Benchmarks garner marginal gain; cautious investors eying Union Budget

The key benchmarks have made a flat start as market-men applied cautious approach in the early trade ahead of Budget but, soon pocketed some gains on selective buying by funds and retail investors on expectations of a market-friendly Union Budget for the year 2012-13 to be announced later in the day, which influenced the trading sentiment. On the global front, the US markets surged overnight with the S&P 500 finishing above 1,400 mark for the first time since June 2008. However, the Asian markets were trading mostly in the red. Though, the Chinese market was trading higher the Japanese market has lost stem on strengthening yen despite a better outlook of US economy. Back home, the investors remained on the sideline and all eyes are on Union Budget 2012-13. On the sectoral front, realty witnessed the maximum gain in trade followed by power and capital goods while, consumer durables, auto and oil & gas remained the only losers on the BSE sectoral space. Meanwhile, Infra stocks were the big gainers expecting higher allocation to the government's flagship programs like Bharat Nirman and JNNURM. The Budget may also address issues of land acquisition and environment clearances. The broader indices were outperforming benchmarks. The market breadth on the BSE was positive; there were 1,051 shares on the gaining side against 562 shares on the losing side while 49 shares remained unchanged.

The BSE Sensex opened at 17,656.81; about 19 points lower compared to its previous closing of 17,675.85, and has touched a high of 17,764.88 while low remain its opening.

The index is currently trading at 17,724.08, up by 48.23 points or 0.27%. There were 22 stocks advancing against 8 declines on the index.

The overall market breadth has made a strong start with 63.24% stocks advancing against 33.81% declines. The broader indices were outperforming benchmarks; the BSE Mid cap and Small cap indices surged 0.56% and 0.41% respectively.

The top gaining sectoral indices on the BSE were, Realty up by 1.15%, Power up by 1.12%, CG up by 0.80%, IT up by 0.60% and Bankex up by 0.57%. Meanwhile, CD down by 1.60%, Auto down by 0.93% and Oil and Gas down by 0.35% remained the only losers on the index.

The top gainers on the Sensex were BHEL up by 2.19%, DLF up by 1.56%, Wipro up by 1.16%, HDFC up by 1.12% and HDFC Bank up by 0.99%.

On the flip side, Maruti Suzuki was down by 1.92%, Tata Motors was down by 1.80%, Hero MotoCorp was down by 1.23%, RIL was down by 0.92% and Bajaj Auto was down by 0.87% were the top losers on the Sensex.

Meanwhile, the Reserve Bank of India (RBI) has kept its policy rates unchanged in its mid-quarter monetary policy review. Even though the apex bank had recently slashed the CRR rate to ease liquidity, it has kept the interest rates unchanged due to the still uncomfortable levels of inflation. Going forward, the focus shall remain on growth, but the timing and magnitude of rate cuts shall be determined by the levels of inflation, as per the apex bank.

As per the RBI, on the domestic front, while most indicators suggest that the economy is slowing down, the performance in Q4 of 2011-12 is expected to be better than that in Q3. Inflation has broadly evolved along the projected trajectory so far. However, upside risks to inflation have increased from the recent surge in crude oil prices, fiscal slippage and rupee depreciation. Besides, there continues to be significant suppressed inflation in fuel, fertilizer and power as administered prices do not fully reflect the costs of production. While corporate sales growth in Q3 of 2011-12 was robust, margins moderated, reflecting increasing difficulty in passing on rising input prices.

The Central Bank has given a slightly positive outlook on the global economy. It has stated that the recent macroeconomic data for the US economy has shown some positive signs, in particular for the labour market. Immediate financial market pressures in the Euro area have also eased due to the European Central Bank (ECB) injecting liquidity of more than 1 trillion euros. However since the emerging and developing economies (EDEs) are showing signs a slowdown, the global growth for 2012 and 2013 is expected to be lower than earlier anticipated. Oil prices continue to remain a concern.

The S&P CNX Nifty opened at 5,380.35; about 58 points higher compared to its previous closing of 5,380.50, and has touched a high and a low of 5,410.65 and 5,379.50 respectively.

The index is currently trading at 5,398.25, higher by 17.75 points or 0.33%. There were 38 stocks advancing against 12 declines on the index.

The top gainers of the Nifty were BHEL up by 2.06%, RInfra up by 1.97%, DLF up by 1.66%, HDFC up by 1.32% and IDFC up by 1.24%.

On the flip side, Tata Motors down by 2.10%, Maruti Suzuki down by 1.78%, Hero Motocorp down by 1.76%, RIL down by 0.83% and Bajaj Auto down by 0.75%, were the major losers on the index.

Most of the Asian equity indices were trading in the red; Hang Seng was down 51.59 points or 0.24% to 21,301.94, Jakarta Composite was down 1.87 points or 0.05% to 4,038.11, Nikkei 225 was down 2.65 points or 0.03% to 10,120.63, Straits Times was down 2.55 points or 0.08% to 3,023.29, Seoul Composite was down 5.31 points or 0.26% to 2,038.45 and Taiwan Weighted was down by 10.89 points or 0.13% to 8,110.73.

On the flip side, Shanghai Composite was up 8.38 points or 0.35% to 2,382.15 and KLSE Composite was up 0.95 points or 0.06% to 1,580.33.