Indian benchmarks remain firm; Nifty above 5,000 mark

Indian equity markets continued its jubilation on the street but trimmed marginal gains in the late afternoon session. The sentiments were optimistic not only on account of positive clues from overseas market but domestic news too helped the market to trade firm. Investors welcomed the weekly food inflation which continued to languish in the negative terrain for the third straight week in the period ended January 7. However, investor were cautious while picking stock on reports that the World Bank expects the Indian economy to grow 6.5% in 2012, much lesser than its earlier estimate of 8.4% in June and even lower than the government’s estimates of 7-7.5% for the current fiscal, mainly on the back of weakening global economic situation. Traders were seen piling up the positions in Realty, Metal and Bankex sector while selling was witnessed in IT, TECk and FMCG sector. Interest rate sensitive counters like high beta realty, banking and automobile remained in demand after the upbeat inflation numbers as investors speculated that the RBI would abstain from its monetary tightening measures and shift its focus to spur economic growth. However, three-wheeler major Bajaj Auto was under pressure on announcing quarterly earnings that were below the street expectations. Also, the IT pocket continued to face the ire of investors after IT bellwethers like Infosys and TCS’ earnings disappointed the street amid expectations that slowdown in major software and technology importing regions like Europe and the US will impact future earnings. Bharti Airtel was trading weak in red on tax demand notice of Rs 1,067 crore from I-T department.

On the global front, Asian markets traded in green while the European markets were trading on a mix note. IMF’s plans to expand its lending capacity by as much as $500 billion in order to prevent fallout from the Euro-zone crisis, averting a global recession, bolstered investors risk taking confidence in the session. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 5,000 and 16,500 levels respectively. The market breadth on BSE was in favor of advances in the ratio of 1646:997 while 117 scrips remained unchanged.

The BSE Sensex is currently trading at 16,592.64 up by 141.17 points or 0.86% after trading as high as 16,662.06 and as low as 16,572.10. There were 21 stocks advancing against 9 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap index surged 1.22% while Small cap jumped 1.04%.

On the BSE sectoral space, Realty up 2.82%, Metal up 1.91%, Bankex up 1.77%, Power up 1.69% and Auto up 1.25% were the major gainers while IT down 0.48%, TECk down 0.47% and FMCG down 0.01% were the only losers in the space.

Sterlite Industries 4.87%, DLF up 4.15%, Tata Power up 4.09%, Hindalco Industries up 3.30% and Maruti Suzuki up 2.77% were the major gainers on the Sensex, while BHEL down 2.88%, M&M down 1.17%, Bharti Airtel down 1.13%, Infosys down 0.78% and ONGC down 0.73% were the major losers in the index.

Meanwhile, the World Bank expects the Indian economy to grow 6.5% in 2012, much lesser than its earlier estimate of 8.4% in June and even lower than the government’s estimates of 7-7.5% for the current fiscal, mainly on the back of weakening global economic situation. It has further predicted GDP growth to remain flat at 6.8% in 2012 but is optimistic that it may bounce back to 8% in 2013-2014.

The bank in its report, ‘Global Economic Prospects 2012’, blamed India’s rising prices combined with deceleration in investment growth, high input prices and slowing global growth for this downturn. The report further said delays and uncertainty surrounding the implementation of policy reforms have hindered investments. It noted that the hurdles in second generation economic reforms such as foreign direct investment in multi-brand retail, goods and services tax (GST)and pension reforms have further affected growth.

As per the report, global economy is expected to expand at 2.5% and 3.1% in 2012 and 2013 as against the 3.6% projected earlier for both years, it also warned for another global recession. Developed and developing countries’ growth rates could also fall by as much or more than in 2008-09. ‘Developing countries should hope for the best and plan for the worst,’ the report warned.

The report stated that the overall GDP growth in the South Asian region is likely to slip to 5.8 percent in 2012, from an estimated 6.6 percent in 2011, before bouncing back to 7.1 percent in 2013. The slowdown in South Asia will be dominated by a slowdown in the Indian economy as it accounts for about 80% of South Asia’s GDP. Demand for the region’s exports is expected to go down to 11.6% in 2012 from 21% in 2011, due to stagnant GDP in the European Union and the projected global slowdown. It warned that the developing countries would have much less fiscal space than in 2008 with which to react to a global slowdown as 38% of developing countries are estimated to have a government deficit of 4% or more of GDP in 2011.

On the sidelines, accepting the global uncertainty, Finance Minister Pranab Mukherjee said, India's economic growth will fall below 7.5% in the current financial year and admitted that the fiscal deficit target of 4.6% of GDP would not be achieved. ‘We have a difficult last quarter ahead of us in this fiscal year. Our growth for 2011-12 may be around 7.5% or less,’ Mukherjee said.

The S&P CNX Nifty is currently trading at 5,000.05, higher by 44.52 points or 0.89% after trading as high as 5,014.85 and as low as 4,991.40. There were 38 stocks advancing against 11 declines while 1 stock remained unchanged on the index.

The top gainers on the Nifty were Reliance Infra up 8.75%, Sterlite up 4.81%m, Tata Power up 3.99%, DLF up 3.97% and JP Associates up 3.75%.

BHEL down 3.26%, Bharti Airtel down 1.43%, M&M down 1.13%, Infosys down 0.80% and ONGC down 0.78% were the major losers on the index.

Asian markets were trading on a positive note; Shanghai Composite surged 1.31%, Hang Seng soared 1.30%, Jakarta Composite climbed 0.40%, Nikkei 225 jumped 1.04%, Straits Times advanced 0.71% and Seoul Composite garnered 1.19%.

Stock markets in Taiwan remained shut on Thursday in observance of a public holiday.

The European markets were trading on a mixed note with, France’s CAC 40 ascended 0.53%, Germany’s DAX edge higher 0.04% and Britain’s FTSE 100 dropped 0.05%.