Benchmarks continue firm trade in late morning session

Indian equity benchmarks continued to trade firm in late morning session on revival of buying by funds and retail investors amid a firm trend in the Asian markets. Besides, a substantial gain of 32 paise in the local currency and expectations of encouraging third quarter earnings by Infosys, to be released later in the day, also supported the upside. Sentiments were boosted by positive US jobs data, expectations of aggressive action from European Central Bank and rebound in crude oil prices. Some support also came in from Finance Minister Arun Jaitley’s statement that significant downward trend in inflation has been recorded in the second and third quarter of 2014-15. The external environment has also largely turned in India’s favour. However, gains remained capped on report that selling by foreign institutional investors continued and they were net sellers in Indian equities worth Rs 477 crore on January 8, 2014.

On global front, Asian stocks extended gains after other global markets bounced back from a rocky start to the year and oil prices stabilized after dramatic plunges. Sentiments were also boosted on expectations of ECB launching a quantitative easing program for Europe. Back home, Indian rupee strengthened by 32 paise at over four-week high of 62.35 against the dollar in early trade on sustained selling of the US currency by exporters and banks amid higher opening in the domestic equity market.

Back on street, stocks from Consumer Durables, IT and Auto counters were supporting the markets’ uptrend, while those from Realty and Infrastructure counters were adding to the underlying cautious undertone. In scrip specific development, Shares of the state-owned National Buildings Construction Corporation (NBCC) have gained after the company has bagged Rs 1,237-crore order in Odisha under the Pradhan Mantri Gram Sadak Yojana. Moreover, Videocon Industries rose after the company announced new discovery of oil accumulation in Farfan area in the Sergipe basin, offshore Brazil.

The market breadth on BSE was positive, out of 2248 stocks traded, 1773 stocks advanced, while 427 stocks declined on the BSE.

The BSE Sensex is currently trading at 27436.30, up by 161.59 points or 0.59% after trading in a range of 27404.19 and 27507.67. There were 20 stocks advancing against 10 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.60%, while Small cap index up by 0.74%.

The gaining sectoral indices on the BSE were Consumer Durables up by 0.98%, IT up by 0.93%, Auto up by 0.75%, FMCG up by 0.67%, TECK up by 0.64% while, Realty down by 0.58% and Infrastructure down by 0.15% were the losing indices on BSE.

The top gainers on the Sensex were Hindustan Unilever up by 3.12%, Cipla up by 2.95%, Tata Motors up by 2.17%, Dr. Reddys Lab up by 2.02% and TCS up by 1.92%. On the flip side, NTPC down by 1.55%, Bajaj Auto down by 0.60%, ICICI Bank down by 0.59%, GAIL India down by 0.58% and BHEL down by 0.52% were the top losers.

Meanwhile, Amid falling global crude oil prices, World Bank Chief  Economist Kaushik Basu has stated that the sharp decline in global crude oil prices gives India a rare ‘window of opportunity’ to contain widening fiscal deficit through carry out the much-needed economic reforms like cutting down oil subsidy. Kaushik Basu added that drop in oil prices would have differential impact on different countries, but for a country like India it is an opportunity to use this window of low oil prices to put in fiscal consolidation.

By adding further, Kaushik Basu asserted that India does spend a lot of money in oil subsidy and if at this point of time the subsidy is cut down, price would not rise sharply. On oil price outlook, he stated that unlike in 2008 when the oil prices fell and bounced back within six months, this time oil prices to remain moderately low over the next year.  He is also of the view that the reforms could get the country back to higher growth rate and prepare it for any global economic crisis in the future.

The price of Brent crude oil has fallen below $50 a barrel for the first time since May 2009. Since 2010, global oil prices have stayed above $100 a barrel level as  the world oil supply was on track and in line with the demand till 2014. However, over the past few years, countries like the United States and Canada in order to reduce their over dependence on imported oil started exploring other alternatives such as shale gas. Shale usage in US and Canada coupled with the weakening of economies in Asia and Europe led to a sudden fall in oil demand.

The CNX Nifty is currently trading at 8281.85, up by 47.25 points or 0.57% after trading in a range of 8272.95 and 8303.30. There were 32 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were Cipla up by 3.01%, Hindustan Unilever up by 2.90%, Tech Mahindra up by 2.63%, Tata Motors up by 2.15% and Dr. Reddys Lab up by 1.92%. On the flip side, DLF down by 2.17%, Asian Paints down by 1.65%, NTPC down by 1.59%, Jindal Steel & Power down by 1.11% and Bank of Baroda down by 0.82% were the top losers.

Asian equity indices were trading mostly in the green; Straits Times gained 0.03%, Shanghai Composite increased 0.44%, Jakarta Composite added 0.34%, KOSPI Index surged 1.17%, Nikkei 225 jumped 0.20% and Hang Seng was up by 1.05%. On the flip side, Taiwan Weighted down 0.14% and FTSE Bursa Malaysia KLCI was down by 0.09%.