Rate sensitives led rally takes Indian benchmarks to high point of the day

Indian equity markets have bounced back in style in Tuesday’s trades after suffering a debacle in the previous session as the benchmark indices continue to gain traction and have even touched high point of the day in early afternoon trades. The frontline indices surged over one and a quarter percent and reclaimed the psychological 17,050 (Sensex) and 5,150 (Nifty) levels, which the gauges had given up in Monday’s plunge. Meanwhile, ICICI Bank, India’s largest private sector bank announced it third quarter earnings which were better than the street’s expectations. Investors commended the bank’s performance which traded with over four percent gains. A broad based position build up was evident in rate sensitive counters like Banking, Realty and Auto while the index heavyweight Oil & Gas counter too garnered strength. Sentiments also remained sanguine after the government slightly lowered India’s economic growth forecast to 8.4 percent from the earlier estimate of 8.5 percent for financial year 2010-11. On the global front, some tentative improvement in investors’ risk appetite was evident amid hopes of a positive outcome of Greek debt negotiations after Greek Prime Minister Lucas Papademos said that major progress has been made in debt-swap talks. Stronger than predicted industrial production reading from world’s third largest economy - Japan too spurred hopes of recovery in global economic situation. Asian markets largely exhibited optimistic trends in the session while the European futures too are signaling at a positive opening for markets there.

Moreover, the broader markets too traded on positive note with under a percent gains but were outclassed by their larger peers. The bourses surged on good volumes of over Rs 0.50 lakh crore while market breadth on BSE was in favor of advances in the ratio of 1428:1047 while 119 scrips remained unchanged.

The BSE Sensex is currently trading at 17,076.36 up by 213.06 points or 1.26% after trading as high as 17,087.51 and as low as 16,965.58. There were 24 stocks advancing against 6 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap index climbed 0.91% and Small cap advanced 0.71%.

On the BSE sectoral space, Bankex up 2.29%, Realty up 1.88%, Oil & Gas up 1.47%, IT up 1.40% and Auto 1.32% were the major gainers while Capital Goods down 0.26% and Healthcare down 0.02% were the only losers in the space.

Bajaj Auto up 3.97%, ICICI Bank up 3.33%, SBI up 2.98%, DLF up 2.78% and RIL up 2.33% were the major gainers on the Sensex, while Maruti down 0.97%, Coal India down 0.92%, L&T down 0.79%, Tata Steel down 0.71% and NTPC down 0.67% were the major losers in the index.

Meanwhile, government has slightly lowered India’s economic growth forecast to 8.4 percent from the earlier estimate of 8.5 percent for financial year 2010-11. According to the Quick Estimates of economic growth released by the Ministry of Statistics and Programme Implementation, the Gross Domestic Product (GDP) at factor cost at constant prices in 2010-11 has registered a growth of 8.4 percent over the previous year.

The major source of growth in the GDP has been from the services sector which has grown at the rate of 9.3 percent. The agriculture sector growth has also been impressive at 7 percent during the year 2010-11. The growth of secondary sector, which includes manufacturing and construction sector, stood at 7.2 percent in 2010-11.

In addition, the GDP growth estimate for FY09-10 has been revised upward to 8.4 per cent from the previous estimate of 8 per cent. Agriculture sector growth recorded 7 per cent growth in 2010-11 as against a mere 1 per cent in 2009-10, the data showed. Finance, insurance, real estate and business services expanded by 10.4 percent in 2010-11 as compared to a growth rate of 9.4 percent in the previous fiscal.

Trade, hotels and restaurants expanded by 9 per cent in 2010-11 against a growth rate of 7.8 percent in 2009-10, the Quick Estimates released by MOSPI said. Construction sector grew by 8 percent during the year under review against 7 percent in the previous fiscal. The mining and quarrying sectors registered 5 percent growth in FY’11, against 6.3 percent expansion in the previous fiscal.

Manufacturing grew by 7.6 percent in 2010-11 compared to a growth of 9.7 percent in 2009-10. Furthermore, electricity, gas and water production recorded 3 percent growth in FY’11, compared to 6.3 percent expansion in FY’10. As per the Quick Estimates, the transport, storage and communication sector expanded 14.7 percent in 2010-11. The sector had grown by 14.8 percent in the previous fiscal.

The GDP at constant prices at market prices during the year 2010-11 has grown at 9.6 percent, as per the data. Earlier this month, the Reserve Bank had lowered its GDP growth forecast for the current fiscal to 7 per cent, from the earlier estimate of 7.6, due to global economic slowdown, high domestic interest rates and other factors.

The S&P CNX Nifty is currently trading at 5,152.90, higher by 65.60 points or 1.29% after trading as high as 5,156.65 and as low as 5,120.15. There were 43 stocks advancing against 7 declines on the index.

The top gainers on the Nifty were RPower up 4.27%, Sun Pharma up 2.12%, R Infra up 1.42%, Jindal Steel up 1.36% and R Com up 1.25%.

BHEL down 8.64%, Sterlite down 4.35%, JP Associates down 4.03%, M&M down 3.66% and BPCL down 3.64% were the major losers on the index.

In the Asian space, Shanghai Composite gained 0.14%, Hang Seng climbed 0.89%, Nikkei 225 rose 0.11%, and Seoul Composite advanced 0.79% and Taiwan Weighted soared 1.48%.

On the flipside only Jakarta Composite declined by 0.27% and Strait Times eased 0.21%.