Markets continue to trade sanguine after RBI’s surprise rate cut move

Markets continued to trade sanguine after the surprise rate cut move by RBI, which prompted across the board buying activity at Dalal Street, lifting Sensex and Nifty above crucial 29,750 and 9000 levels respectively, with gains of over half a percent. Though off day’s high, the overall sentiment at Indian equity markets remained buoyant despite mix regional counterparts. At day’s high, while Sensex hit the life-time high 30,000 level, While Nifty sailed past 9,100 mark. Meanwhile, broader indices also participated into the rally, nevertheless the gains were in the range of 0.10-0.20%.

On the global front, Asian shares eased on Wednesday as investors grew cautious ahead of U.S. jobs data and growth targets from china. Street widely expects U.S. to add 219,000 jobs last month after gaining 213,000 in January, while Chinese Premier Li Keqiang is expected to announce a growth target of about 7 percent for this year during the government’s annual National People’s Congress on Thursday.

Closer home, amidst broad-based buying, stocks from most of the sectoral indices were trading in green, nevertheless notable gainers were stocks from Realty, FMCG and Banking counters. On the flip side, massive drubbing was witnessed by stocks from Metal, Oil & Gas and Information Technology counters. In stock-specific activity, telecom stocks rose on reports that Department of Telecommunications will start the biggest ever auction of 2G and 3G spectrum today, March 4, 2015. The overall market breadth on BSE was in the favour of declines which thumped advances in the ratio of 1356:1226; while 120 shares remained unchanged.

The BSE Sensex is currently trading at 29788.01, up by 194.28 points or 0.66% after trading in a range of 29699.71 and 30024.74. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.11%, while Small cap index up by 0.19%.

The gaining sectoral indices on the BSE were Realty up by 1.91%, FMCG up by 1.42%, Bankex up by 0.66%, Auto up by 0.61% and INFRA up by 0.40% while, Metal down by 0.62%, Oil & Gas down by 0.33%, IT down by 0.30%, PSU down by 0.18% and Power down by 0.09% were the losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 5.79%, Bharti Airtel up by 2.26%, HDFC up by 1.95%, ICICI Bank up by 1.87% and ITC up by 1.86%. On the flip side, Hindalco down by 2.62%, Coal India down by 1.23%, Tata Power down by 1.20%, Wipro down by 1.03% and Reliance Industries down by 0.72% were the top losers.

Meanwhile, Chief Economic Adviser (CEA) Arvind Subramanian underscored that the ambitious 8.1-8.5% economic growth projected for the next fiscal in Finance Minister Arun Jaitley's Budget is more like a 'statistical and not a real number”. The minister highlighted that to achieve a particular growth rate, it was important to estimate tax revenue, which are just not fanciful assumptions, but solid achievable figures.

However, the minister highlighted that the government expects 15.8% growth in revenue collection this year and that this number was very much achievable and that with the growth rate of 8-8.5%, one should view the economy as “recovering economy” and not “surging economy”.

He highlighted that “8.5%” growth figure was 'directionally' fine since there was an uptick in the growth rate from 2013-14 to 2014-15. On being questioned about credibility of the economic growth projection, Finance Minister highlighted the budget was based on projections about nominal GDP growth, which is the sum of real GDP growth and inflation.

Before the (revised) numbers came out, he highlighted that the government was expecting a nominal GDP growth of 11.5%, broadly which was about 6.5% of GDP growth and 4.5% on inflation. However, the minister highlighted that with the release of new numbers though real GDP growth had gone up, the inflation numbers had actually come down. And hence, relevant numbers used for tax revenues and tax revenue projections remained same as before. So in that sense, for the revenue projections the new statistical numbers did not make difference.

Lastly, on bank recapitalization, Subramanian highlighted the government has allocated about Rs 8,000 crore, which has been linked with performance and the government could further dilute 52% its stake if it requires more money.

The CNX Nifty is currently trading at 9047.70, up by 51.45 points or 0.57% after trading in a range of 9020.80 and 9119.20. There were 25 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were Sun Pharma up by 6.35%, Kotak Mahindra Bank up by 2.50%, DLF up by 2.21%, Jindal Steel & Power up by 2.20% and Bharti Airtel up by 2.16%. On the flip side, Hindalco down by 2.96%, Cairn India down by 2.79%, Grasim Industries down by 1.56%, NMDC down by 1.45% and Coal India down by 1.33% were the top losers.

Asian markets were trading mixed; with FTSE Bursa Malaysia KLCI trading higher by 1 points or 0.05% to 1,822.25; Shanghai Composite trading higher by 3.74 points or 0.11% to 3,266.79;  Straits Times trading higher by 5.49 points or 0.16% to 3,427.60; Taiwan Weighted trading higher by 15.96 points or 0.17% to 9,621.73. On the flip side, Hang Seng were trading lower by 141.95 points or 0.57% to 24,560.83;  Nikkei 225 were trading lower by 111.56 points or 0.59% to 18,703.60;  Jakarta Composite were trading lower by 10.74 points or 0.2% to 5,463.88 and KOSPI Index trading lower by 3.09 points or 0.15% to 1,998.29.