Local equity markets trade sanguine; positive opening of European markets fuel the rally

After getting a gap-up opening, Indian equity markets are holding up firmly in green on account of sanguine global leads that have prompted strength in already active bulls, which running across the board, have led to sharp uptick of the bourses. Although buying witnessed is broad-based, prominent gainers on BSE sectoral front are Metal, Bankex and Realty counters. Announcement of new bond buying program called Outright Monetary Transactions, to help calm the euro zone's debt crisis have given stocks a shot in the arm, with markets in both Asia and Europe still trading merry on the previous day’s announcement.

Closer home, 30 share barometer index, Sensex, amassing gains of over 300 points, is currently trading over psychological 17600 level, while 50 share widely followed index, Nifty, adding close to century of points,  were trading above the 5300 bastion.  Further, broader indices too climbed higher, both Midcap and Smallcap index were trading higher around a percent. However, stocks of PSU OMCs lost all the steam after Oil Minister S. Jaipal Reddy, denying the reports about oil price rise in the near future, said that there is no immediate plan to raise domestic fuel prices. He further added that it was now up to the cabinet to decide on the thorny issue of reducing hefty subsidies on diesel, cooking gas and kerosene. The overall market breadth on BSE was in the favour of advances which have thumped declines in the ratio of 1689:858, while 113 shares remained unchanged.

The BSE Sensex is currently trading at 17,661.00, up by 314.73 points or 1.81% after touching a high of 17,675.76 and low of 17,575.79. All the 30 stocks on the Sensex were on advancing side.

The broader indices too climbed higher; the BSE Mid cap and Small cap indices were trading higher by 1.37% and 0.87% respectively.

On the BSE sectoral space, buying witnessed was broad-based, however, Metal up by 2.29%, Bankex up by 1.99%, Realty up by 1.92%, Auto and Capital Goods were trading up by 1.90% were the prominent gainers.

Since all the 30 stocks were advancing side, there were no losers, however, top gainers on the Sensex were Tata Steel up by 4.59%, ICICI Bank up by 4.07%, Tata Motors up by 3.93%, RIL up by 2.63% and Hindalco Industries up by 2.56%.

Meanwhile, joining the club which supports the reduction of Cash Reserve Ratio (CRR), Prime Minister’s Economic Advisory Council’s chairman, C Rangarajan, said that the country needs to move towards a situation where cash reserve ratio (CRR), or the portion of deposits banks keep with the Reserve Bank of India (RBI), is lowered and that its use as an instrument of ‘credit control’ be exercised only in extraordinary conditions. Rangarajan, on the sidelines of FICCI-IBA banking conference, averred that, as ‘Open market operations (OMOs) will become increasingly major instrument, while the role of CRR, as credit control, will come down.’

Rangarajan’s comments come in wake of a bitter spat between RBI’s deputy governor K C Chakrabarty and State Bank of India chairman Pratip Chaudhuri on CRR abolishment issue. RBI Deputy Governor K C Chakrabarty recently snubbed SBI's chairman Pratip K Chaudhuri for his remarks suggesting abolition of CRR, bluntly telling him that he has to find 'some other place' if he could not work as per the central bank's regulatory environment.

Meanwhile, reinforcing the belief in the current state of the economy, C Rangarajan expects the economy to grow at 6.7 per cent in 2012-13, and further to 8 percent in another two years. Furthermore, he underscored that lower base in the second half of last year would help India’s gross domestic product to register higher growth in the current financial year.

The S&P CNX Nifty is currently trading at 5,329.10, up by 90.70 points or 1.73% after trading in a range of 5,334.45 and 5,309.20. There were 47 stocks advancing against 3 declines on the index.

The top gainers of the Nifty were Tata Steel up by 4.43%, ICICI Bank up by 3.98%, Tata Motors up by 3.93%, DLF up by 3.89% and JP Associates up by 3.83%. On the flip side, BPCL down by 2.26%, Ranbaxy down by 0.62% and Ambuja Cement down by 0.16% were the top losers on the index.

All the Asian indices were trading  in green; Nikkei 225 spurted by 2.20%, Hang Seng jumped higher by 2.62%, Taiwan Weighted gained 1.34%, Straits Times rose 0.86% ,KLSE Composite added 0.29%, Shanghai Composite soared 3.74%, Kospi Composite Index notched up by 2.57% and Jakarta Composite advanced 1.12%.

European markets started off in green; CAC 40 added 0.84%, DAX advanced 0.38% and FTSE 100 rose 0.10%.