Benchmarks trade higher in early deals

Erasing their initial losses, Indian equity benchmarks have gained positive territory reacting to the US Federal Reserve’s decision to keep interest rates near zero for a considerable time. Some support also came in after the Reserve Bank of India eased foreign direct investment (FDI) norms allowing companies to issue equity shares to a resident outside India against any type of fund subject to certain conditions. There was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too equally participated in the rally.

Global cues too remained supportive with the US markets ending modestly higher in last session after the Federal Reserve's monetary policy announcement. Though, the trade remained volatile but traders seemed pleased that the Fed reiterated its pledge to keep interest rates low for a 'considerable time'. The Asian markets too turned green after a cautious start led by Japanese market which surged over a percent toward a six-year high on a weaker yen.

Back home, none of the sectoral indices were trading in the red, while realty and capital goods witnessed the maximum gains in trade. Consumer durables, PSU, oil and gas, metal, banking, infrastructure and auto too were trading significantly. The broader indices too were trading in-line with benchmarks, while the market breadth on the BSE was positive; there were 1607 shares on the gaining side against 440 shares on the losing side while 57 shares remain unchanged.

The BSE Sensex opened at 26573.89; around 58 points lower as compared to its previous closing of 26631.29, and has touched a high and a low of 26655.65 and 26511.71 respectively. The BSE Sensex is currently trading at 26831.01, up by 199.72 points or 0.75%. There were 27 stocks advancing against 3 stocks declining on the index.

The overall market breadth remained in the favour of advances with 76.38% stocks advancing against 20.91% declines. The broader indices were trading in green; the BSE Mid cap index was up by 1.14%, while Small cap index up by 1.87%.

The gaining sectoral indices on the BSE were Realty up by 2.03%, Capital Goods up by 1.34%, Consumer Durables up by 1.24%, PSU up by 1.22% and Oil & Gas up by 1.22%, while there were no losers on the index.

The top gainers on the Sensex were Sun Pharma up by 1.95%, Hero MotoCorp up by 1.83%, Hindalco up by 1.65%, ONGC up by 1.60% and Dr. Reddys Lab up by 1.60%. On the flip side, Infosys down by 1.61%, Hindustan Unilever down by 0.45% and Mahindra & Mahindra down by 0.18% were the few 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 opened at 7,950.65; around 25 points lower as compared to its previous closing of 7,975.50, and has touched a high and a low of 8,051.35 and 7,939.70 respectively.

The CNX Nifty is currently trading at 8040.10, up by 64.60 points or 0.81%. There were 47 stocks advancing against 3 stocks declining on the index.

The top gainers on Nifty were PNB up by 2.35%, Jindal Steel & Power up by 2.30%, Hero MotoCorp up by 2.27%, Bank of Baroda up by 2.26% and Kotak Mahindra Bank up by 2.12%. On the flip side, Infosys down by 1.64%, United Spirits down by 0.72% and Hindustan Unilever down by 0.48% were the few losers.

Asian markets were trading mostly in the green; Straits Times was surged 4.98 points or 0.15% to 3,301.46, Nikkei 225 jumped by 207.07 points or 1.30% to 16,095.74 , Jakarta Composite gained by 14.13 points or 0.27% to 5,202.31, Shanghai Composite added by 9.12 points or 0.40% to 2,317.01 and Taiwan Weighted was up by 18.15 points or 0.20% to 9,213.32.

On the flip side FTSE Bursa Malaysia KLCI dipped by 5.04 points or 0.27% to 1,838.74, Hang Seng declined by 176.54 points or 176.54% to 0.72 and KOSPI Index was down by 17.18 points or 0.83% to 2,045.43.