Sensex sustains strong momentum in noon trades; Metal, Capital Goods rally

Stock markets in India continued to trade with hefty gains in Friday afternoon session as investors’ appetite for riskier asset classes like equities got a boost from reports that debt laden Greece moved a step closer towards a crucial debt-swap in order to avert an onerous debt debacle. Though some profit booking around the psychological 17,500 (Sensex) and 5,350 (Nifty) levels brought the key indices off the day’s highs, however the gauges have recovered in early afternoon trades after IMF head Christine Lagarde voiced her optimism over the Greek debt deal stating the risk of crisis in the Euro-zone has been removed, with the Greek rescue efforts seeing progress. Besides, the sanguinity in the global markets too buttressed investors’ mood in the session. Markets across Asian region along with European stock futures moved higher for second straight day as 85.8 percent of Greece's private creditors accepted its bond swap offer, helping the debt laden nation to avert an onerous debt debacle. Encouraging global economic report like the sharper than expected moderation in Chinese inflation along with higher than anticipated increase in German industrial output, buoyed investors’ morale. On the domestic front, across the board buying was evident on the BSE sectoral space with the Metal counter leading the space after rallying over 3.5% followed by the Capital Goods pocket which jumped over 3%. Though there appeared no sectoral laggard, some individual names like M&M and HUL slipped lower in the session.

Moreover, the broader markets too traded on an optimistic note with strong gains of around one and half a percent. The bourses surged on good volumes while market breadth on BSE was dominantly in favor of advances in the ratio of 1763:784 while 100 scrips remained unchanged.

The BSE Sensex is currently trading at 17,450.68 up by 305.16 points or 1.78% after trading as high as 17,508.45 and as low as 17,325.82. There were 25 stocks advancing against 5 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap index surged 1.69% and Small cap soared 1.42%.

On the BSE sectoral space, Metal up 3.58%, Capital Goods up 3.11%, Bankex up 2.92%, Realty up 2.70% and Consumer Durables 2.28% were the major gainers, while there were no losers in the space.

Jindal Steel up 5.03%, ICICI Bank up 4.52%, Tata Steel up 4.43%, L&T up 4.26% and Sterlite up 4.02% were the major gainers on the Sensex, while M&M down 1.49%, HUL down 0.61%, Wipro down 0.48%, ITC down 0.14% and Infosys down 0.02% were the only losers in the index.

Meanwhile, as per a new paper published by the International Monetary Fund (IMF) there is considerable room for improving the business environment in India. The paper observes that cost of doing business in India is high given the terms of financial access and the state of infrastructure. Attempts towards improving these could boost the business environment of the country.

The paper has noted that corporate investments have slumped to 10% of the national economy from 14% prior, due to the global financial crisis. Though this can be largely explained by the global economic scenario, it does not fully account for the recent weak performance of the corporate sector. Hence an improvement in the domestic environment by way of controlling inflation, improving financial access by reforming regulation and bettering institutions along with developing infrastructure can stimulate business investment.

Last year, India was placed at the 132nd position among 183 countries in terms of ease of doing business. Even though the ranking was better than in 2010 (139th spot), it reflected relatively high costs of doing business as per Kiichi Tokuoka, the author of the paper.

The S&P CNX Nifty is currently trading at 5,323.15, higher by 102.70 points or 1.97% after trading as high as 5,332.35 and as low as 5,291.60. There were 44 stocks advancing against 6 declines on the index.

The top gainers on the Nifty were IDFC up 5.27%, Jindal Steel up 5.16%, ICICI Bank up 5.06%, Cairn up 5.04% and Tata Steel up 5.01%.

M&M down 1.70%, R Power down 1.58%, HUL down 0.60%, Wipro down 0.44% and ITC down 0.14% were the major losers on the index.

In the Asian space, Shanghai Composite climbed 0.71%, Hang Seng surged 0.92%, Jakarta Composite advanced 0.55%, KLSE Composite inched up 0.03%, Nikkei 225 soared 1.65%, Straits Times gained 0.28%, Seoul Composite amassed 0.88% and Taiwan Weighted added 0.39%.