Moody’s ratings upgrade take markets higher

Indian equity benchmarks made a gap-up opening and are trading jubilantly in early deals with frontline gauges recapturing their crucial 33,500 (Sensex) and 10,300 (Nifty) levels. Sentiments remained buoyant, as Moody’s Investor Services, pinning faith in the continued progress on economic front backed by institutional reforms has lifted the Government of India’s local and foreign currency debt ratings to Baa2 from Baa3. The rating agency said that the reforms will improve the business climate in the country and raise productivity. Traders also took some encouragement with RBI Governor C Rangarajan’s statement who said the inflation, which rose to 3.58 percent in October, may ease by December and end up below 4 percent by the end of the current fiscal.

Global cues too remained supportive with most of the Asian counters trading in green at this point of time, building up on their last session’s rally, as risk appetite returned amid rising odds of U.S. corporate tax cuts and encouraging earnings. The US markets got a strong bounce back and with the upward move on the day, the Nasdaq reached a new record closing high. The gains reflected a positive reaction to better than expected quarterly results from Wal-Mart and Cisco Systems.

Back home, realty stocks remained in focus, as the government has decided to increase the carpet area of houses eligible for interest subsidy under the Credit Linked Subsidy Scheme (CLSS) for the Middle Income Group (MIG) under Pradhan Mantri Awas Yojana (PMAY). The move also means that the private developers will have incentives to increase scale. Meanwhile, HDFC Standard Life Insurance Company has made a decent debut and trading with a gain of around 9% on the bourses.

The BSE Sensex is currently trading at 33510.24, up by 403.42 points or 1.22% after trading in a range of 33387.37 and 33520.82. There were 26 stocks advancing against 5 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index surged 1.47%, while Small cap index was up by 1.38%.

The top gaining sectoral indices on the BSE were Metal up by 2.56%, Realty up by 2.51%, Bankex up by 2.05%, Basic Materials up by 2.00% and PSU was up by 1.69%, while IT down by 0.72% and TECK was down by 0.46% were the only losing indices on BSE.

The top gainers on the Sensex were ICICI Bank up by 3.42%, SBI up by 2.79%, Tata Steel up by 2.59%, HDFC up by 1.81% and Cipla up by 1.79%. On the flip side, Infosys down by 1.40%, TCS down by 0.53%, Wipro down by 0.52%, Dr. Reddy’s Lab down by 0.39% and Power Grid Corporation down by 0.12% were the top losers.

Meanwhile, highlighting ‘massive’ economic reforms undertaken by India, Finance Minister Arun Jaitley has said that the country’s economic slowdown has bottomed out and now it should start moving upwards after recovering from the temporary blip. He acknowledged that there was a ‘temporary blip’ as a result of structural changes initiated by the government. He added that India grew between 7-8% over the last three years. Therefore, they need over the next, at least, a decade, if not more, significantly higher growth rates in order to go ahead with expansion plan of the Indian economy.

However, Jaitley said that the country's basic economic parameters are quite stable. In a move to bring in confidence among investors, he said that the combination of the IT scheme and now the large-scale recapitalisation they have announced should be put into motion expeditiously. He explained that the combination of these two steps are likely to improve the capacity of the banks, and even lend their surplus, particularly to the small and medium-scale industries which need those funds in abundance because they are the ones that are the big job creators and keep the Indian economy going.

Finance Minister also clarified the often over-stated labour issues, saying these were no longer there as the negative environment of disruption of industrial activity is long over. He said the labour laws are being fortified by taking the unions into consultation, and there has not been any significant labour resistance in recent times, whether it is disinvestment or privatisation. He pointed out that they haven’t encountered trade union resistance as that is concerned, adding that there are already various kinds of reforms.

The CNX Nifty is currently trading at 10331.35, up by 116.60 points or 1.14% after trading in a range of 10313.55 and 10343.60. There were 42 stocks advancing against 7 stocks declining on the index, while 1 stock remained unchanged.

The top gainers on Nifty were Vedanta up by 3.48%, ICICI Bank up by 3.32%, Tata Steel up by 2.94%, SBI up by 2.82% and Yes Bank up by 2.80%. On the flip side, Infosys down by 1.27%, Tech Mahindra down by 1.18%, Bharti Infratel down by 0.73%, TCS down by 0.46% and Wipro down by 0.44% were the top losers.

Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI rose 3.35 points or 0.19% to 1,721.46, KOSPI Index gained 4.63 points or 0.18% to 2,539.42, Jakarta Composite rose 32.32 points or 0.54% to 6,070.22, Nikkei 225 jumped 37.54 points or 0.17% to 22,388.66, Taiwan Weighted added 84.86 points or 0.8% to 10,709.90 and Hang Seng was up by 231.33 points or 0.8% to 29,250.09.

On the flip side, Shanghai Composite was down by 18.62 points or 0.55% to 3,380.63.