Markets remain in positive territory; ICICI Bank leading rally ahead of results

Indian equity markets pared some early gains but remained fairly well placed in positive territory on the back of buying in several blue chip counters. Benchmark 30 share BSE index was up by 0.29%, while the 50 share NSE index gains 0.48%. On sectoral front bank stocks were up following the Union Cabinet clearing the much awaited Banking Law (Amendment) bill. Information technology, consumer durables and realty stocks were also finding good support. Metal, FMCG and PSU stocks were trading mixed. Pharma and oil stocks were mostly trading flat. Largest private sector lenders ICICI Bank and Axis Bank shot up 2.5% each ahead of their fourth quarter numbers. In the currency market, the Indian rupee drifted lower against the US dollar amid worries about a likely fall in fund inflow. On the global front, Asian shares inched up this morning, tracking US stocks which jumped overnight on strong housing data and earnings, but concerns over the health of European banks weighed on investor risk appetite after Standard & Poor's downgraded Spain's rating. Back home, the market breadth favoring the positive trend; there were 1,380 shares on the gaining side against 998 shares on the losing side while 117 shares remained unchanged.

The BSE Sensex is currently trading at 17,180.19, up by 49.52 points or 0.29%. The index has touched a high and low of 17,242.15 and 17,134.85 respectively.  There were 18 stocks advancing against 11 declines on the index and one remained unchanged.

The broader indices too were trading firm; the BSE Mid cap and Small cap indices surged by 0.52% and 0.40% respectively.

The top gaining sectoral indices on the BSE were, Bankex up by 0.87%, CD up by 0.82%, CG up by 0.70%, Power up by 0.68% and IT up by 0.63%. While, Oil & Gas down by 0.25%, Realty up by 0.16%, Metal up 0.07% and Health Care (HC) up by 0.02% were top losers on the index.

The major gainers on the Sensex were ICICI Bank up by 2.69%, M&M up by 1.82%, Hindalco Industries up by 1.59%, TCS up by 1.25% and Bajaj Auto up by 1.16%. While, Coal India down by 1.22%, Bharti Airtel down by 0.99%, DLF down by 0.88%, Sun Pharma down by 0.75% and SBI down by 0.67% were major losers on the Sensex.

Meanwhile, as per the Met Department, in all probability India will see a normal monsoon this year. In its first official forecast for the 2012 monsoon season, the Met has forecasted that this year between June and September rains will be around 99% of the Long Period Average (LPA).  However, there is a 24% probability of rains being below normal, while the chances of the country experiencing an above normal rainfall are 17%.

A monsoon is considered normal when rains are 96-104% of the LPA. The LPA is the average annual rainfall across the country in 50 years starting from 1941. It is estimated at 89 centimetres.

However there is also a chance that the El Nino could affect rainfall during the second half of the season. El Nino, an abnormal warming of waters in the equatorial tropical Pacific, is linked with poor rains or a drought-like situation in southeast Asia and Australia. In 2009, the El Nino weather pattern turned monsoon rains erratic, leading to the worst drought in nearly four decades.

Monsoon rains play a crucial role in India's farm output as 60% of the country's agricultural area depends on rainfall for irrigation. Agriculture accounts for about 15% of India’s GDP. A normal monsoon leads to the chances of a bumper crop and helps in controlling food inflation. India has of late been struggling with stubbornly high prices of food. Food inflation rose close to double digits in March from 6.07% in February and deflation in the previous month.

India is also the world’s second largest producer of rice, wheat and sugar and a bumper crop will lead to greater exports of these. It will also put some money in the hands of farmers and will help generate demand in the economy. The rural areas are today seen as major demand centres. Also when there is an increase in the incomes of people especially of the rural areas it leads to an increase in demand for gold and silver. Infact about 60-70% of gold demand comes from rural areas and a good harvest is expected to boost the appetite for the bullion.

A good monsoon also leads to a greater demand for seeds and fertilizers, benefitting companies producing these. Hence a good monsoon is not only important for agriculture but also for the economy at large.

The S&P CNX Nifty is currently trading at 5,206.60, higher by 17.60 points or 0.34%. The index has touched a high and low of 5223.05 and 5188.90 respectively. There were 35 stocks advancing against 15 declining ones on the index.

The top gainers of the Nifty were ICICI Bank up by 2.62%, Siemens up by 2.51%, Axis Bank up by 2.27%, M&M up by 1.90% and JP Associates up by 1.46%. On the flip side, Ranbaxy down by 1.83%, Coal India down by 1.45%, DLF down by 1.43%, SBI down by 1.00% and Bharti Airtel down by 0.92% remained the only losers on the index.

Asian market were trading mixed; Hang Seng gained 0.21Straits Times added 0.28% and Seoul Composite expanded by 0.58%.

Shanghai Composite down by 0.10%, Jakarta Composite declined by 0.20%, Nikkei 225 down by 0.43%, and KLSE Composite slid 0.51% and Taiwan Weighted lost 0.54%.