Sensex, Nifty holds early gains; HCL Tech leads rally on strong result

Indian equity markets hold early gains as investors buying stocks from rate sensitive sectors subsequent to the central bank's decision to cut repo rate by a bigger-than-expected 50 basis points. However a strong close in the US and European markets overnight amid slightly easing worries about the financial situation in Europe, and the firm trend seen in Asian markets also helped local bourses to hold gains. On sectoral front automobile, realty and bank stocks led the surge. Though shares from realty and banking sectors have retreated slightly from their earlier high levels, automobile stocks continue to trade firm on strong buying support. Consumer durables, metal, healthcare, capital goods and PSU stocks were also mostly trading higher. Oil, power and information technology stocks too are trading firm. FMCG stocks were a bit subdued. HCL Technologies, led the rally on posting a net profit Rs 400.15 crore for the quarter ended March 31, 2012 as compared to Rs 331.81 crore for the quarter ended March 31, 2011.

Meanwhile Indian consumer prices rose 9.47% in the year to March, faster than the previous month's reading of 8.83%. The consumer price-based food inflation accelerated to 8.22% in March from 6.62% in February, which indicates the yawning current account gap.

On global front global front Asian markets continued trading strong. Back home, the market breadth favoring the positive trend; there were 1,695 shares on the gaining side against 786 shares on the losing side while 135 shares remained unchanged.

The BSE Sensex is currently trading at 17,469.65, up by 111.71 points or 0.64%. The index has touched a high and low of 17,522.80 and 17,446.62 respectively. There were 26 stocks advancing against only 4 declines on the index.

The broader indices continue to outperform benchmarks; the BSE Mid cap and Small cap indices surged by 1.03% and 1.03% respectively.

The top gaining sectoral indices on the BSE were, CD up by 1.97%, Auto up by 1.32%, Power up by 1.29%, Oil & Gas up by 1.27% and Metal up by 1.23%. While, Fast Moving Consumer goods down by 0.57% was the lone loser on the index.

The top gainers on the Sensex were Bajaj Auto up by 3.02%, Hindalco up by 2.46%, Sun Pharma up by 1.92%, Tata Steel up by 1.83% and Tata Motors up by 1.71%. While, ITC down by 1.44%, Coal India down by 0.61%, Infosys down by 0.61% and HUL down by 0.34% were top losers on the Sensex.

Meanwhile, the International Monetary Fund (IMF) in its World Economic Outlook (WEO) has marginally reduced India’s growth rate for 2012 to 6.9% from the earlier 7%. The reduction has come in the wake of reducing global and domestic demand. It has pegged India's growth during the 2013 calendar year at 7.3% and for 2011 it was 7.2%.

On the other hand, as per the estimates of India's Central Statistical Organization (CSO), the growth rate during the financial year 2011-12 slipped to a 3-year low of 6.9%. While the government has projected a growth rate of 7.6% for the current financial year, which began on April 1, 2012, the Reserve Bank of India expects it to be 7.3%.

The global economy too is expected to witness a deceleration to 3.5% from 3.9% in 2011. As per the report, growth in advanced companies has improved even though it is slow. However, things still remain fragile in the Euro zone areas.

With regards to India the report states that structural bottlenecks like power, roads, railways etc. should be removed to strengthen the economy. Also governance and public service delivery should be enhanced to boost growth. The report also emphasized that government should strengthen policies to solidify the weak recovery and contain potential risks that can weigh on consumer and investor confidence.

Referring to the declining growth rate in India, the WEO said domestic factors have also contributed to the slowdown, as a deterioration in business sentiment weakened investment and policy tightening raised borrowing costs.  IMF believes that easing of monetary policy will remain constrained in countries like India where inflationary pressure exist. Also it expects the government to make fiscal consolidation a priority to meet future challenges.

After a gap of 3 years, India's Reserve Bank lowered the interest rates by 50 basis points thereby making credit cheaper. India Inc has been demanding easing of interest rates in view of slowing investments and slumping industrial output.

The S&P CNX Nifty is currently trading at 5,329.50, higher by 39.80 points or 0.75%. The index has touched a high and low of 5,342.00 and 5,320.70 respectively. There were 43 stocks advancing against 7 declines on the index.

The top gainers of the Nifty were HCL Tech up by 5.93%, Bajaj Auto up by 3.19%, Siemens up by 2.86%, ACC up by 2.57%, Ambuja Cement up by 2.54%.

On the flip side, ITC down by 4.46%, Infosys down by 0.65%, Coal India down by 0.53%, RCom down by 0.51% and HUL down by 0.28% remained the losers on the index.

All the Asian equity indices were trading in the green; Shanghai Composite gained by 1.78%, Hang Seng surged 1.19%, Jakarta Composite inched up by 0.10%, KLSE Composite added 0.31% to 1,601.11, Nikkei 225 spurted by 2.14%, Straits Times rose 0.51%, Seoul Composite expanded by 0.97% and Taiwan Weighted was up by 0.25%.