Sentiments turn bullish in morning trade on positive global cues

Post sharp sell-off in last session, the domestic benchmarks have made gap-up opening as sentiments turned bullish on the back of higher global markets. The world markets rallied after the Fed Chairman suggested further monetary easing in the US to drive growth and employment. Short-term interest rates are near zero in the US and rates are unlikely to change in the near future, Ben Bernanke indicated. The Dow Jones index jumped over 160 points overnight while, all the Asian counters were trading jubilantly at this point of time. Back home, BSE’s -- Sensex -- and NSE’s -- Nifty -- recaptured their crucial, 17,100 and 5,200 mark respectively, supported by most of the index heavyweights along with broader indices. On the sectoral front, realty witnessed the maximum gain in trade followed by fast moving consumer goods and consumer durables while, oil and gas and banking remained the only losers on the BSE sectoral space. Meanwhile, Finance Minister Pranab Mukherjee’s clarification that there was no 'vindictive intention' behind the move to retrospectively amend the income tax act too supported the sentiments. The broader indices too were trading in the green and the market breadth on the BSE was positive; there were 1,000 shares on the gaining side against 655 shares on the losing side while 92 shares remained unchanged.

The BSE Sensex opened at 17,209.13; about 157 points higher compared to its previous closing of 17,052.78, and has touched a high and a low of 17,230.34 and 17,115.83 respectively.

The index is currently trading at 17,124.33, up by 71.55 points or 0.42%. There were 23 stocks advancing against 7 declines on the index.

The overall market breadth has made a strong start with 57.24% stocks advancing against 37.49% declines. The broader indices too were trading in the green; the BSE Mid cap and Small cap indices surged 0.18% and 0.32% respectively.

The top gaining sectoral indices on the BSE were, Realty up by 1.16%, FMCG up by 0.99%, CD up by 0.88%, Metal up by 0.70% and HC up by 0.68%. While, Oil and Gas down by 0.18% and Bankex down by 0.02% remained the only losers on the index.

The top gainers on the Sensex were HUL up by 2.72%, DLF up by 1.80%, Cipla up by 1.73%, Sterlite Industries up by 1.71% and HDFC up by 1.58%.

On the flip side, Maruti Suzuki was down by 2.09%, Coal India was down by 1.30%, BHEL was down by 1.26%, ICICI Bank was down by 0.90% and RIL was down by 0.23% were the top losers on the Sensex.

Meanwhile, the recent hike in excise duty and service tax is expected to raise inflation by 25 to 50 basis points. However, Chief Economic Adviser, Kaushik Basu is of the view that a hike in tax rates will actually help reduce inflation in the long run by bringing down the fiscal deficit.

The Finance Minister, in the budget had  hiked the excise duty and service tax rates from 10% to 12% given the improvement in the global economic scenario. He however did not go all the way and increased it to 14% levels as he felt that it could curb domestic demand which has been the driver of growth in India. The increase was also necessitated by the fact that the fiscal deficit had risen to 5.9%, much higher than the targeted 4.6% for the fiscal.

As per Basu, the tax hike could in fact help lower inflation levels in the long run by controlling the fiscal deficit. Inflation, as measured by the Wholesale Price Index (WPI), was 6.95% in February. It remained close to double-digit throughout 2011 before moderating to 8.3% in December. Average inflation for FY ’12 is expected to be around 8% and will be around 6.5% in the next.

The S&P CNX Nifty opened at 5,242.95; about 58 points higher compared to its previous closing of 5,184.25, and has touched a high and a low of 5,246.05 and 5,205.55 respectively.

The index is currently trading at 5,207.45, higher by 23.20 points or 0.45%. There were 41 stocks advancing against 9 declines on the index.

The top gainers of the Nifty were HUL up by 2.64%, DLF up by 2.38%, Sterlite Industries up by 1.76%, Ambuja Cement up by 1.76% and Cipla up by 1.75%.

On the flip side, Maruti Suzuki down by 1.88%, ICICI Bank down by 1.13%, Coal India down by 0.96%, RIL down by 0.42% and BHEL down by 0.35%, were the major losers on the index.

All the Asian equity indices were trading in the green; Shanghai Composite was up 4.69 points or 0.20% to 2,355.29, Hang Seng was up 282.36 points or 1.37% to 20,951.22, Jakarta Composite was up 23.80 points or 0.59% to 4,055.51, KLSE Composite was up 5.05 points or 0.32% to 1,588.03, Nikkei 225 was up 150.45 points or 1.50% to 10,168.69, Straits Times was up 25.08 points or 0.84% to 2,999.58, Seoul Composite was up 12.68 points or 0.63% to 2,031.87 and Taiwan Weighted was up 31.62 points or 0.40% to 7,999.24.