Sensex, Nifty trading modestly higher; IT stocks leading rally

Following a positive opening and a subsequent retreat, Indian equity markets regained the momentum and are trading firm in the late morning session on Monday. Investors were busy on selective buying amid expectations of some positive measures from the forthcoming Union Budget. In currency market, rupee gained subsequently against US dollar in the late morning session, amid increased foreign fund inflows. On sectoral front, information technology stocks were among the top gainers. Select automobile, power and bank stocks were also edging higher, while oil, realty, metal, capital goods and FMCG stocks were trading weak. Meanwhile, shares of non-banking financial companies (NBFC) gained after the central bank issued guidelines allowing any business sector to apply for banking licenses. On the global front, Asian markets were mostly trading higher, as investors were busy picking up shares, beaten-up in the last week’s steep plunge. While the yen fell to fresh lows on news of a reflationary advocate could head the Bank of Japan (BoJ) next month. Back home, the market breadth favoring negative trend; there were 1,190 shares on the losing side against 1,135 shares on the gaining side while 121 shares remain unchanged.

The BSE Sensex is currently trading at 19,364.01, up by 47.00 points or 0.24% after trading in a range of 19,382.89 and 19,280.46. There were 16 stocks advancing against 14 declines on the index.

The broader indices were trading mixed; the BSE Mid cap index was up by 0.07% and Small cap index was down by 0.05%.

The top gaining sectoral indices on the BSE were, IT up by 1.86%, TECk up by 1.41%, Auto up by 0.72%, Power up by 0.29% and Bankex up by 0.27%. While Realty down by 1.20%, Oil & Gas down by 0.85%, PSU down by 0.46%, Capital Goods down by 0.46% and Metal down by 0.40% were the losers on the BSE.

The top gainers on the Sensex were, Infosys up by 2.66%, Tata Motors up by 2.46%, Wipro up by 1.79%, TCS up by 1.21% and BHEL up by 1.12%

On the flip side, Cipla down by 1.78%, Coal India down by 1.70%, ONGC down by 1.25%, Dr Reddy down by 0.97% and Reliance down by 0.88%, were the top losers on the Sensex.

Meanwhile, as per the government, Indian economy is expected to grow at 5 percent in 2012-13, lowest since 2003-04, on the back of slower growth in industry, agriculture and service sector. The parliament was informed on February, 23 in a written reply 'as per the Advance Estimates released by the Central Statistics Office, the growth rate of GDP (at factor cost at constant 2004-05) is estimated to be 5 percent in 2012-13. This growth rate is the lowest during the period 2003-04 to 2012-13'.

Minister of State for Finance Namo Narain Meena said that the current economic slowdown is attributed to both domestic factors as well as the uncertain global economic environment. Among domestic factors, the tightening of monetary policy during most of 2011-12 in order to control inflation resulted in the slowing down of investment and growth, particularly in the industrial sector. While, global factors include euro-zone crisis and sluggish growth in several industrialised economies in 2012.

Regarding the slowdown in the industrial sector, he said that the performance of the industrial sector has been affected by both hardening of interest rates as well as moderation in external demand owing to uncertainty arising from global economic crisis. Further he said that deceleration in rate of credit flows, slowdown in consumer expenditure, infrastructure bottlenecks, high input costs, subdued business confidence have also contributed to the slowdown in industrial performance.

India's annual industrial output growth measured by index of industrial production (IIP), contracted by 0.6% at 179.3 for the month of December 2012 against contraction of 0.1%, later revised to -0.8%, in the previous month. The numbers were way lower than expectation of over 1% growth figure. The cumulative growth for the period April-December 2012-13 over the corresponding period of the previous year stands at 0.7%.

However, to revive the economy, the government has taken various steps include better access to finance for manufacturing sector, fast tracking of large investment projects in infrastructure, use of buffer stocks to moderate food inflation, strengthening of financial and banking sector, reducing the volatility of exchange rate. The government has also set up the Cabinet Committee on Investment (CCI) to expedite decisions on approvals and clearances for implementation of projects.  

The CNX Nifty is currently trading at 5,863.00 up by 12.70 points or 0.22% after trading in a range of 5,874.25 and 5,837.30. There were 26 stocks advancing against 23 declines and one remains unchanged on the index.

The top gainers of the Nifty were Ranbaxy up by 3.74%, Tata Motors up by 2.56%, Infosys up by 2.52%, Power Grid up by 1.83% and Wipro up by 1.76%.

On the flip side, DLF down by 2.75%, BPCL down by 2.71%, Cipla down by 1.85%, UltraTech Cement down by 1.47% and Coal India down by 1.42% were the major losers on the index.

Most of the Asian equity indices were trading in the green; Shanghai Composite rose 0.56%, Hang Seng increased by 0.27%, Jakarta Composite jumped 0.51, KLSE Composite added 0.21%, Nikkei 225 surged 2.33% and Straits Times was up by 0.12%.

On the flip side, KOSPI Composite dipped 0.35% and Taiwan Weighted was down by 0.49%.