Markets extend Friday’s rally with a positive opening

Extending previous session’s rally, Indian equity benchmarks have made a gap-up opening and are trading with traction in the early deals on Monday, with frontline gauges recapturing their crucial 7,450 (Nifty) and 24,600 (Sensex) levels supported by firm global cues after rebound in crude oil prices. Meanwhile, the session was proving jubilant for broader indices too, which were trading with gains in the range of 1.00-1.50%. Traders were getting support with global rating agency Moody's statement that India's credit profile will be unaffected by a small slippage in fiscal deficit target, as it expects the government to continue fiscal consolidation and target lower deficits every year despite headwinds from global slowdown. Besides, appreciation in Indian rupee against dollar too supported sentiments. The rupee rose by 10 paise to 67.53 against the dollar at the Interbank Foreign Exchange in early trade today on increased selling of the US currency by banks and exporters. However, upside remained capped as investors are keenly awaiting signals from the US Federal Reserve at its two-day FOMC meet which begins on January 26. Markets will be closed on Tuesday, January 26, 2016 on account of Republic Day holiday.

In the scrip specific development, SpiceJet surged around 9% on the BSE after the company reported net profit at Rs 238 crore for the quarter ended December 2015 (Q3FY16) against loss of Rs 275 crore in a year ago quarter. Force Motors rallied 9% on the BSE after the company reported nearly three-fold jump in net profit at Rs 27.44 crore for the third quarter ended December 2015 (Q3FY16) on back of strong operational income.

On the global front, US markets ended higher on Friday to wrap up its first positive week of 2016, as a cold snap in the United States and Europe sent oil prices sharply higher. Asian markets were trading mostly in green, extending the rally from Friday's session, with the gains on Wall Street and European markets as well as the surge in crude oil prices boosting risk appetite.

Back home, all the sectoral indices on the BSE were trading in fine fettle led by Capital Goods, Metal, Realty, Consumer Durables and Auto. The market breadth on BSE was positive in the ratio of 1422: 218, while 55 scrips remained unchanged.

The BSE Sensex is currently trading at 24638.52, up by 202.86 points or 0.83% after trading in a range of 24521.59 and 24639.48. 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 1.01%, while Small cap index was up by 1.46%.

The top gaining sectoral indices on the BSE were Capital Goods up by 1.25%, Metal up by 1.16%, Realty up by 1.09%, Consumer Durables up by 1.08% and Auto up by 1.04%, while there were no losers. 

The top gainers on the Sensex were Tata Steel up by 2.65%, BHEL up by 2.34%, SBI up by 2.03%, Adani Ports &Special up by 1.49% and ONGC up by 1.46%. On the flip side, Bharti Airtel down by 1.32%, Wipro down by 0.74%, Hero MotoCorp down by 0.72% and Axis Bank down by 0.61% were the top losers.

Meanwhile, Global rating agency Moody's has said that India's credit profile will be unaffected by a small slippage in fiscal deficit target as it expects the government to continue fiscal consolidation and target lower deficits every year despite headwinds from global slowdown.

The fiscal consolidation trend that has been underway for a few years now, Moody’s said “will continue despite headwinds from global growth”. Moody's Investors Service Associate MD (Sovereign Risk Group) Atsi Sheth further said that a rise in corporate profits and bounce back in government revenues hold key to India meeting 3.5 per cent fiscal deficit target in 2016-17.  He said that “We see fiscal consolidation as a process, not an event determined on the day of the budget announcement. While we are not focused on a shift in the fiscal deficit target by a few basis points, we do anticipate that the government will target lower fiscal deficits every year than in the previous year.”

As per the fiscal consolidation path laid out by the government, deficit which was 4 per cent last fiscal is to be brought down to 3.9 per cent of GDP in current fiscal and further to 3.5 per cent in 2016-17.

Moody's Investors Service has said that a poll that Moody’s and its Indian affiliate, ICRA Limited, conducted in Mumbai in mid-January 2016 shows that market concerns over India's (Baa3 positive) economic exposure to external risks have risen over the past seven months.

Last year Moody’s upgraded India’s outlook to ‘positive’ from ‘stable’, but retained the credit rating at ‘Baa3’, just a notch above the junk grade. Moody’s had said it would consider a rating upgrade after 12-18 months depending upon improvement in macroeconomic parameters.

The CNX Nifty is currently trading at 7479.15, up by 56.70 points or 0.76% after trading in a range of 7447.85 and 7483.15. There were 42 stocks advancing against 7 stocks declining on the index.

The top gainers on Nifty were Vedanta up by 2.78%, Cairn India up by 2.61%, Tata Steel up by 2.50%, BHEL up by 2.27% and SBI up by 1.92%. On the flip side, Bharti Airtel down by 1.19%, ITC down by 0.91%, Hero MotoCorp down by 0.83%, Axis Bank down by 0.66% and Wipro down by 0.55% were the top losers.

Asian markets were trading in green, KOSPI Index increased 18.24 points or 0.97% to 1,897.67, Shanghai Composite increased 30.02 points or 1.03% to 2,946.58, Jakarta Composite increased 43.21 points or 0.97% to 4,499.96, Taiwan Weighted increased 138.36 points or 1.78% to 7,894.54, Nikkei 225 increased 235.87 points or 1.39% to 17,194.40 and Hang Seng increased 375.32 points or 1.97% to 19,455.83.