Markets hold on to their early gains

The Indian equity markets were holding their early gains on sustained buying by funds and retail investors amid positive global cues ahead of Diwali. Domestic sentiment was buoyed on the last trading session of the Samvat Year 2070, on increased capital inflows amid the government’s announcement of a slew of economic reforms. Some support also came with global credit rating agency Moody’s saying that the decisions to deregulate diesel prices and hike the natural gas prices are 'credit positive' as it would bring in fiscal discipline.

The BSE’s 30-share Sensex and the NSE’s 50-share Nifty reclaimed the psychological 26,750 and 7,950 levels, respectively in trade. Global cues were also very strong with all regional peers trading in the positive terrain. Back home, the buying remained broad-based. Barring PSU, all other BSE sectoral indices were trading significantly in the green. Among the major movers, auto index gained the most, followed by capital goods and Consumer Durables. Festive buying has led to a surge in BSE Auto and Consumer Durables indices, while Chinese data and reform measures have boosted the Metal index.

In scrip specific development, shares of Dewan Housing Finance have gained after reporting 18% year-on-year growth in net profit at Rs 152 crore for the quarter ended September 2014, on back of strong operational income. On the flip side, shares of Financial Technologies India (FTIL) have tanked up to 13%, extending its previous day’s 20% fall, after the government proposed a merger of the National Spot Exchange (NSEL) with the company.

On global front, Asian markets were trading higher after Wall Street's strong performance on upbeat results from two technology bellwethers offset investors' recent concerns about the outlook for the global economy. Back home, Indian rupee strengthened by 14 paise to 61.17 against the US dollar in early trade on sustained foreign capital inflows amid government announcing key reforms in the oil and gas sector. The market breadth on BSE was positive, out of 2087 stocks traded, 1394 stocks advanced, while 615 stocks declined on the BSE. 

The BSE Sensex is currently trading at 26757.10 up by 181.45 points or 0.68% after trading in a range of 26818.33 and 26742.04. There were 24 stocks advancing against 6 stocks declining on the index.The broader indices were trading in green; the BSE Mid cap index was up by 0.68%, while Small cap index gained 1%.

The gaining sectoral indices on the BSE were Auto up by 1.88%, Capital Goods up by 1.68%, Consumer Durables up by 0.91%, Power up by 0.86% and Infrastructure up by 0.84%, while PSU down by 0.08% was the only losing Index on BSE.

The top gainers on the Sensex were Hero MotoCorp up by 3.64%, BHEL up by 2.53%, Tata Motors up by 2.37%, Bajaj Auto up by 2.14% and Cipla up by 2.05%. On the flip side, ONGC down by 1.31%, Tata Power down by 0.40%, Coal India down by 0.38%, ICICI Bank down by 0.13% and ITC down by 0.10% were the top losers.

Meanwhile, global rating agency Moody's Investors Service has stated that the decision to deregulate the diesel prices and hike the natural gas prices are credit positive for India as it would improve the fiscal discipline of the country. Currently, Moody's has assigned 'Baa3' rating on India, with stable outlook. Moody's rating reflects high domestic savings, adequate foreign exchange reserves and challenges posed by large fiscal deficits, recurrent inflation and weak infrastructure.

The government has recently deregulated diesel prices and raised the natural gas rates. Moody’s stated that diesel deregulation will reduce the subsidy burden for the government, which grew nearly six-fold to Rs 85,500 crore in FY14 from Rs 15,000 crore in FY10. However, fiscal savings are likely to be limited, given total subsidies account for less than 1% of the country's FY14 GDP. It noted that rise in diesel prices in future could contribute to food inflation, as companies will charge more for freight transportation services or for the cost of fuel-intensive machines.

Moody’s further added that hike in gas prices will directly benefit oil exploration companies of the country.  The government has approved raising natural gas price to $5.61 per mmBtu. The new gas price will be implemented from November 1 and will be revised every six months with the next revision being on April 1.

The CNX Nifty is currently trading at 7,985.35 up by 57.60 points or 0.73% after trading in a range of 7,999.30 and 7,977.65. There were 40 stocks advancing against 10 declining on the index.

The top gainers on Nifty were Hero MotoCorp up by 3.54%, Kotak Mahindra Bank up by 2.93%, Tata Motors up by 2.50%, Jindal Steel & Power up by 2.37% and Bajaj Auto up by 2.11%. On the flip side, ONGC down by 1.21%, PNB down by 0.66%, NMDC down by 0.64%, Tata Power down by 0.57% and ICICI Bank down by 0.40% were the top losers.

Asian markets were trading mostly in the green; Nikkei 225 spurted by 1.91%, Hang Seng added 1.31%, KOSPI Index climbed 1.01%, Straits Times increased by 0.68%, Jakarta Composite jumped 0.92%, Shanghai Composite surged 0.41% and Taiwan Weighted was up by 1.04%. On the flip side, FTSE Bursa Malaysia KLCI was down by 0.38%.