Markets trade near day’s high on increased growth projection

Indian equity benchmarks extended their gains and are trading near the Intraday high in early noon trade after the Congress-led UPA government raised the growth projection for fiscal year 2013-14 and simultaneously lowered the Inflation target for Asia’s third-biggest economy. Economic Survey 2012-13, presented by Finance Minister P. Chidambaram in the Lok Sabha, stated that India’s economy may grow at 6.1-6.7% for the year 2013-14. The survey suggested that revival of growth will help contain NPAs, but more attention will have to be paid to whether projects are adequately capitalized up front given the risks.

Global cues too remained jovial as most of the Asian equity indices were trading in the green terrain after encouraging data from the US and the Federal Reserve’s assurance to continue with monetary stimulus measures. However, investors remained cautious with Italy's hung parliament in the general elections that could hinder reforms in the euro zone and drive up borrowing costs. Back home, capital goods witnessed the maximum gain in trade followed by oil and gas and realty, while software, technology and healthcare remained the top losers on the BSE sectoral space. The broader indices, were witnessing mixed trend, though  the overall market breadth on BSE still remains in the favour of declines which have thumped advances in the ratio of 1141: 1358, while 129 shares remained unchanged.

The BSE Sensex is currently trading at 19,123.46, up by 108.32 points or 0.57% after trading in a range of 19137.39 and 18997.82. There were 21 stocks advancing against 9 declines on the index.

The broader indices were trading mixed; the BSE Mid cap index was up by 0.14% and Small cap index was down by 0.27%.

The top gaining sectoral indices on the BSE were, Capital Goods up by 1.73%, Oil and Gas up by 1.05%, Realty up by 1.01%, FMCG up 0.91% and Bankex up by 0.69%, while IT down by 0.83%, TECk down by 0.26% and Health Care down by 0.04% were the few losers on the BSE.

The top gainers on the Sensex were Bharti Airtel up by 2.94%, L&T up by 2.40%, ONGC up by 2.07%, Bajaj Auto up by 2.07% and M&M up by 1.81%.

On the flip side, GAIL was down by 1.63%, Tata Motors was down by 1.50%, Infosys was down by 1.46%, Hero MotoCorp was down by 0.85% and HDFC Bank was down by 0.77%  were the top losers on the Sensex.

Meanwhile, to pave way for smooth roll-out of Goods and Service tax (GST), the committee on CST has recommended that all unsettled CST compensation cases of individual states of earlier years to be decided on case to case basis at the earliest. GST is a new indirect tax regime under which various levies would be subsumed into a single tax. The states want the central government to resolve the CST compensation issue before moving ahead with GST.

Earlier, Finance Minister P Chidambaram had constituted two committees to sort out contentious issues that hamper implementation of the GST. Similarly, earlier this month, state finance ministers had decided to prepare model legislation and set up three committees to sort out various issues for smooth roll-out of the GST. The states had agreed to a lower payment of Rs 34,000-crore for phasing out CST, pre-condition for rollout of the GST.

The government would bear 100 percent of the loss accrued to states in 2010-11 fiscal on account of lowering of CST, which includes 100 per cent compensation for 2010-11, 75 per cent for 2011-12 and 50 per cent for 2012-13.

As per Chidambaram, the GST legislation could be brought in by December this year and if the GST implementation takes a longer time then the government will revisit the CST compensation issue again or look at reverting to original CST rate of 4 per cent.

The CNX Nifty is currently trading at 5,795.90 up by 34.55 points or 0.60% after trading in a range of 5,796.50 and 5,749.70. There were 32 stocks advancing against 18 declines on the index.

The top gainers of the Nifty were L&T up by 2.88%, Bharti Airtel up by 2.75%, JP Associates up by 2.56%, ONGC up by 2.51% and M&M up by 2.27%.

On the flip side, Ranbaxy down by 4.31%, GAIL down by 1.72%, Tata Motors down by 1.54%, Infosys down by 1.40% and Hero MotoCorp down by 1.07% were the major losers on the index.

Most of the Asian equity indices were trading in the green; Shanghai Composite rose 0.77%, Hang Seng gained by 0.19%, Jakarta Composite strengthened 0.93%, KLSE Composite added 0.11%, Straits Times jumped 0.42%, KOSPI Composite increased 0.20% and Taiwan Weighted was up by 0.22%.

On the flip side, Nikkei 225 was down by 1.27%.