Benchmarks extend gains; trade near intra-day high levels

Indian equity benchmarks extended early gains to continue firm trade in late morning session, hovering near intra-day high levels on sustained fund inflows, driven by a slew of economic reforms announced by the government amid optimism over strong corporate earnings. Besides, a firm trend in the global market on robust US economic data also boosted the sentiment. At present, Sensex and Nifty were trading above the crucial 27,650 and 8,250 levels respectively, with gains of over a percentage point.  Apart from blue chips, broader indices too equally participated in the rally with both mid cap and small cap indices trading up by over 1.00%.

Sentiments remain bullish with government’s announced austerity drive. The Finance Ministry in wake of lower revenue realisation till date, has issued new austerity measures, including 10 per cent cut in non-Plan expenditure and ban on creation of new posts. Also, the government has said that it is committed to improving the savings rate and plans to launch new products to achieve the objective. Some support also came after Rating agency Moody's said the recent reform measures by the government coupled with those unveiled by the Reserve Bank on the economic, fiscal and financial fronts are credit positive as they will accelerate growth if successfully implemented. 

Barring consumer durables, all other BSE sectoral indices were trading significantly in the green. Among them, Oil & Gas index gained 1.55 per cent, followed by infrastructure 1.53 per cent and Metal indices 1.46 per cent. Some optimum also seen in IT exporters that earn major part of their revenues from exports to the US after US Federal Reserve Bank's encouraging comments about the US economy. In scrip specific development, shares of Thermax have surged over 4% after the company secured Rs 321 crore worth order to build and commission a captive power plant in Africa. On the flip side, shares of Jubilant Foodworks have declined after reporting a 12.7% drop in its net profit at Rs 29 crore in the July-September quarter of 2015 fiscal compared to the Rs 33.24 crore net profit in the same quarter last fiscal.

On the global front, Asian stocks climbed after strong US economic growth and upbeat earnings sent Wall Street higher. Besides, Japanese stocks jumped and the yen skidded to six-year lows against the dollar after the Bank of Japan surprised markets with fresh easing steps - a move aimed at stoking inflation and recharging a fragile economic recovery. Back home, Indian rupee rose by eight paise to 61.37 against the US dollar in early trade on sustained foreign capital inflows amidst a higher opening in the domestic equity market. The market breadth on BSE was positive, out of 2281 stocks traded, 1576 stocks advanced, while 623 stocks declined on the BSE. 

The BSE Sensex is currently trading at 27657.59 up by 311.26 points or 1.14% after trading in a range of 27664.41 and 27438.28. There were 28 stocks advancing against 2 stocks declining on the index.

The broader markets gained too with the BSE Midcap and Smallcap indices adding 1.31 percent and 1.08 percent, respectively.

The gaining sectoral indices on the BSE were Oil & Gas up by 1.55%, Infrastructure up by 1.53%, Metal up by 1.46%, IT up by 1.38% and PSU up by 1.38% while, Consumer Durables down by 2.40% was the only losing Index on BSE.

The top gainers on the Sensex were HDFC up by 2.26%, SBI up by 2.00%, Hero MotoCorp up by 1.99%, Sesa Sterlite up by 1.90% and Tata Steel up by 1.89%. On the flip side, Bharti Airtel down by 1.78% and Hindustan Unilever down by 0.07% were the only losers.

Meanwhile, With an aim to trim the fiscal deficit to 4.1 per cent of gross domestic product (GDP) in FY15, the government has issued new austerity measures including 10 per cent cut in non-Plan expenditure and ban on creation of new posts. Keeping in mind lower revenue realisation till date, the government also decided to barred senior officials from first-class air travel, foreign jaunts, holding meetings in five-star hotels and purchase of new cars.

A memorandum issued by Expenditure Department of the Finance Ministry noted that during the current fiscal, every Ministry/Department shall effect a mandatory 10 per cent cut in non-Plan expenditure excluding interest payment, repayment of debt, Defence capital, salaries, pension and Finance Commission grants to the States. The government highlighted that there is a need to continue to rationalise expenditure and optimise available resources and these measures will help to check fiscal deficit without restricting the operational efficiency of the various government’s departments.

These measures have been announced after considering the low growth in indirect tax collection at 5.8 per cent during first six months of the current fiscal against the budgeted target of 25.8 per cent. Tax is main source of revenue for the government. Meanwhile, it is expected that government's latest austerity drive would lead to a saving of up to Rs 40,000 crore or 0.3 per cent of the Gross Domestic Product (GDP).  India's fiscal deficit during the FY14 narrowed to $86.08 billion or 4.5% of GDP as compared to 4.89% during the FY13.

The CNX Nifty is currently trading at 8,262.05 up by 92.85 points or 1.14% after trading in a range of 8,265.35 and 8,198.05. There were 48 stocks advancing against 2 declining on the index.

The top gainers on Nifty were IDFC up by 3.17%, HCL Tech up by 2.05%, SBI up by 2.03%, Tata Steel up by 1.93% and HDFC up by 1.86%. On the flip side, Bharti Airtel down by 1.84%, DLF down by 0.97%, Hindustan Unilever down by 0.22% and Power Grid down by 0.21% were the top losers.

Asian markets were trading in the green; Nikkei 225 increased 3.81%, FTSE Bursa Malaysia KLCI increased 0.04%, KOSPI Index increased 0.11%, Taiwan Weighted increased 0.30%, Jakarta Composite increased 0.18%, Straits Times increased 0.66%, Shanghai Composite increased 1.18% and Hang Seng increased 1.17%.