Sensex inches up into green as rupee bounces back after initial drift

Stock markets in India recovered from intraday lows hit in morning trades with the benchmark equity indices paring all the losses and trading in close proximity with the previous closing levels. After Thursday’s sharp rally investors remained cautious as they searched for fresh catalyst to open fresh bets in the markets. The frontline gauges had drifted around the psychological 16,100 (Sensex) and 4,900 (Nifty) levels in morning trades following the early depreciation in rupee and few reports from influential brokerage houses highlighting that Indian economy may grow at a weaker than expected pace of around 6.3% amid the gloomy global environment and disappointing domestic setup. However, the key indices showed signs of recovery following the bounce back in rupee against the US dollar after Reserve Bank of India stepped up efforts to curb the beleaguered currency’s declining momentum. Meanwhile, the European markets too got off to a positive start though most indices traded with moderate gains of around a quarter percent. Cues from the Asian markets remained mixed however, the benchmark in Indonesia traded with large cuts of over two percent in the session. Back home, there were signs that the government was preparing to take the bolder step of cutting subsidies on other fuels weighing on its budget deficit, but after a day of uproar over petrol prices, an imminent move looked unlikely, thereby making investors cautious. On the BSE sectoral front, investors were seen piling positions in the Metal counter which surged around a percent being the top gainer in the space. The high beta Realty and Capital Goods pockets too traded with notable gains of around three fourth of a percent, helping the frontline indices pare losses. However, some correction in Oil & Gas names like ONGC and auto heavyweight like Maruti Suzuki capped the upside chances for the markets.

Moreover, the broader markets continued to trade on a positive note with moderate gains of around half a percent and went on to outperform their larger peers. The bourses rose 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 1308:1090 while 119 scrips remained unchanged.

The BSE Sensex is currently trading at 16,227.73 up by 5.43 points or 0.03% after trading as high as 16,228.49 and as low as 16,118.35. There were 17 stocks advancing against 13 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap index gained 0.50% and Small cap index rose 0.57%.

On the BSE sectoral space, Metal up 0.87%, Realty up 0.75%, Capital Goods up 0.71%, Power up 0.41%, Bankex up 0.32% were the major gainers, while Oil & Gas down 0.34%, Consumer Durables down 0.25%, Auto down 0.20% and IT down 0.05% were the only laggards in the space.

Sterlite up 2.15%, Tata Steel up 2.03%, DLF up 1.57%, GAIL India up 1.43% and Hero Moto up 1.11% were the major gainers on the Sensex, while Maruti down 2.02%, M&M down 1.17%, HDFC down 1.03%, Jindal Steel down 0.87% and HUL down 0.75% were the major losers in the index.

Meanwhile, the government should adopt the practice of dual pricing of diesel, says CII. The farm use of the fuel should continue to be subsidized whereas its non-farm use should have a minimum subsidy. Further, the huge subsidy on the price of cooking LPG in the urban areas should be phased out.

The chamber however, is in favour of continuing with kerosene subsidy as it is the poor man’s fuel. CII is also of the opinion that the hike in prices of petrol is steep and is unlikely to resolve the issue of the large subsidy bill. However there is an urgent need to address the issue.

The PHD chamber on the other hand has criticized the hike stating that it is likely to have an inflationary impact on the economy. It has further observed that even though crude oil prices have fallen considerably in the past few weeks, their effect has been nullified with the depreciation in the rupee.

The chamber is also of the opinion that the government should initiate policies that encourage investment and attract foreign capital inflows in the economy. Efforts should also be made to stabilize the falling rupee.

The S&P CNX Nifty is currently trading at 4,921.65, up by 0.25 points or 0.01% after trading as high as 4,921.75 and as low as 4,889.35. There were 31 stocks advancing against 19 declines on the index.

The top gainers on the Nifty were JP Associates up 3.44%, Sesa Goa up 2.32%, Sterlite up 2.04%, Tata Steel up 1.99% and Ranbaxy up 1.96%.

Maruti down 1.95%, Bank of Baroda down 1.86%, M&M down 1.66%, Grasim down 1.42% and HDFC down 1.27% were the major losers on the index.

In the Asian space, Shanghai Composite declined 0.73%, Jakarta Composite got pounded by 2.31%, Straits Times Index drifted 0.43% and Taiwan Weighted dropped 0.75%.

On the other hand, Hang Seng rose 0.09%, KLSE Composite inched up 0.02%, Nikkei 225 added 0.20%, and KOSPI Composite advanced 0.53%.

The European markets got off to a flat start as France’s CAC 40 added 0.28%, Germany’s DAX gained 0.11% and United Kingdom’s FTSE rose 0.22%.