Sensex trades in a narrow range in noon trades; rupee woes cap gains

Stock markets in India continued to trade on an uninspiring note in Tuesday afternoon trades with the benchmark equity indices gaining around half a percentage points. It is turning out to be a choppy session of trade with the frontline indices trading in an extremely tight range. The psychological 16,300 (Sensex) and 4,950 (Nifty) levels were proving as stern resistances since late morning trades as the key to indices failed to sail beyond those levels despite repeated attempts. Domestic markets failed soar in tandem with the rally in global markets as domestic concerns marred investors’ appetite for riskier asset classes like equities. Sentiments in Asian markets remained sanguine since the start of trade tracking overnight rally in US markets as investors resorted to bargain hunting amid some supportive developments from the meeting of group of eight (G8) nations and hopes that world’s second largest economy China would employ further stimulus measures to spur growth of the global growth machine. Moreover, the European markets too got off to an encouraging start as they extended their positive run as investors awaited the outcome of an informal meeting of leaders from Euro-zone on Wednesday in which some decisions on further measures to tackle the region’s onerous debt crisis are expected. Back home, the beleaguered rupee which started on a positive note went ahead to touch fresh historical lows in the session and weighed down investors’ morale. On the BSE sectoral space, buying was evident in the PSU and Oil & Gas counters which surged around a percent each and supported the benchmark indices. On the flipside, the falls in defensive Healthcare and high beta Realty sectors by around a quarter percent each exerted pressure on the bourses.

Moreover, the broader markets too came off the highs of the day and traded with moderate gains of around a quarter percent, underperforming their larger peers. The bourses advanced on good volumes of over Rs 0.7 lakh crore while the market breadth on BSE was in favor of advances in the ratio of 1299:992 while 133 scrips remained unchanged.

The BSE Sensex is currently trading at 16,274.42 up by 91.16 points or 0.56% after trading as high as 16,366.72 and as low as 16,252.19. There were 21 stocks advancing against 9 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap index rose 0.28% and Small cap index gained 0.26%.

On the BSE sectoral space, PSU up 0.98%, Oil & Gas up 0.93%, IT up 0.80%, TECk up 0.73% and FMCG up 0.73% were the major gainers, while Healthcare down 0.25% and Realty down 0.25% were the only laggards in the space.

BHEL up 3.17%, Tata Motors up 2.71%, GAIL India up 1.47%, TCS up 1.33% and Tata Steel up 1.32% were the major gainers on the Sensex, while Tata Power down 2.15%, Sun Pharma down 2.05%, Maruti down 1.45%, Hero Moto down 0.87% and Bajaj Auto down 0.84% were the major losers in the index.

Meanwhile, the Reserve Bank of India (RBI) has taken and will continue to take steps to arrest the downfall in the rupee, stated Subir Gokarn, deputy governor of RBI. However Gokarn opined that ultimately the price of the rupee shall be determined by the capital inflows.

The Rupee fell to an all time low of 55.03 against the dollar on 21 May. The fall was essentially due to the high demand for the dollar from the oil companies. The widening current account deficit also contributed to fall.

The rupee that fell by 22% between August and December 2011 has dipped by 18% this year. Even though most currencies in South East Asia have performing badly, rupee has been one of the worst performers. 

The RBI on its part has not only dug into its reserves of $293 billion but has also announced various incentives to increase the inflow of the dollar. These include relaxing interest rates caps on non-resident deposits and asking exporters to convert half of their foreign currency earnings into rupee. Gokaran has also hinted at the possibility of the RBI buying bonds through open market operations (OMO) again this week.

The S&P CNX Nifty is currently trading at 4,932.95, higher by 26.90 points or 0.55% after trading as high as 4,956.35 and as low as 4,925.05. There were 32 stocks advancing against 18 declines on the index.

The top gainers on the Nifty were BHEL up 2.93%, Tata Motors up 2.79%, SAIL up 2.36%, Cairn up 1.62% and ONGC up 1.40%.

Tata Power down 2.51%, Sun Pharma down 2.50%, Maruti down 1.56%, Sesa Goa down 1.11% and L&T down 1.11% were the major losers on the index.

In the Asian space, Shanghai Composite surged 0.98%, Hang Seng soared 1.02%, Jakarta Composite jumped 1.41%, KLSE Composite rose 0.18%, Nikkei 225 climbed 1.10%, Straits Times Index amassed 1.39%, KOSPI Composite accumulated 1.64% and Taiwan Weighted garnered 1.15%.

The European markets got off to a positive start as France’s CAC 40 rose 0.77%, Germany’s DAX advanced 0.9% and United Kingdom’s FTSE added 0.94%.