Markets magnify gains in late morning deals

Domestic equity indices magnified their gains and were trading higher by over half a percent in late morning deals, on account of buying by funds and retail investors. Frontline gauges recaptured their crucial 65,700 (Sensex) and 19,500 (Nifty) levels. Meanwhile, broader indices on the BSE were also trading in green with gains in the range of 0.50-0.95%.Sentiments remained upbeat as S&P Global report said India can become a $6.7 trillion economy by 2031, from $3.4 trillion currently, if the country clocks an average growth of 6.7 per cent for 7 years.  On the sectoral front, most of the sectoral indices on BSE were holding in green, with only exceptions of Auto and Oil & Gas counters. Stocks from IT, Telecom, Bankex, TECK and Consumer Durables counters were the prominent gainers.

On the global front, Asian markets were trading mixed as rising bond yields continue to put pressure on equities in the wake of the U.S. credit downgrade. Back home, in the stock specific development,  Cipla soared amid buzz that the world’s largest private equity fund, Blackstone is set to submit a non-binding bid as early as next week to acquire the entire promoter stake in the drugmaker.

The BSE Sensex is currently trading at 65717.64, up by 476.96 points or 0.73% after trading in a range of 65387.18 and 65726.55. There were 24 stocks advancing against 6 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.50%, while Small cap index up by 0.93%.

The top gaining sectoral indices on the BSE were IT up by 1.35%, Telecom up by 1.34%, Bankex up by 1.16%, TECK up by 1.13% and Consumer Durables up by 1.06%, while Auto down by 0.16% and Oil & Gas down by 0.05% were the only losing indices on BSE.

The top gainers on the Sensex were Indusind Bank up by 2.25%, Wipro up by 2.03%, Axis Bank up by 1.87%, Tech Mahindra up by 1.75% and HCL up by 1.73%. On the flip side, Sun Pharma down by 0.61%, Power Grid down by 0.52%, Bajaj Finserv down by 0.35%, Tata Motors down by 0.22% and Hindustan Unilever down by 0.21% were the top losers.

Meanwhile, Chief Economic Advisor (CEA) V Anantha Nageswaran has said that India needs to focus on the manufacturing sector to achieve sustained growth of 7-7.5 per cent until 2030. He also said that manufacturing should be a key growth area given the country's comparative advantage in terms of skilled labour, improved physical infrastructure, well-established industrial ecosystem and large domestic market. 

As regards the services sector, CEA said the composition should change in favour of high value added services as this would improve earnings by attracting foreign demand. He noted that the share of manufacturing in total gross value added has to increase from 16 per cent at present to at least 25 per cent of GDP at the expense of agriculture and low value added services. He further said the investment rate (gross fixed capital formation/GDP) needs to increase from 29 per cent to at least 35 per cent. The private sector, including foreign direct investment, must drive up the investment rate as the government has limited fiscal space.

Nageswaran suggested that the key initiatives in this regard should include the development of domestic corporate bond market, and well-targeted fiscal incentives to attract investment. Regarding government investments, he said the focus should be on infrastructure and public goods which in turn would facilitate and stimulate private sector investment. According to him, the net exports need to increase from about (-)3.7 per cent of GDP to a more balanced figure, which can be done by creating a market for high-end manufacturing and high value added services. He also underlined the need for keeping inflation under check.

The CNX Nifty is currently trading at 19517.45, up by 135.80 points or 0.70% after trading in a range of 19436.45 and 19519.20. There were 37 stocks advancing against 13 stocks declining on the index.

The top gainers on Nifty were Cipla up by 3.31%, Indusind Bank up by 2.08%, Wipro up by 2.03%, Axis Bank up by 1.87% and Tech Mahindra up by 1.79%. On the flip side, Bajaj Auto down by 1.27%, BPCL down by 0.94%, Power Grid down by 0.56%, Sun Pharma down by 0.55% and Adani Enterprises down by 0.53% were the top losers.

Asian markets were trading mixed; Hang Seng advanced 234.86 points or 1.21% to 19,655.73, Shanghai Composite strengthened 24.74 points or 0.75% to 3,305.20, KOSPI increased 2.01 points or 0.08% to 2,607.40 and Nikkei 225 surged 27.01 points or 0.08% to 32,186.29. However, Taiwan Weighted lost 36.74 points or 0.22% to 16,856.99, Jakarta Composite plunged 14.98 points or 0.22% to 6,883.10 and Straits Times fell 6.96 points or 0.21% to 3,297.10.