Benchmarks trade higher in early deals on firm global cues

Extending their rally for third straight day, Indian equity indices have made a positive opening with frontline gauges surpassing their crucial 6,050 (Nifty) and 19,950 (Sensex) levels supported by firm global cues. The US markets extended their gains overnight, though the trade remain subdued lacking any major economic news. The major indices just extended their upward trend of the past few weeks. While, most of the Asian equity were trading in green at this point of time as strong Chinese trade data added to positive sentiment already bolstered by record highs overnight for US and German stocks. China’s exports rose 14.7% in April, while imports grew 16.8%, leaving the country with a trade surplus of $18.16 billion for the month.

Back home, sentiments remained jubilant after National Council of Applied Economic Research (NCAER) said that the Indian economy is likely to grow by 6.2 percent in the current financial year, significantly higher than the Reserve Bank of India's GDP growth projection of 5.7 percent for 2013-14. Sentiments got buttressed with the government’s statement that it has taken a slew of initiatives to boost exports and reduce imports to lower trade deficit and thereby Current Account Deficit (CAD). Some support also came in from rally in sugar stocks like Uttam Sugar, Rajshree Sugar, Balrampur Chini Mills, EID Parry and Rana Sugars edged higher as the Food Ministry has notified the Cabinet Committee on Economic Affairs (CCEA) decision to partially decontrol the sugar sector. On April 4, the CCEA had decided to decontrol the sugar sector.

On the sectoral front, metal witnessed the maximum gain in trade followed by software and oil and gas while, power, capital goods and consumer durables remained the top losers on the BSE sectoral space. The broader indices were going neck-to-neck with benchmarks while, the market breadth on the BSE was positive; there were 792 shares on the gaining side against 461 shares on the losing side while 53 shares remain unchanged.

The BSE Sensex opened at 19,950.22; about 61 points higher compared to its previous closing of 19888.95, and has touched a high and a low of 19,989.64 and 19,913.22 respectively.

The index is currently trading at 19,954.77, up by 65.82 points or 0.33%. There were 18 stocks advancing against 12 declines on the index.

The overall market breadth has made a strong start with 60.64% stocks advancing against 35.30% declines. The broader indices were trading in green; the BSE Mid cap and Small cap indices up by 0.43% and 0.55% respectively. 

The top gaining sectoral indices on the BSE were, Metal up by 0.58%, IT up by 0.45%, Oil & Gas up by 0.43%, Teck up by 0.41% and Health Care up by 0.29% while, Power down by 0.28% and Capital Goods down by 0.17% were the only losers on the sectoral index.

The top gainers on the Sensex were HDFC up by 2.20%, Tata Motors up by 1.96%, ONGC up by 1.36%, Sterlite Industries up by 1.27% and Hindalco Industries up by 1.08%.

On the flip side, Hero MotoCorp  was down by 1.31%, NTPC was down by 1.27%, Bajaj Auto  was down by 0.94%,  Dr Reddys Lab was down by 0.63% and SBI  was down by 0.61% were the top losers on the Sensex.

Meanwhile, in order to boost exports and bridge the widening current account deficit, the Reserve Bank of India (RBI) has suggested a slew of measures such as introduction of differential tax regime and increasing the scope of interest subsidy scheme for exporters. The central bank said ‘the global trade environment may not improve in the immediate period. Therefore, there is an urgent need to boost India’s exports so that the trade deficit is narrowed down, and CAD stays within the projected cap’.

The CAD, which is the difference between the inflow and outflow of foreign currency, had touched a record high of 6.7 per cent in the third quarter of FY13. Moreover, exports declined by 1.76 per cent to $300.6 billion in 2012-13 fiscal and the trade deficit touched an all time high of $190.91 billion for the same period.

The central bank had constituted a technical committee on services/facilities for the exporters headed by RBI Executive Director G Padmanabhan to suggest ways for improving financial support from alternative sources. In line with its objective, the committee has made recommendations relating to review of Gold Card Scheme for extension of export credit to exporters, appropriate inclusion of export finance under the priority sector lending and widening the scope of interest subvention.    

To make the tax structures more streamlined for exporters, the RBI committee said that like Singapore and Sri Lanka, which offer differential tax rates to promote exports, the government may consider offering this facility to Indian exporters. It also asked for early introduction of Goods and Services Tax (GST), since exporters incur numerous levies, such as VAT (value added tax), purchase tax, turnover tax, octroi, electricity duty, which make the Indian export pricing uncompetitive. 

Further, the committee also recommended continuation of export credit refinance policy for three years, which would provide certainty in availability of funds to the banks for managing their asset-liability positions and would also build confidence among the exporting community. It also proposes to set up a nodal agency for borrowing in foreign currency from abroad on a pool basis, and further lend to export orientated companies in India at competitive rates. 

The CNX Nifty opened at 6,064.15; about 20 points higher as compared to its previous closing of 6,043.55, and has touched a high and a low of 6,070.15 and 6,049.40 respectively.

The index is currently trading at 6,061.45, up by 17.90 points or 0.30%. There were 28 stocks advancing against 22 declines on the index.

The top gainers of the Nifty were HDFC up by 2.17%, Lupin up by 2.02%, Tata Motors up by 1.94%, JP Associate up by 1.64% and ONGC up by 1.41%.

On the flip side, Ranbaxy down by 1.66%, NTPC down by 1.39%, Hero MotoCorp down by 1.22%, Asian Paints down by 1.02% and Bajaj-Auto down by 0.88%, were the major losers on the index.

Most of the Asian equity indices were trading in green; Shanghai Composite rose 5.96 points or 0.27% to 2,241.54, Hang Seng jumped 144.00 points or 0.62% to 23,191.09, Jakarta Composite increased 28.79 points or 0.57% to 5,071.58, Nikkei 225 surged 213.34 points or 1.50% to 14,393.58, Straits Times soared 29.65 points or 0.88% to 3,412.81, KOSPI Composite added 2.54 points or 0.13% to 1,956.89 and Taiwan Weighted was up by 82.20 points or 1.01% to 8,245.26.

On the flip side, KLSE Composite was down by 1.86 points or 0.10% to 1,774.87.