Markets trade higher in early deals; Nifty reclaims 7450 mark

The Indian equity markets made negative start but bounced back in the positive territory and are now trading with gains of over half a percent on sustained buying by fund and retail investors in early deals on Friday. Meanwhile, the session also remained upbeat for broader indices, which were trading with gains in the range of 0.30-0.50%. Sentiment got boost with Planning Commission's former deputy Chairman Montek Singh Ahluwalia stating that Indian economy, which expanded at 7.7 percent between 2003 and 2014 has the potential to clock 8 percent growth in the near future. Further, appreciation in Indian rupee against dollar also supported the markets. The rupee rose by 25 paise to 67.98 against the US dollar in early trade at the Interbank Foreign Exchange after durable goods data in US suggested weakening growth in the country, indicating US Federal Reserve will adopt a slower pace of hiking interest rates going ahead. However, foreign portfolio investors (FPIs) sold shares worth a net Rs 961.82 crore on January 28, 2016, as per provisional data released by the stock exchanges. On the sectoral front, most of the indices on BSE were trading in green, with prominent gainers being the stocks from Consumer Durables, Metal, Oil & Gas, FMCG and Power counters. On the flip side, stocks from Bankex counter were the only loser of the session.

In the scrip specific development, ICICI Bank dropped 7% on the BSE, after the bank disappointed on the asset quality front with the gross non-performing assets (NPA) ratio rose by 95 basis points (bp) quarter-on-quarter (qoq) to 4.72%, while the net NPA ratio rose by 63bps qoq to 2.28% in December 2015 quarter (Q3FY16).

On the global front, the US markets ended higher as crude futures surged to a three-week high and the major indices received a boost from Facebook Inc and Under Armour Inc, after the two companies reported stellar earnings. Asian markets were trading mixed despite the positive lead overnight from Wall Street and the gain in crude oil prices, as investors digested mixed regional economic data and corporate earnings.

Back home, the NSE Nifty and BSE Sensex were trading above the psychological 7,450 and 24,550 levels respectively The market breadth on BSE was positive in the ratio of 948: 649, while 84 scrips remained unchanged.

The BSE Sensex is currently trading at 24592.19, up by 122.62 points or 0.50% after trading in a range of 24340.06 and 24637.63. There were 23 stocks advancing against 7 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.31%, while Small cap index gained 0.35%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.82%, Metal up by 1.74%, Oil & Gas up by 1.32%, FMCG up by 1.00% and Power up by 0.98%, while Bankex down by 1.07% was the losing indices on BSE.

The top gainers on the Sensex were Sun Pharma Inds. up by 2.92%, Coal India up by 2.88%, Mahindra & Mahindra up by 2.39%, ONGC up by 2.27% and GAIL India up by 2.12%. On the flip side, ICICI Bank down by 3.97%, Maruti Suzuki down by 2.92%, Axis Bank down by 2.24%, SBI down by 1.19% and Tata Motors down by 0.42% were the top losers.

Meanwhile, after many economists and academicians, Reserve Bank of India (RBI) Governor Raghuram Rajan too has raised doubts over the new GDP growth rate methodology. He said that there is a need for better computation of numbers so as to avoid overlaps and capture the net gains to the economy. He added that 'There are problems with the way we count GDP which is why we need to be careful sometimes just talking about growth.' Dr. Rajan said that there were many suggestions from various quarters on the ways to calculate GDP in a better way and said such suggestions should be taken seriously.

Rajan further called for improving the method of calculating the country's gross domestic product (GDP) as the current practice does not adequately reflect value addition. He said there is a need to calculate data in such a way as to avoid an overlap and to capture the net value addition to the economy.

Rajan addressing the 13th convocation at the RBI-promoted Indira Gandhi Institute of Development Research said that “We should be careful about how we count. Obviously lots of people have thought how to improve our counting of GDP and going forward that is something that we will have to think about.”

A year back, the government changed the methodology for computation of GDP by moving from the factor or basic cost (which took into account cost of products received by manufacturers) to market prices (what is paid by consumers). The government had also changed the base year for GDP calculation from 2004-05 to 2011-12.

The CNX Nifty is currently trading at 7475.60, up by 50.95 points or 0.69% after trading in a range of 7402.80 and 7479.45. There were 39 stocks advancing against 11 stocks declining on the index.

The top gainers on Nifty were Vedanta up by 5.79%, Cairn India up by 4.08%, Sun Pharma Inds. up by 3.08%,  Coal India up by 2.56% and ONGC up by 2.39%. On the flip side, ICICI Bank down by 3.75%, Maruti Suzuki down by 3.27%, Bank Of Baroda down by 3.19%, Axis Bank down by 1.94% and Yes Bank down by 1.68% were the top losers.

Asian markets were trading mixed, FTSE Bursa Malaysia KLCI increased 14.28 points or 0.87% to 1,648.81, Shanghai Composite increased 53.17 points or 2% to 2,708.83, Taiwan Weighted increased 158.99 points or 2.01% to 8,064.09 and Hang Seng increased 223.84 points or 1.17% to 19,419.67.

On the flip side, Nikkei 225 decreased 88.36 points or 0.52% to 16,953.09, Jakarta Composite decreased 19.73 points or 0.43% to 4,583.10 and KOSPI Index decreased 1.89 points or 0.1% to 1,905.05.