Markets make a positive start on hopes of more reform push

Markets have made a positive start after a day of break, though the global cues were not that supportive after the US markets ended flat and the Asian peers started mixed, but the domestic markets rose on hopes of more government reforms. The strength in rupee too is supporting the markets in early deal. The Indian currency has moved higher against the dollar on good fund inflows. Meanwhile, in line with the other global and some local agencies, ADB has cut its growth estimates for India and has said that growth in India is expected to hit 5.6% and 6.7% in 2012 and 2013, weaker than previous forecasts of 7% and 7.5%. Not only India, the Manila-based bank has cut most of its 2012 and 2013 growth estimates for developing Asia and said that euro zone's unresolved sovereign debt crisis and US fiscal cliff remain the biggest risks to the growth outlook. Back on street, the Oil & gas sector has taken the lead closely followed by healthcare and power, while consumer durables and capital goods were trailing in red. The non sectoral gauge telecom is buzzing ahead of the EGoM meet to decide on one-time spectrum fee issue, the EGoM will also discuss on issue of re-farming of radio waves.

The BSE Sensex opened at 18841.49; tad higher compared to its previous closing of 18823.91, and has touched a high and a low of 18882.21 and 18831.94 respectively. The index is currently trading at 18859.86, up by 35.95 points or 0.19%. There were 20 stocks advancing against 10 declines on the index.

The overall market breadth has made a positive start with 63.39% stocks advancing against 32.24% declines. The broader indices were outperforming benchmarks; the BSE Mid cap index was up by 0.43%, while the BSE Small cap indices gained 0.45%.

The top gaining sectoral indices on the BSE were Oil and Gas up by 0.92%, HC up by 0.74%, Power up by 0.45%, PSU up by 0.43% and TECk up by 0.19%. On the other hand CD down by 0.67%, CG down by 0.06%, Realty down by 0.06%, Metal down by 0.04% and FMCG down by 0.04% were the losers on the index.

The top gainers on the Sensex were Dr Reddy’s up by 1.58%, HUL up by 1.33%, RIL up by 1.18%, Bharti Airtel up by 1.13% and M&M up by 0.99%.

On the flip side, Jindal Steel down by 3.20%, Hero MotoCorp down by 1.55%, ITC down by 1.10%, Bajaj Auto down by 0.78% and BHEL down by 0.66% were the top losers on the Sensex.

Meanwhile, amid continuing battle against oppositions for the reform measures taken, the government has been provided with panacea from Kelkar Committee, who has been tasked to chart a roadmap for fiscal consolidation, and as per which the government has to take out half of the per unit diesel subsidy by the end of this fiscal and the rest over 2013-14, trim down subsidy on cooking gas by 25% this year and completely eliminated over the next two years. It has suggested hiking kerosene and urea prices regularly and switch to direct transfer of cash subsidies for the poor.

The panel also urged the centre to improve tax mobilization, trim plan expenses and focus more on disinvestment of state-run firms. It warned that the slow approach to this will cause huge mounting of fiscal deficit for the nation, leading sovereign credit downgrade and curtail foreign capital investments. The committee also cautioned that the deficit for the current fiscal can widen to 6.1% of the GDP against the budgeted 5.1%, also confirmed that the practice of suggestions put forth will ensure that the deficit will stick to 5.2% of the GDP, even though government does not seem to agree with the grim prognosis.

However,  Arvind Mayaram, Department of Economic Affairs Secretary pointed out that the proposals by the committee differ to the objective of the government, which focuses more on sustained and inclusive growth. In a developing country like India, where a significant proportion of the population is poor, a significant portion of subsidies is unavoidable, and measures must be taken to protect the poor and vulnerable sections of the society, he added.

The S&P CNX Nifty opened at 5,727.70; about 10 points higher compared to its previous closing of 5,718.80, and has touched a high and a low of 5,738.25 and 5,722.85 respectively. The index is currently trading at 5,731.45, up by 12.65 points or 0.22%. There were 34 stocks advancing against 16 declines on the index.

The top gainers of the Nifty were JP Associates up by 1.92%, Ambuja Cements up by 1.84%, IDFC up by 1.78%, Siemens up by 1.74% and Dr Reddy’s up by 1.43%.

On the flip side, Jindal Steel down by 3.80%, Hero MotoCorp down by 1.20%, ITC down by 1.04%, Asian Paint down by 0.75% and Axis bank down by 0.74% were the major losers on the index.

Most of the Asian markets were trading in red, Hang Seng was down by 0.02%, Jakarta Composite was lower by 0.08%, KLSE Composite lost 0.59%, Nikkei 225 declined by 0.41%, Straits Times was lower by 0.26% and Taiwan Weighted declined by 0.47%. Markets in China and Korea are closed today for holidays.