Markets extend early gains; Nifty hits 28-month high

Following a positive rally, Indian equity markets extended gains in the late morning session on Wednesday, amid sustained buying across the counters. The BSE Sensex surged 405 points, while Nifty hits 28-month high. Meanwhile, Governor Duvvuri Subbarao’s statement that, the Reserve Bank of India will take note of falling inflation when discussing potential interest rate cuts also boosted market sentiments. Indian rupee recovered against greenback amid increased selling of the US currency by exporters. On the sectoral front, all rate sensitives like banking, automobile and realty were trading firm on continued buying interest. Shares from capital goods, oil, metal, PSU, power and healthcare sectors too were mostly trading notably higher, while information technology stocks edged up a bit after a subdued start.

On the global front, Asian stock markets are mostly trading higher on Wednesday with Japan’s Nikkei touching fresh 5 1/2 year highs on further weakness in yen. US stocks also ended at record highs on hopes of steady US growth will extend the bull-run in equity markets. Back home, the market breadth was still favoring positive trend; there were 1,120 shares on the gaining side against 469 shares on the losing side, while 96 shares remain unchanged.

The BSE Sensex is currently trading at 20,127.72, up by 405.43 points or 2.06% after trading in a range of 20,141.03 and 19,798.18. All 30 stocks were advancing on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.40% and Small cap index was up by 1.01%.

The gaining sectoral indices on the BSE were, Realty up by 2.76%, Auto up by 2.63%, Bankex up by 2.63%, Capital Goods up by 2.24% and PSU up by 2.04%, while there was no loser on the BSE sectoral space.

The top gainers on the Sensex were HDFC up by 5.17%, Mahindra & Mahindra up by 3.32%, Tata Motors up by 3.04%, SBI up by 3.00% and Hindalco Inds up by 2.99%, while there was no loser on the Sensex.

Meanwhile, as per the global rating agency Standard & Poor's (S&P), India’s economy to grow by 6 percent in the current fiscal, however, cautioned that a weaker global risk appetite and poor monsoon would pull down growth to around 5 percent. The rating agency's projection is lower than the Government's estimate of 6.1-6.7 percent growth, while, it is higher than RBI's projection of 5.7 percent for FY14. For FY15 and FY16, S&P projected the economic growth to pick up at 6.7 percent and 7 percent respectively.

Regarding the Asia Pacific economic growth, S&P said in its report that growth in most of the Asian region will hold steady or even pick up slightly in 2013 and 2014, after having slowed sharply in the first half of 2012. The upside potential for the region is characterised by a stronger than expected global recovery, boosting trade and growth in Asia. By adding further, it said that Asia Pacific witnessed positive economic trends in the second half of 2012, while India remained the only country that saw falling growth during the period.

The rating agency said that growth and exports generally picked up in the second half of 2012 on the back of more positive global developments, especially in the US. Referring to the Euro-zone crises, it said that the euro zone's debt crisis continues to be a key risk for global credit conditions in 2013 and 2014 as the European economic engine continues to falter. Further, S&P forecasted that the Euro zone stays in recession this year followed by anemic recovery in 2014, instead of in the second half of this year.

The CNX Nifty is currently trading at 6,120.05 up by 124.65 points or 2.08% after trading in a range of 6,125.50 and 6,018.85. There were 49 stocks advancing against 1 decline on the index.

The top gainers of the Nifty were HDFC up by 5.01%, PNB up by 4.86%, IDFC up by 4.20%, Reliance Infra up by 3.80%, and Lupin up by 3.51%. On the flip side, Ranbaxy down by 0.49% was the only loser on the index.

Most of the Asian markets were trading in green; Hang Seng rose 0.78%, Jakarta Composite increased 0.12%, Nikkei 225 surged 2.25%, Straits Times added 0.24% and Taiwan Weighted was up by 0.81%.

On the flip side, Shanghai Composite declined 0.06%, KOSPI Composite was down by 0.05% and KLSE Composite declined 0.01 points.