Markets get a gap-up start on European optimism and supportive cues

The development in the Europe has given a reason of jubilation for the global markets and the domestic markets too are showing the festivity mood ahead of Diwali with a good gap up start of the new week. EU leaders made some progress towards a strategy to fight the euro zone’s sovereign debt crisis on Sunday, nearing agreement on bank recapitalization and on how to leverage their rescue fund to try to stop bond market contagion. Though the final decision will be taken on Wednesday and any disappointment may turn the markets lower then, however the domestic investors are feeling relieved for the time being and despite being the F&O expiry week and the RBI’s monetary policy review scheduled tomorrow, have surged in tandem with their Asian peers who are showing gains of 1-4%. All the sectoral gauges are trading in green, while the IT industry stocks have taken the lead expecting a positive conclusion to the European debt issue. The rate sensitive auto, banking and realty too are trading higher in early trade factoring a 25 basis points hike in the RBI’s scheduled policy meet on Tuesday.

The BSE Sensex opened at 17,011.06; about 200 points higher compared to its previous closing of 16,785.64, and has touched a high and a low of 17,098.28 and 17,006.28 respectively.

The index is currently trading at the high point of the day at 17,098.28, up by 312.64 points or 1.86%. There were 29 stocks advancing against just one decline on the index.

The overall market breadth has made a strong start with 72.92% stocks advancing against 23.52% declines. The broader indices were, however, underperforming the benchmarks; the BSE Mid cap and Small cap indices were up by 0.87% and 0.80% respectively.

The top gaining sectoral indices on the BSE were IT up by 2.20%, Auto up by 2.15%, Bankex up by 2.04%, Metal was up by 2.01% and Realty was up by 1.94%.

The top gainers on the Sensex were Tata Motors up by 3.71%, Sterlite Industries up by 3.69%, TCS up by 3.49%, Wipro up by 3.01% and JP Associates up by 2.88%

On the flip side, L&T remains the lone losers on the Sensex, down by 1.03%

Meanwhile, Prime Minister Manmohan Singh has expressed concern over meeting the growth target of 9% for coming five year plan, given the uncertainty in international economy.

Owing to the slowdown in United States and debt crisis in Eurozone, high inflation and moderation in industrial growth had forced India to revise its growth forecast downturn. Now government is expecting economy to grow by 8% in the current financial year.

However, in a speech discussing preparations for country’s 12th five year plan (2012-17), Prime Minister said long-term economic prospects remained good. 'The approach paper proposes a growth target of 9% per year. It is relevant to ask whether this is feasible since the economy is currently slowing down,' he added.

Expressing concern over the current slowdown, however Prime Minister expects it to be a short term phenomenon, because of the high volatility in the global economy.

With reference to the India’s downturn revision in GDP growth forecast, Prime Minister said all major economies were reducing their growth expectations given the debt problems in Europe and the United States.

Country’s economic growth in the first quarter of 2011-12 have been affected by the deteriorating condition in the global economy along with the high inflation and increased cost of capital because of the high interest rates. In April to June 2011, country’s economic growth declined to 7.7% compare to 8.8% in April to June 2010.

The S&P CNX Nifty opened at 5,114.70; about 65 points higher compared to its previous closing of 5,049.95, and has touched a high and a low of 5,144.75 and 5,111.35 respectively. The index is currently trading at 5,144.00, higher by 94.05 points or 1.86%. There were 48 stocks advancing against just 2 declines on the index.

The top gainers of the Nifty were RPower up by 5.10%, Tata Motors up by 4.15%, Sterlite Industries up by 3.83%, TCS up by 3.57% and Axis bank was up by 3.04%.

On the flip side, RCom down by 1.35% and L&T down by 0.88% were the two losers on the index.

Most of the Asian equity indices continue to trade with good gains; Shanghai Composite was up by 8.02 points or 0.35% to 2,325.30, Hang Seng surged by 706.02 points or 3.92% to 17,079.14, Jakarta Composite was up by 78.59 points or 2.11% to 3,597.49, KLSE Composite was up by 18.97 points or 1.32% to 1,457.80, Nikkei 225 was up by 148.41 points or 1.71% to 8,827.30, Straits Times was up 54.12  points or 2.00% to 2,766.53, Seoul Composite was up by 51.73 points or 2.81% to 1,890.11 and  Taiwan Weighted was up by 191.06 points or 2.63% to 7,445.57.