Benchmarks make gap-up opening amid firm global cues

With a gap up opening Indian equity markets have extended their previous session’ gains and are now trading in fine fettle with up by over one percent, on sustained buying by fund and retail investors amid firm Asian markets, as a sluggish US jobs data eased fears of a rate hike by the US Federal Reserve this year. The sentiment got a boost with reports that the government may extend export incentives such as cheap credit to even large players in sectors like pharmaceuticals, chemicals and electronics. The sentiments were also supported by Indian rupee appreciating 27 paise to trade at 65.24 against the US dollar in early trade today at the Interbank Foreign Exchange on increased selling of American currency by exporters. Some support also came on reports that the Foreign Institutional Investors (FIIs) were the net buyers on Thursday, to the tune of Rs 48.60 crore as per provisional stock exchange data. At present, both Sensex and Nifty were trading above the crucial 26,550 and 8,050 levels respectively.  Apart from blue chips, broader indices too equally participated in the rally with both mid cap and small cap indices trading up by 1.37% and 1.08% respectively.

On the global front, the US markets ended higher as worries about the economy after the disappointing jobs report gave way to a robust rally in energy and materials stocks. The Asian markets were trading in green after the prospect of an imminent interest rate hike by the Federal Reserve faded on Friday's weaker-than-expected U.S. employment data.

Closer home, all the sectoral indices were trading in green led by Capital Goods, Auto, Consumer Durables and Bankex. The market breadth on BSE was positive in the ratio of 1401: 337 while 52 scrips remained unchanged. 

The BSE Sensex is currently trading at 26594.73, up by 373.78 points or 1.43% after trading in a range of 26375.31 and 26607.31. There were 26 stocks advancing against 4 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.37%, while Small cap index up by 1.08%.

The gaining sectoral indices on the BSE were Capital Goods up by 1.94%, Auto up by 1.72%, Consumer Durables up by 1.71%, Bankex up by 1.71% and Power up by 1.63%, while there were no losers.

The top gainers on the Sensex were Tata Motors up by 6.41%, HDFC up by 3.09%, Tata Steel up by 2.99%, ICICI Bank up by 2.77% and Larsen & Toubro up by 2.41%. On the flip side, Maruti Suzuki down by 1.70%, Dr. Reddys Lab down by 1.17%, ONGC down by 0.95% and Coal India down by 0.41% were the top losers.

Meanwhile, Industry body, the Associated Chambers of Commerce & Industry of India (ASSOCHAM) has approached the government for incentives like a cut in excise duty, teaser loans for housing and interest subvention for exporters, saying that sectors like real estate, power, steel, gems and jewellery are in a real crisis.  It has sought special dispensations for these industries for taking them out of stress.

The chamber pointed that the RBI did show a great courage and slashed the policy interest rates, which however, did not get transmitted to the borrowers, on earlier occasions. Between September 2014  and August , 2015 while the Repo rate got reduced by 75 basis points (before the latest 50 bps cut), the banks weighted average lending rate was marginally brought down to 11.93 per cent, just down 15 bps from 12.12 per cent. Certainly, the banks did not help the situation and some of these core employment generating industries slipped further into troubles because of lack of consumer demand, high interest costs and cheap imports.

The industry body has said that besides, the Reserve Bank of India , banks, states and the Central Government should move fast in taking the troubled power distribution companies (discoms) out of morass, or else they would become dead assets and big drags on the exchequer , causing big rise in the non-performing assets.

Assocham Secretary General D S Rawat has said that for creating additional demand, the government will have to chip in with rather bold measures and create extra elbowroom for select industries by extending short-term stimulus on construction materials like steel, cement, power equipment. He said that the RBI has correctly noticed, the average industry capacity utilization is 77 per cent. So, unless the C.U reaches at least 100 per cent, we cannot expect the investment cycle to revive even though interest rates have come down.

The CNX Nifty is currently trading at 8058.20, up by 107.30 points or 1.35% after trading in a range of 8005.10 and 8061.45. There were 45 stocks advancing against 5 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 6.20%, HDFC up by 3.38%, Tata Steel up by 2.87%, ICICI Bank up by 2.79% and Adani Ports &Special up by 2.64%. On the flip side, Maruti Suzuki down by 1.59%, Dr. Reddys Lab down by 1.22%, ONGC down by 1.01%, Coal India down by 0.56% and HCL Tech. down by 0.42% were the top losers.

Asian markets were trading in green, FTSE Bursa Malaysia KLCI increased 12.7 points or 0.78% to 1,641.50, KOSPI Index increased 20.55 points or 1.04% to 1,990.23, Straits Times increased 42.11 points or 1.51% to 2,835.26, Taiwan Weighted increased 52.92 points or 0.64% to 8,357.95, Jakarta Composite increased 101.18 points or 2.4% to 4,308.98, Nikkei 225 increased 272.97 points or 1.54% to 17,998.10 and Hang Seng increased 366.67 points or 1.7% to 21,872.76.