Indian equities continue firm trade inline with European counterparts

Indian equities continued its firm trade in the late afternoon session as investors accumulated blue chip counters. Also supportive cues from the European markets were propelling the domestic markets, with rate-sensitive shares leading the gains. Traders were seen piling up position in Auto, Bankex and Realty sector. Besides, stocks from the fertilizer counter traded on a somber note with hefty cuts after India’s Cabinet Committee on Economic Affairs (CCEA) deferred the Fertilizer Ministry’s proposal to raise the retail prices of urea by 10% to Rs 5,841 per tonne for the financial year 2012-13. In the scrip specific development, Info Edge India was seen trading firm on reports that the board has approved bonus share issue of 1:1. Pantaloon Retail was trading in green on reports that the company has made allotment of 800 optionally fully convertible debentures (OFCDs) of Rs 1 crore each aggregating to Rs 800 crore to Peter England Fashions and Retail on a preferential basis.

On the global front, the Asian markets were trading in green barring KOSPI Composite Index while the European markets too were trading in green on optimistic note. The mood was supportive by reports that central banks from major economies are preparing for coordinated action to provide liquidity if needed after the Greek election this weekend. On the home turf, the NSE Nifty and BSE Sensex were trading above their psychological 5,100 and 16,800 levels respectively. The market breadth on BSE was positive in the ratio of 1444:1094 while 132 scrips remained unchanged.

The BSE Sensex is currently trading at 16,855.47 up by 177.59 points or 1.06% after trading as high as 16,882.90 and as low as 16,701.28. There were 26 stocks advancing against 4 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap index rose 0.41% while Small cap index added 0.43%.

On the BSE sectoral space, Auto up 1.75%, Bankex up 1.59%, Realty up 1.13%, Capital Goods up 0.92% and Health Care up 0.90% were the major gainers, while there were no laggards in the space.

Tata Motors up 3.85%, ICICI Bank up 2.84%, Hero MotoCorp up 2.78%, Coal India up 2.31% and M&M up 1.87% were the major gainers on the Sensex, while Sterlite Industries down 2.26%, Bajaj Auto down 1.38%, ONGC down 0.58% and HDFC down 0.09% were the only losers in the index.

Meanwhile, Indian economy is facing stagflation, as per the global financial services firm Moody's, where growth is slow and inflation high and also cautioned that the Reserve Bank of India (RBI) should not be too aggressive in slashing interest rates in its policy meet.

The agency is of the view that with headline inflation inching up to 7.5% y-o-y in May due to supply-side constraints, along with rupee depreciating to record low-levels, sluggish prospects of growth and industrial production, a further rate cut will have an upward pressure on inflation.

The recent fall in the rupee will further push the prices upwards, particularly imported goods and commodities valued in dollar. By adding further it stated, the rupee, which is sitting 15% below its peak of late-February, will make sure that inflation remains in the 7-8% range for an additional 6-months.

The agency cautioned that the RBI should not be ‘too aggressive’, when inflation remains a problem. However, with economic growth slowing, the RBI should accept the higher inflation and go for a marginal rate-cut.

The S&P CNX Nifty is currently trading at 5,110.15, higher by 55.40 points or 1.10% after trading as high as 5,120.40 and as low as 5,069.15. There were 42 stocks advancing against 8 declines on the index.

The top gainers on the Nifty were Tata Motors up 4.10%, ICICI Bank up 3.01%, Reliance Infrastructure up 2.98%, Hero MotoCorp up 2.81% and Ambuja Cement up 2.73%.

Sterlite Industries down 2.85%, Sesa Goa down 1.79%, Bajaj Auto down 1.28%, ONGC down 0.77% and Asian Paints down 0.25% were the major losers on the index.

In the Asian space, Shanghai Composite advanced 0.47%, Hang Seng surged 2.26%, Jakarta Composite added 0.79%, KLSE Composite ascended 0.47%, Nikkei 225 inched up 0.01%, Straits Times Index soared 1.26% and Taiwan Weighted jumped 1.14%. On the other hand, KOSPI Composite Index sank 0.71%.

The European markets were trading in green with France’s CAC 40 advanced 1.02%, Germany’s DAX ascended 0.64% and the United Kingdom’s FTSE 100 gained 0.71%.