Indian equities added gains; Nifty above 5,900 mark

Indian equities added gains to continue its firm trade hovering near the highest point of the day in the late afternoon session on account of buying in frontline counters and taking cues from European counterparts. The sentiments in the street initially turned pessimistic after the Reserve Bank of India left the key policy rate unchanged in its mid quarter (December 2012) monetary policy. With status quo in the policy action, repo rate stood at 8% while reverse repo was at 7%. Cash reserve ratio (CRR) or the portion of deposits banks keep with the RBI also remained at 4.25%. Investors have now started eyeing rate cut in RBI’s next policy meet which is scheduled for January 29. Traders were seen piling some position in Realty, Metal and CG sectors, while selling was witnessed in Oil & Gas sectors. In the scrip specific development, Jet Airways has extended gains for sixth day while Kingfisher Airlines was trading up on reports that Etihad Airways has entered in the final stages of talks to buy stake in either of them. Bharat Heavy Electricals (BHEL) was trading firm after foreign brokerage firm CLSA added the stock to its Asia ex-Japan long only portfolio. Compucom Software was trading firm after hitting 52-weeks high as the well-known ace investor Rakesh Jhunjhunwala has picked 5 lakh shares in the company.

On the global front, all the Asian markets were trading in green barring Hang Seng and Jakarta Composite while the European markets were trading on optimistic note. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 5,900 and 19,300 levels respectively. The market breadth on BSE was positive in the ratio of 1518:1247 while 138 scrips remain unchanged.

The BSE Sensex is currently trading at 19,381.98, up by 137.56 points or 0.71% after trading in a range of 19,386.84 and 19,149.03. There were 25 stocks advancing against 5 declines on the index.

The broader indices turned positive; the BSE Mid cap and Small cap indices were trading higher by 0.56% and 0.55% respectively.

The top gaining sectoral indices on the BSE were, Realty up by 2.21%, Metal up by 1.75%, Capital Goods (CG) up by 1.33%, Power up by 1.10% and TECk up by 0.83%. While Oil & Gas down by 0.07% were the top losers on the index.

The top gainers on the Sensex were Bharti Airtel up by 4.24%, BHEL up by 3.51%, Tata Steel up by 3.12%, Hindalco Industries up by 2.98% and Sun Pharma up by 2.43%.

On the flip side, Maruti Suzuki down by 1.10%, ONGC down by 0.50%, Bajaj Auto down by 0.45%, TCS down by 0.15% and RIL down by 0.13% were the only losers on the Sensex.

Meanwhile, pitching the need for supportive monetary and fiscal policies to perk up investor confidence, the government lowered the growth projection for the current fiscal to 5.7-5.9% from 7.6% estimated earlier. As per the mid-year economic analysis for 2012-13, which was tabled in Parliament on December 17, the growth rate in the second half of the current fiscal would be close to around 6%.

This growth projection by the government would be the lowest growth since 2002-03, when the economy expanded by a mere 4%. Further, meeting revenue realization, disinvestment target, and containing fiscal deficit at 5.3% of GDP would be the challenges before the economy to reach the desired growth rate.

Referring to inflation, the report said further moderation in price rise is expected to happen by the fourth quarter of the financial year. ‘Inflation at the end of March 2013 is expected to moderate to 6.8-7% level.’ Further to bring down inflation, the government on its part should address concerns relating to structural supply side bottlenecks, which is the main reason behind the price rise.

As per the report, the economy can reach the desired growth rate in near future on the back of confidence inducing Budget, speeding up clearance for projects, and further steps taken in capital market reform to boost investors’ confidence and propel growth momentum. By adding further it said, economic slowdown has bottomed out and is headed towards higher growth in near future driven by factors like improved business confidence, better industrial output numbers, corporate profitability and moderating inflation.

On the rising current account deficit (CAD), the report said, the government can reduce its CAD by improving the exports and trade balance. The CAD and trade deficit would be lower than the last fiscal. In 2011-12 fiscal, CAD was 4.2%. However, uncertainty, on account of disinvestment receipts and likely higher subsidy requirement, does make it a challenging task to adhere to the overall fiscal deficit target in 2012-13.

The S&P CNX Nifty is currently trading at 5,901.45, up by 43.55 points or 0.74% after trading in a range of 5,902.45 and 5,823.15. There were 41 stocks advancing against 9 declines on the index.

The top gainers of the Nifty were Bharti Airtel up by 4.43%, BHEL up by 3.53%, Tata Steel up by 3.21%, Hindalco Industries up by 2.70% and JP Associates up by 2.40%.

On the flip side, Maruti Suzuki down by 1.04%, Bajaj Auto down by 0.59%, HCL Tech down by 0.57%, Ranbaxy Laboratories down by 0.51% and TCS down by 0.40% were the major losers on the index.

Most of the Asian equity indices were trading in green; KLSE Composite added 0.62%, Nikkei 225 soared 0.96%, Straits Times gained 0.14%, Shanghai Composite inched higher by 0.10%, KOSPI Composite was up by 0.51% and Taiwan Weighted was up by 0.16%. On the flip side, Hang Seng was down by 0.08% and Jakarta Composite declined 0.78%.

The European markets were trading in green with, France’s CAC 40 added 0.27%, Germany’s DAX ascended 0.53% while the United Kingdom’s FTSE 100 jumped 0.31%.