Benchmarks make gap-up opening after three straight days of fall

Buoyed by firm global cues, Indian equity benchmarks have made a gap-up opening, after a three days continuous fall, led by financial shares on hopes of a rate cut by the central bank in its policy meet on June 17. Some support also came in with finance minister P Chidambaram’s statement that the government will unveil more reforms in the next few days and weeks, to revive investment and growth and there is no need for panic over the rupee’s weakness. Chidambaram has further said that the economy was stronger than what it was this time last year and inflation too was low. Chief Economic Advisor Raghuram Rajan too has allayed concern about the country’s Current Account Deficit (CAD) and said that for the fourth quarter of financial year 2012-13, it is likely to be around 4 percent of the gross domestic product.

Global cues too remained supportive as the US markets bounced back in last session on getting some better than expected economic data and the traders even shrugged the concern that better economy may lead the Fed to start tapering its stimulus measures soon. The Asian markets too were trading in green at this point of time with the Japanese market surging by about two and a half percent in early deals, rebounding from their biggest drop in three weeks as the yen fell overnight. Meanwhile, South Korean shares too traded higher in morning deals after slumping to a seven-month closing low on Thursday on selling by foreign investors.

On the sectoral front, consumer durables witnessed the maximum gain in trade followed by realty and auto, while software remained the lone loser 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 953 shares on the gaining side against 310 shares on the losing side while 46 shares remain unchanged.

The BSE Sensex opened at 18,959.83; about 132 points higher compared to its previous closing of 18,827.16, and has touched a high and a low of 19,065.08 and 18,952.09 respectively. The index is currently trading at 19,035.06, up by 207.90 points or 1.10%. There were 24 stocks advancing against 6 declines on the index.

The overall market breadth has made a strong start with 72.80% stocks advancing against 23.68% declines. The broader indices were trading in green; the BSE Mid cap and Small cap indices up by 1.12% and 0.95% respectively. 

The top gaining sectoral indices on the BSE were, Consumer Durables up by 2.47%, Realty up by 2.39%, Auto up by 1.66%, Capital Goods up by 1.56% and Oil & Gas up by 1.52% while, IT down by 0.20% was the sole loser on the sectoral index.

The top gainers on the Sensex were Tata Motors up by 3.18%, Tata Steel up by 2.61%, HDFC up by 2.57%, Tata Power up by 2.56% and Maruti Suzuki up by 2.35%.

On the flip side, Wipro was down by 1.96%, Cipla was down by 0.63%, TCS was down by 0.60%, Coal India was down by 0.42% and Hindustan Unilever was down by 0.27% were the top losers on the Sensex.

Meanwhile, attributing the rupee's decline to the surge in dollar demand in international markets, Planning Commission Deputy Chairman Montek Singh Ahluwalia said that the government has been taking steps to deal with the economic situation and hoped that forex market will stabilize in coming days. Ahluwalia said that rupee is falling in tandem with all emerging market economies because of their high current account deficit. The rupee had touched an all-time intra-day low of 58.98 recently on account of strong dollar demand in international market. Presently dollar is appreciating against all the currencies across the world and the rupee has not weakened as much as some of its peers with South African currency depreciating by around 11 per cent.

Currently, to check the rupee depreciation, the RBI intervened which suggests that it is feeling that market pressures were pushing the currency to an unnecessarily low point. It was learnt that the central bank asked some state owned banks to sell US dollars when the local unit was trading at 58.95/$. Accordingly, banks include Union Bank of India, Canara Bank, SBI , Syndicate Bank and others have sold the greenback to tune of $4-5 billion.   

The rupee is depreciating mainly due to the high CAD, which widened on account of rising gold import and high crude oil prices. Further, persistent dollar demand from importers and banks also added to the fall in rupee value. In May, India’s gold imports touched 162 tonnes, while in April, it was around 100-120 tonnes, higher than the average monthly import level of 70-80 tonnes. The CAD widened to a record high of 6.7% in the third quarter of FY13. 

The CNX Nifty opened at 5,748.95; about 49 points higher as compared to its previous closing of 5,699.10, and has touched a high and a low of 5,772.55 and 5,739.40 respectively.

The index is currently trading at 5,765.15, up by 66.05 points or 1.16%. There were 43 stocks advancing against 7 declines on the index.

The top gainers of the Nifty were Tata Motors up by 3.22%, IDFC up by 3.21%, HDFC up by 2.68%, JP Associate up by 2.63% and Tata Steel up by 2.59%.

On the flip side, HCL Tech down by 1.00%, IndusInd Bank down by 0.98%, TCS down by 0.72%, Hero MotoCorp down by 0.51% and Cipla down by 0.41% were the major losers on the index.

Most of the Asian equity indices were trading in green; Shanghai Composite rose 4.61 points or 0.21% to 2,152.96, Hang Seng surged 206.46 points or 0.99% to 21,093.50, Jakarta Composite zoomed 139.26 points or 3.02% to 4,746.92, KLSE Composite increased 13.21 points or 0.76% to 1,756.08, Nikkei 225 soared 307.32 points or 2.47% to 12,752.70, Straits Times added 25.43 points or 0.81% to 3,156.12 and KOSPI Composite was up by 3.92 points or 0.21% to 1,886.65.

On the flip side, Taiwan Weighted was down by 25.63 points or 0.32% to 7,926.03.