Benchmarks continue firm trade in late morning session

Indian equity benchmarks continue to trade firm in late morning session on continued buying activities by both funds and retail investors. Sentiments got some support with activities at Indian services companies on a month-by-month basis, improving to 52.4 in January, up from 51.1 in December. However, investors remained coutious with RBI Governor Raghuram Rajan's statement that inflation is still a concern for the central bank and the monetary policy continues being ‘conventional’. He also clarified that the mid-policy action was also to assuage the concerns of some people, who were calling RBI as ‘tardy’ in its policy formulating. Some weakness also came with the report that foreign portfolio investors (FPIs) sold shares worth a net Rs 83.80 crore on February 04, 2015.

On global front, Asian stocks declined as optimism from China's latest move to boost its economy was tempered by the European Central Bank's withdrawal of a key financial support for Greek banks. Risk appetite, which had warmed earlier in the week on hopes that Greece would gain relief from its creditors, took a hit after the ECB pulled back its soft treatment of Greek debt and cancelled its acceptance of the country's bonds in return for funding. Back home, Indian rupee fell 16 paise to 61.91 against the dollar in early trade due to appreciation of the US currency overseas.

Back on street, stocks from IT, Teck and FMCG counters were supporting the markets’ uptrend, while those from Realty, Power and Metal counters were adding to the underlying cautious undertone. In scrip specific development, shares of JK Lakshmi Cement have gained after the company reported 31.15% rise in net profit to Rs 18.48 crore in Q3 December 2014 over Q3 December 2013. On the flip side, Shares of Aurobindo Pharma have declined after posting an 8% fall in its net profit at Rs 394.27 crore for third quarter ended December 31, 2014 as compared to Rs 418.16 crore for the same quarter in the previous year.

The market breadth on BSE was positive, out of 2278 stocks traded, 1236 stocks advanced, while 975 stocks declined on the BSE.

The BSE Sensex is currently trading at 28994.34, up by 111.23 points or 0.39% after trading in a range of 28824.88 and 29054.26. There were 16 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.39%, while Small cap index up by 0.34%.

The top gaining sectoral indices on the BSE were IT up by 1.32%, TECK up by 1.02%, FMCG up by 0.54%, Bankex up by 0.31% and Auto up by 0.24% while, Realty down by 0.86%, Power down by 0.67%, Metal down by 0.50%, Consumer Durables down by 0.45% and Infrastructure down by 0.34% were the losing indices on BSE.

The top gainers on the Sensex were Axis Bank up by 2.10%, Wipro up by 1.89%, HDFC up by 1.82%, TCS up by 1.35% and Hindustan Unilever up by 1.23%. On the flip side, Tata Power down by 3.44%, ONGC down by 2.00%, GAIL India down by 1.92%, Mahindra & Mahindra down by 1.83% and Sesa Sterlite down by 1.62% were the top losers.

Meanwhile, the Reserve Bank of India (RBI) governor Raghuram Rajan, after keeping the interest rates unchanged in its sixth bi-monthly credit policy, has said that inflation is still a concern for the central bank and the monetary policy continues being “conventional”. He further stated that given the deflationary environment elsewhere, it is actually easier for us because we are not fighting inflation in an environment where inflation is picking up elsewhere.

Rajan stated that emerging markets have different problems from developed markets on inflation and the medium-term view of inflation was more important than short-term view, as Lower inflation increases disposable income and propensity to save. Going further, for increasing the saving rate, which has dipped to 30 percent, Rajan also advocated for increasing the tax benefit for small investments in financial instruments like PPF, PF, insurance policies etc under Sec 80C.

Indian CPI inflation increased for the first time in five months to 5 percent in December of 2014 from a record-low of 4.38 percent the previous month, still remaining well within the RBI medium-term target of 6 percent. While the wholesale price index (WPI) rose 0.11 percent year-on-year.

The CNX Nifty is currently trading at 8751.30, up by 27.60 points or 0.32% after trading in a range of 8705.05 and 8768.30. There were 23 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were BPCL up by 2.91%, Axis Bank up by 2.22%, HCL Tech up by 2.10%, HDFC up by 1.81% and Wipro up by 1.80%. On the flip side, Tata Power down by 3.44%, Cairn India down by 2.60%, ONGC down by 1.98%, Mahindra & Mahindra down by 1.91% and GAIL India down by 1.75% were the top losers.

Asian markets traded mostly in the red; Nikkei 225 shed 0.80%, Taiwan Weighted slipped 0.30%, Jakarta Composite decreased 0.76%, Straits Times declined 0.42%, KOSPI Index dropped 0.61% and FTSE Bursa Malaysia KLCI was down by 0.40%. On the flip side, Shanghai Composite increased 1.09% and Hang Seng was up by 0.55%.