Strength continues in markets following Asian shares

Indian equity markets extended gains and continued trading firm in positive territory tracking some encouraging global cues. Both BSE Sensex and 50-share Nifty were up by 0.86%. However, Indian government getting pressurized to consider a partial rollback of petrol price hikes, while investors were looking out for proposed diesel and LPG price increase. In currency markets, Indian rupee continued its positive journey on Monday, as global risk assets stabilizes. On sectoral front all were trading in green. On the global front, Asian shares were trading in mixed as opinion polls showing a lead for Greece's pro-bailout camps help ease risk aversion. Back home, the market breadth favoring positive trend; there were 1,490 shares on the gaining side against 798 shares on the losing side while 72 shares remained unchanged.

The BSE Sensex is currently trading at 16,356.74, up by 138.92 points or 0.86%. The index has touched a high and low of 16,365.28 and 16,273.49 respectively. There were 25 stocks advancing against just 5 declines on the index.

The broader indices gained some additional traction; the BSE Mid cap and Small cap indices surged 0.86% and 0.89% respectively.

The top gaining sectoral indices on the BSE were Bankex up by 1.52, CG up by 1.33%, Power up by 1.29%, Auto up by 0.96% and Metal up by 0.84%. While, there was no loser on the index.

The top gainers on the Sensex were BHEL up by 3.17%, SBI up by 2.87%, Tata Power up by 2.19%, Mahindra & Mahindra up by 2.01% and ICICI Bank up by 1.97%.

On the flip side, GAIL down by 2.47%, Maruti Suzuki down by 1.06%, HUL down by 0.97%, ONGC down by 0.74 and TCS down by 0.05% were the major losers on the index.

Meanwhile, the industry body ASSOCHAM has advised the government that it should try and control its public debt especially from external sources. It is of the opinion that though there is a need for funds the government should be careful while borrowing especially when it comes to raising external debt.

In its report titled ‘Rising Interest Burden’ it has stated that India should learn from the example of some European and developed nations and realize that it is extremely important to keep the debt under control. India can derive some consolation from the fact that its public debt largely comes from internal sources and dependence on foreign funds has not gone up.

However it must be noted that in India the growth of per capita debt is higher than the growth of per capita income, which should be a cause for concern. At a time when the currency is volatile and unpredictable, India must be very cautious in opening up its market and allowing foreign investors to invest in government securities.

The report has noted that the government's non-plan expenditure has been increasing and payments made towards debt servicing have been on the rise. The interest payment's share to the total non-plan expenditure has gone up from 31.6% in 2008-09 to 35.9% in 2011-12. It is expected to be 33% in 2012-13.

One third of the total government’s revenue is being used to make interest payments and if not checked can lead to a debt trap. Further raising funds from overseas market is prone to several risks, including extra burden on redemption as the rupee's value has depreciated, says ASSOCHAM.

The S&P CNX Nifty is currently trading at 4,962.60, higher by 42.20 points or 0.86%. There were 40 stocks advancing against 10 declines on the index.

The top gainers of the Nifty were BHEL up by 3.19%, Reliance Infra up by 2.78%, SBI up by 2.77%, SAIL up by 2.27%, and Tata Power up by 2.19%. 

On the flip side, GAIL down by 2.77%, BPCL down by 1.46%, Maruti Suzuki down by 1.24%, HUL down by 1.01%, and Ranbaxy down by 0.91% were the major losers on the index.

Asian markets were trading mixed; Shanghai Composite eased 6.64 points or 0.28% to 2,340.19, Jakarta Composite got brutally lacerated by 176.53 points or 4.34% to 3,893.49 KLSE Composite inched down 0.64 points or 0.04% to 1,550.48 and Nikkei 225 fell 1.36 points or 0.02% to 8,579.03.

On the flip side, Hang Seng Index gained 0.43%, Straits Times Index added 0.75% and Taiwan Weighted rose 0.91%.

South Korean markets remained closed on Monday for a public holiday on account of birthday of Gautama Buddha.