Markets trade with marginal gains in early deals

With a positive opening Indian equity markets have extended their Friday’s rally and are now trading with gains of 0.15 per cent in early deals on Monday, on the back of buying activities by market-participants. Meanwhile, the broader markets were outperforming the benchmark indices. The BSE mid-cap index surged 0.63 per cent and the small-cap index jumped 0.75 per cent. The sentiment got boost on report that foreign portfolio investors (FPIs) bought shares worth a net Rs 571.70 crore on January 29, 2016, as per provisional data released by the stock exchanges. Besides, some support also came in with the statement of NITI Aayog Vice-Chairman Arvind Panagariya that  India is expected to get on to a double-digit growth in the next 2-3 years if reform process continues. However, upside remained capped with the statement of Standard & Poor's Ratings Services that India will face challenges in sticking to the fiscal consolidation roadmap as the expected revenues may not be fully realised and subsidy cuts may be delayed. Some cautiousness also prevailed in the markets ahead of RBI’s rate decision tomorrow. On the sectoral front, traders were seen piling up position in Capital Goods, IT, TECK, Realty and FMCG, while selling was witnessed in Oil & Gas, Bankex, Metal and PSU.

In the scrip specific development, Larsen & Toubro was trading higher after the company reported robust order inflows during the third quarter of the current financial year. V-Guard Industries surged 10% on the BSE after the company reported more than double net profit at Rs 21.48 crore for the third quarter ended December 31, 2015 (Q3FY16).

On the global front, the US markets ended higher on Friday, the last trading day of January, after the Bank of Japan unexpectedly adopted a negative interest rate policy for the first time. Encouraging earnings reports, a better-than-expected Chicago PMI report and some stabilization in oil prices also helped push equities higher. Asian markets were trading mostly in red, after Chinese officials reported that the manufacturing purchasing managers index fell to 49.4 in January, marking the sixth-straight month of contraction.

Back home, the NSE Nifty and BSE Sensex were trading above the psychological 7,550 and 24,900 levels respectively The market breadth on BSE was positive in the ratio of 1145: 436, while 52 scrips remained unchanged.

The BSE Sensex is currently trading at 24908.07, up by 37.38 points or 0.15% after trading in a range of 24848.62 and 25002.32. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.63%, while Small cap index gained 0.75%.

The top gaining sectoral indices on the BSE were Capital Goods up by 2.02%, IT up by 0.91%, TECK up by 0.82%, Realty up by 0.55% and FMCG up by 0.42%, while Oil & Gas down by 0.57%, Bankex down by 0.35%, Metal down by 0.31% and PSU down by 0.27% were the losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 3.68%, Lupin up by 2.47%, Bharti Airtel up by 1.85%, Cipla up by 1.72% and Wipro up by 1.39%. On the flip side, ICICI Bank down by 2.56%, Hero MotoCorp down by 1.40%, GAIL India down by 1.33%, Hindustan Unilever down by 0.91% and Dr. Reddys Lab down by 0.91% were the top losers.

Meanwhile, after Reserve Bank of India (RBI) Governor Raghuram Rajan cautioned against the fiscal profligacy to spur growth, global rating agency, Standard & Poor's Ratings Services has said that India will face challenges in sticking to the fiscal consolidation roadmap as the expected revenues may not be fully realised and subsidy cuts may be delayed. Rajan had said that consolidated fiscal deficit of the Centre and states rose to 7.2 percent in 2015 from 7 percent in the previous year.

S&P said that India's fiscal challenges reflect both revenue under performance and constraints on expenditure (mainly related to subsidies for food, energy, and fertilisers). In the medium term, S&P expects improved fiscal performance primarily from revenue-side improvements, brought about by the planned introduction of the Goods and Services Tax (GST) and administrative efforts to expand the tax base.

However, sometimes back S&P had clarified that India's sovereign ratings will not be impacted adversely if the government decides to step up public spending to accelerate economic growth and defer fiscal deficit targets.

Earlier Finance Minister Arun Jaitley had said that there are pros and cons of pushing growth by higher public spending and he would take a view on the issue at the time of Budget after in a pre-budget meeting with finance minister, economists pitched for relaxation in fiscal consolidation targets to step up public spending on infrastructure.

The government had last year deviated from the fiscal consolidation path, postponing reduction in fiscal deficit target by a year. The original target was to bring down fiscal deficit to 3.6 percent of the GDP in 2015-16 but it has been postponed by a year. Now, government is targeting 3.9 percent in the current fiscal.

The CNX Nifty is currently trading at 7574.70, up by 11.15 points or 0.15% after trading in a range of 7556.80 and 7592.35. There were 31 stocks advancing against 19 stocks declining on the index.

The top gainers on Nifty were Larsen & Toubro up by 3.83%, Grasim Industries up by 3.78%, Lupin up by 2.48%, HCL Tech. up by 2.17% and Cipla up by 1.79%. On the flip side, ICICI Bank down by 2.65%, GAIL India down by 1.80%, Zee Entertainment down by 1.57%, Hero MotoCorp down by 1.51% and Vedanta down by 1.18% were the top losers.

Asian markets were trading mostly in red, Hang Seng decreased 186.16 points or 0.95% to 19,496.95, Shanghai Composite decreased 48.73 points or 1.78% to 2,688.87, Taiwan Weighted decreased 29.42 points or 0.36% to 8,115.79 and Jakarta Composite decreased 15.83 points or 0.34% to 4,599.33.

On the flip side, KOSPI Index increased 3.48 points or 0.18% to 1,915.54, FTSE Bursa Malaysia KLCI increased 33.27 points or 2.04% to 1,667.80 and Nikkei 225 increased 315.23 points or 1.8% to 17,833.53.