Benchmarks gain strength to trade in green

Indian equities added gains to continue its firm trade above neutral line in green in the late afternoon session as investors started piling up fresh positions. The benchmarks exhibited sideways kind of movement since the start and investors lacked conviction to open fresh positions ahead of the April series futures and options contract expiry day. Latter on benchmarks gathered strength and started trading with a positive bias amid uncertain market conditions. Traders were seen piling up position in Metal, Consumer Durables and IT sector while selling was witnessed in PSU, Auto and Power sector. Market participants chose to consolidate their positions after rating agencies like S&P’s and Moody’s voiced their concerns over India’s economic outlook, citing problems like policy paralysis, slow progress on its fiscal situation, as well as deteriorating economic indicators. In the scrip specific development, EID Parry (India) was trading in green as the company is going to merge Sankili and Haliyal undertaking of Parry Sugar. GAIL India, the country's largest gas transmission and marketing company, hit 52-weeks low. Central Bank of India was trading in red on reports that the bank is expected to report non-performing assets at 4.2% for the fourth quarter of FY12, quite higher as compared to 2.04% in the previous quarter.

On the global front, Asian markets were trading in green barring Shanghai Composite and Taiwan Weighted while the European markets were too trading in green on optimistic note. On the home turf, the NSE Nifty and BSE Sensex were trading above their psychological 5,200 and 17,100 levels respectively. The market breadth on BSE was negative in the ratio of 1104:1413 while 134 scrips remained unchanged.

The BSE Sensex is currently trading at 17,175.81 up by 24.52 points or 0.14% after trading as high as 17,193.25 and as low as 17,101.73. There were 14 stocks advancing against 16 declines on the index.

The broader indices were trading on a negative note; the BSE Mid cap index eased 0.09% while Small cap shed 0.11%.

On the BSE sectoral space, Metal up 1.04%, Consumer Durables up 0.70%, IT up 0.57%, FMCG up 0.42% and TECk up 0.38% and were the top gainers, while PSU down 0.48%, Auto down 0.47%, Power down 0.42%, Oil & Gas down 0.24% and Bankex down 0.20% were the major laggards in the space.

Jindal Steel up 3.88%, Tata Steel up 1.61%, ITC up 1.30%, TCS up 1.30% and M&M up 0.97% were the major gainers on the Sensex, while GAIL India down 3.25%, Bajaj Auto down 3.15%, Hero MotoCorp down 2.79%, NTPC down 1.21% and DLF down 1.13% were the major losers in the index.

Meanwhile, India Inc anguished over downgrade of outlook by S&P said that this should serve as a “wakeup call” for government and it should consider fast tracking of economic reforms especially on FDI and tax fronts. It has also added that opening up of sectors like aviation and insurance to FDI would help in improving foreign capital inflows and also improve investors’ sentiment.

In another statement industry body ASSOCHAM has said that the government should keep its political compulsions away and demonstrate that the reforms process is well on track. It is also of the opinion that fiscal consolidation in terms of cutting subsidies for fuel, fertilisers and social schemes is a must to reverse economic indicators.

On a positive note financial services provider Nomura is of the opinion that it is unlikely that the sovereign rating downgrade on India is unlikely as economic activity is expected to show some rebound shortly. The debt-to-GDP ratio is also likely to remain stable, and the fiscal deficit should not worsen substantially. However risk can come in from the declining forex reserves.

S&P has revised the outlook on India's sovereign credit rating to negative from stable, while reaffirming its BBB- rating. The rating agency cited slowing investment and economic growth, and the widening current account deficit as the main reasons.

The S&P CNX Nifty is currently trading at 5,206.90, higher by 4.90 points or 0.09% after trading as high as 5,215.60 and as low as 5,183.65. There were 21 stocks advancing against 29 declines on the index.

The top gainers on the Nifty were Jindal Steel up 3.62%, Kotak Bank up 2.19%, Tata Steel up 1.88%, Grasim up 1.87% and ACC up 1.62%.

Hero MotoCorp down 3.03%, Bajaj Auto down 2.99%, GAIL India down 2.83%, BPCL down 2.61%, and JP Associates down 2.44% were the major losers on the index.

In the Asian space, Hang Seng advanced 0.79%, Jakarta Composite climbed 0.32%, Nikkei 225 added 0.01%, Straits Times rose 0.24%, KLSE Composite added 0.03% and Seoul Composite gained 0.10%. On the other hand, Shanghai Composite eased 0.09% and Taiwan Weighted fell 0.55%.

The European markets were trading in green with France’s CAC 40 added 0.01%, Germany’s DAX ascended 0.16% and Britain’s FTSE 100 gained 0.50%.