Indian shares continue trading firm on RBI’s surprising move

Indian equity markets pared some early gains but still trading strong in the positive territory on the back of firm trend in Asian markets and bargain hunting after recent losses. Meanwhile, Reserve Bank of India's surprise move to buy Rs 10,000 crore worth of bonds from the market to ease the liquidity crunch improved investor sentiment. Strong infrastructure output data for February and a continuing decline in the prices of oil on talk from consumer nations about a possible strategic oil reserves release also helped local markets to get strength but mixed Asian cues, weighed down by weaker-than-expected data on US jobless claims and Japanese industrial production limited the gains. On the sectoral front all were trading in green. Realty, metal and bank stocks, among the severely battered ones in recent weeks, were the top gainers today.  However, software services provider Tata Consultancy Services rose 1.5% after AmBank, Malaysia selected company's universal financial services platform.  On the global front, Asian markets were trading mixed. Back home, the market breadth favoring the positive trend; there were 1,709 shares on the gaining side against 695 shares on the losing side while 89 shares remained unchanged.

The BSE Sensex is currently trading at 17,249.08, up by 190.47 points or 1.12%. The index has touched a high and a low of 17,307.59 and 17,105.22 respectively. There were 26 stocks advancing against just 4 declines on the index.

The broader indices too captured gains in line with benchmarks; the BSE Mid cap and Small cap indices surged 1.34% and 1.29% respectively.

The top gaining sectoral indices on the BSE were, Realty up by 2.16%, Metal up by 1.90%, PSU up by 1.66%, Bankex up by 1.60% and Oil & Gas up by 1.40%. There was no loser on the BSE sectoral space.

The top gainers on the Sensex were Hindalco Industries up by 3.37%, Gail India up by 2.80%, Tata Steel up by 2.42%, Tata Power up by 2.24% and ICICI Bank up by 2.06%. While, Sun Pharma down by 0.61%, Jindal Steel down by 0.50%, Wipro down by 0.38% and HUL down by 0.10% were the top losers on the Sensex.

Meanwhile, a significant outcome of the fourth BRICS summit that concluded in New Delhi on March 29, has been the agreement on extending credit facility in local currencies. Leaders of these five rapidly emerging economies of Brazil, Russia, India, China and South Africa have also agreed to examine in greater detail a proposal to set up a South-South Development Bank, funded and managed by the BRICS and other developing countries.

In a move to provide substance to the agreements, the government-owned banks from all the five countries, have agreed to extend credit to each other in their local currencies, as well as allow for multilateral letters of credit. The move is expected to help boost intra-regional trade from $212 billion to the target of $500 billion by 2015. It will also help reduce the demand for fully convertible currencies for trade transactions among the BRICS countries.

The leaders have called for greater co-operation amongst the countries to increase capacity and create a favourable business environment, in terms of greater market access in each other’s countries. The Prime Minister, Manmohan Singh has highlighted the need to prioritize easier business visa norms and remove barriers to trade and investment flows by avoiding protectionist measures.

The BRICS countries have also expressed concern over the slow pace of quota and governance reforms in the International Monetary Fund (IMF). The leaders were of the opinion that the process of selecting candidates for the top posts in the World Bank or the IMF should be open and merit-based. Moreover, the nature of the Bank must shift from an institution that essentially mediates North-South cooperation to an institution that promotes equal partnership with all countries. 

The leaders also felt that the volatility in commodity prices posed risks, especially in food and energy. They have called for improved regulation of the derivatives market to avoid destabilizing impacts on food and energy supplies. The leaders also agreed to make the UN Security Council more effective, efficient and representative. They also felt that the situation in Iran should be resolved through dialogue and should not be allowed to escalate into a full-fledged conflict.

The acronym BRICS has come to become a symbol of the shift in global economic power away from the developed G7 economies towards the developing world. Currently the five nations account for nearly 28% of the global economy. The BRICS nations are absolutely diverse in their economies and political system. The coming together has been motivated by the need to increase their trade links and decrease dependency on Europe and the United States. It is estimated that BRIC economies will overtake G7 economies by 2027.

The S&P CNX Nifty is currently trading at 5,245.35, higher by 66.50 points or 1.28%. The index has touched a high and low of 5,261.45 and 5,203.65 respectively. There were 45 stocks advancing against just 5 declines on the index.

The top gainers of the Nifty were IDFC up by 4.30%, Tata Power up by 3.39%, JP Associates up by 3.37%, Hindalco up by 3.37% and Sesa Goa up by 3.34%.

On the flip side, Sun Pharma down by 0.85%, Wipro down by 0.62%, Cairn India down by 0.45%, Jindal Steel down by 0.12% and HUL down by 0.11% were the major losers on the index.

Asian markets were trading mixed; Jakarta Composite rose 0.04%, KLSE Composite added 0.42%, Straits Times accumulated 0.30% and Taiwan crept higher by 0.77%.

On the flip side, Shanghai Composite down 0.05%, Hang Seng down by 0.59%, Nikkei 225 down by 0.31% and Seoul Composite down by 0.03% were the losers in the Asian pack.