Benchmarks continue to trade in fine contour; Sensex nears 19,700 mark

Benchmark equity indices continue to trade in fine contour on selective buying by participants amidst mixed global cues. A positive start of European markets could further augur well for Indian equity markets, which after getting a weak start have made significant headway in the green terrain. Benchmark 30-share index, Sensex, adding  close to half a percent, has inched further close to psychological 19,700 level, at this point of time, while 50-share index, Nifty, too adding close to similar magnitude gains, is comfortably cruising past the crucial 5,950 bastion. Broader indices outperforming larger peers are trading with gains of over half a percent each.

Meanwhile, on the global front, bouncing back after a 3% slide in four sessions, European stocks rose on Tuesday tracking a rally on Wall Street where soft US factory data eased worries the Federal Reserve could soon start to scale back its stimulus measures. However, Asian pacific shares are enduring wide swings between gains and losses as strong cues from US stocks were countered by concerns over China’s growth trajectory.

Closer home, stocks from Health Care, Capital Goods and Oil & Gas counters are the major pockets of strength, while those from Consumer Durable, Information Technology (IT) and Metal counters are the weak links of trade. Additionally, realty stocks are trading comfortably in green even as the Union Cabinet is likely to consider a Bill to set up a regulator for the real estate sector today. The Real Estate (Regulation and Development), Bill 2013, seeks to make it mandatory for developers to launch projects only after acquiring all the statutory clearances from relevant authorities. The overall market breadth on BSE is in favour of advances, which have thumped declines in the ratio of 1127:903; while 126 shares remain unchanged.

The BSE Sensex is currently trading at 19,694.95, up by 84.47 points or 0.43%, after trading in a range of 19,742.70 and 19,576.18. There were 18 stocks advancing against 12 declines on the index.

The broader indices were trading in green; the BSE Mid cap and Small cap index were trading up by 0.49% and 0.58% respectively.

The top gaining sectoral indices on the BSE were, Health Care up by 2.05%, Capital Goods up by 1.66%, Oil & Gas up by 0.95%, Power up by 0.78% and Bankex up by 0.63%, while Consumer Durables down by 0.66% IT down by 0.49%, TECk down 0.12% and Metal down by 0.07% were the top losers on the BSE.

The top gainers on the Sensex were Cipla up by 2.66%, L&T up by 2.58%, Dr Reddys Lab up by 1.79%, ICICI Bank up by 1.56% and M&M up by 1.53%.

On the flip side, Sterlite Inds down by 1.13%, Coal India down by 0.95%, Jindal Steel down by 0.89%, HDFC down by 0.78% and Infosys down by 0.67% were the top losers on the Sensex.

Meanwhile, concerned over the widening current account deficit (CAD), the Reserve Bank of India (RBI) governor, D Subbarao said, the central bank would consider measures to contain the deficit in its next monetary policy review on June 17, since it has implications for the exchange rate and thereby for inflation.

The RBI governor emphasized that the country can run a large CAD one year but it cannot do it year after year and said though exports have to go up, there is a need to quickly deal with the import side issues. By adding further, he said that the government has raised the customs duty on gold import and the RBI has come out with some regulations to restrain the import of gold. But we need to increase exports in a big way and reduce dead-weight import like gold.

Gold imports into India, the world's largest consumer of the metal, stood at around 830 tonne in 2012-13, which widened the CAD to a record high of 6.7 percent in the third quarter of FY13.  In April, gold import jumped by 138 percent to $7.5 billion the highest so far this year pushing up the CAD to $17.7 billion.

Meanwhile, the RBI has taken several steps to check the widening CAD as the central bank recently imposed curbs on import of the yellow metal by banks. Besides this, it has also put restrictions on banks and NBFCs for providing loans against gold coins as well as units of gold ETFs. The government has also taken steps like hike in import duty to restrict gold imports.

The CNX Nifty is currently trading at 5,964.20, up by 24.90 points or 0.42% after trading in a range of 5,981.60 and 5,932.85. There were 35 stocks advancing against 14 declines on the index and one remains unchanged.

The top gainers of the Nifty were Ranbaxy up by 3.64%, Cipla up by 2.91%, L&T up by 2.62%, Lupin up by 2.20% and IDFC up by 2.12%.

On the flip side, Sesa Goa down by 1.43%, Jindal Steel down by 1.43%, HCL Technologies down by 0.92%, HDFC down by 0.89% and Coal India down by 0.81% were the major losers on the index.

Most of the Asian equity indices were mostly trading in red; Shanghai Composite tumbled 1.35%, Straits Times declined 0.12%, Hang Seng slid 0.03%, Taiwan Weighted down by 0.12% and KOSPI Composite was trading flat with negative bias. On the flip side, KLSE Composite rose 0.23%, Nikkei 225 was up by 2.05% and Jakarta Composite was trading flat with positive bias.

European markets have got off to a positive start; with CAC 40 adding 0.82%, DAX rising 1.11% and FTSE 100 gaining 0.66%.