Indian markets trade firm on supportive global cues; Nifty re-conquers 5,900 level

Buoyed by supportive global cues, Indian equity benchmarks have made a gap-up opening with frontline equity indices recapturing their crucial 19,500 (Sensex) and 5,900 (Nifty) levels. The US markets extended their gains overnight on hopes that a deal would be struck to avoid painful spending cuts and tax hikes that could hurt the economy. There were signs of progress in budget negotiations between President Barack Obama and House Speaker John Boehner. Moreover, most of the Asian counters were trading in the green at this point of time led by Nikkei which topping 10,000 points for the first time since April amid hopes that Bank of Japan will resort to additional monetary easing.

Back home, the sentiments remained ebullient after shares of non-banking financial companies (NBFC) and banking stocks edged higher in opening deals after the Lok Sabha on Monday after market hours passed a banking bill paving way for foreign investments in the sector and establishment of new private banks. The passage of amendments to the Banking Laws in the lower house of the parliament is expected to pave the way for issuance of the new bank licenses by the Reserve Bank of India (RBI).

Realty witnessed the maximum gain in trade followed by auto and software with no losers on the BSE sectoral space. The broader indices were going neck-to-neck with benchmarks. The market breadth on the BSE was positive; there were 1,246 shares on the gaining side against 480 shares on the losing side while 76 shares remain unchanged.

The BSE Sensex opened at 19,429.91; about 65 points higher compared to its previous closing of 19,364.75, and has touched a high and a low of 19,514.03 and 19,429.08 respectively.

The index is currently trading at 19,512.87, up by 148.12 points or 0.76%. There were 27 stocks advancing against 3 declines on the index.

The overall market breadth has made a positive start with 68.82% stocks advancing against 27.16% declines. The broader indices were outperforming benchmarks; the BSE Mid cap and Small cap indices rose 0.76% and 0.52% respectively.

The top gaining sectoral indices on the BSE were, Realty up by 1.30%, Auto up by 1.24%, IT up by 1.23%, Metal up by 1.22% and Oil & Gas up by 1.20%. While, there were no losers on the index.

The top gainers on the Sensex were Tata Motors up by 2.10%, ONGC up by 1.95%, TCS up by 1.93%, Maruti Suzuki up by 1.91% and Hindalco up by 1.65%.

On the flip side, HDFC was down by 0.51%, Hindustan Unilever was down by 0.30% and ICICI Bank was down by 0.12% were the top 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 opened at 5,917.30; about 20 points higher compared to its previous closing of 5,896.80, and has touched a high and a low of 5,936.80 and 5,917.00 respectively. The index is currently trading at 5,936.55, up by 39.75 points or 0.67%. There were 43 stocks advancing against 7 declines on the index.

The top gainers of the Nifty were IDFC up by 2.64%, ONGC up by 2.09%, Maruti Suzuki up by 1.87%, Tata Motors up by 1.86% and TCS up by 1.83%.

On the flip side, HDFC down by 0.66%, Hindustan Unilever down by 0.46%, Axis Bank down by 0.24%, NTPC down by 0.13% and Power Grid down by 0.13%, were the major losers on the index.

Most of the Asian equity indices were trading in green; Hang Seng rose 158.02 points or 0.70% to 22,652.75, KLSE Composite added 2.61 points or 0.16% to 1,662.05, Straits Times was up by 2.08 points or 0.06% to 3,158.65, Nikkei 225 surged 158.12 points or 1.60% to 10,081.62, and Taiwan Weighted was up by 23.38 points or 0.32% to 7,668.39.

On the flip side, Shanghai Composite declined 3.82 points or 0.18% to 2,158.65 and Jakarta Composite slipped 26.22 points or 0.61% to 4,277.98.

KOSPI Composite remained closed today.