.

The BSE Sensex is currently trading at 26567.74, up by 75.23 points or 0.28% after trading in a range of 26511.71 and 26682.64. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.26%, while Small cap index down by 0.20%.

The gaining sectoral indices on the BSE were IT up by 1.25%, TECK up by 0.90%, Power up by 0.60%, Auto up by 0.47%, FMCG up by 0.26% while, Consumer Durables down by 1.79%, INFRA down by 0.83%, Metal down by 0.63%, PSU down by 0.53%, Oil & Gas down by 0.22% were the losing indices on BSE.

The top gainers on the Sensex were Hero MotoCorp up by 2.82%, Infosys up by 1.85%, Dr. Reddy’s Lab up by 1.65%, Tata Power up by 1.55% and Mahindra & Mahindra up by 1.33%. On the flip side, Sesa Sterlite down by 1.86%, Cipla down by 1.85%, Coal India down by 1.80%, GAIL India down by 1.24% and Sun Pharmaceuticals Industries down by 0.81% 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 7956.85, up by 23.95 points or 0.30% 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 Hero MotoCorp up by 2.85%, Cairn India up by 2.11%, Infosys up by 2.02%, Tata Power up by 1.74% and Dr. Reddy’s Lab up by 1.52%. On the flip side, Jindal Steel & Power down by 4.01%, BPCL down by 2.63%, Coal India down by 2.03%, Sesa Sterlite down by 1.89% and Cipla down by 1.82% were the top losers.

The Asian markets were trading mostly in green; Shanghai Composite up 11.34 points or 0.49% to 2,307.89, KOSPI Index up 19.69 points or 0.96% to 2,062.61, Straits Times up 21.09 points or 0.64% to 3,293.71, Jakarta Composite up 59.38 points or 1.16% to 5,189.89, Taiwan Weighted up 61.77 points or 0.68% to 9,195.17 and Hang Seng up 240.4 points or 1% to 24,376.41.

On the flip side, Nikkei 225 was down by 22.86 points or 0.14% to 15,888.67 and FTSE Bursa Malaysia KLCI down 1.97 points or 0.11% to 1,845.33.

The European market was trading in green; UK’s FTSE 100 up by 1.11 points or 0.02% to 6,793.35, France’s CAC up 15.86 points or 0.36% to 4,425.01 and Germany’s DAX up 28.96 points or 0.3% to 9,661.89.