Indian markets rallied as current account deficit concerns ease

Indian markets were firmly placed in late morning session after a strong opening on revived sentiment as the current account deficit came down at lower-than-estimated 3.6 percent, while fresh buying by funds amid firming Asian trend also supported the markets. The market may turn volatile as the session progresses as traders are likely to square off open positions on the last day of June series. After plunging to an all-time low in previous trade, the Indian rupee opened on a firm note. The partially convertible rupee was at 60.53, up 19 paise, against previous close of 60.72 per dollar. In an effort to pull-back the rupee from all-time low levels, the Reserve Bank of India released current account deficit CAD data a day early. India's CAD for the March quarter was $18.1 billion, or 3.6 per cent of GDP, lower than expected and below the $21.7 billion deficit a year earlier. The April-March CAD stood at $88.2 billion and the Q4 Balance of Payments ( BoP) stood at a surplus of $300 billion versus a $600 billion deficit year-on-year.

On the global front, Asian markets too were rallying at this point of time with KOSPI Composite surging by about three per cent after South Korean government revised up its growth forecast for the economy this year, as it expects the recent stimulus measures to boost economic activity further ahead. Back home, the traders were seen piling up positions in IT, Realty and Health Care while selling was seen in Consumer Durables sector. In scrip specific developments, Oil & Gas stocks trades higher ahead of the Cabinet meet due later today to decide on raising natural gas prices for the first time in three years even as the move faces stiff resistance because it would result in rise in electricity tariff and fertiliser cost.  

In scrip specific actions, Magma Fincorp zoomed after the Kolkata based non-banking finance company decided to apply to the Reserve Bank of India (RBI) for a new banking license. The company's board on Wednesday approved the decision to go ahead with the application process. Reliance Communications rose, after the telecom major has tied up with Apple to bundle the iPhone handset with its service plans. The Anil Ambani-owned telecom operator will offer as much as 50% discount on data service on its 3G, or third generation, network to iPhone users on its network under these plans. Crompton Greaves soared after the company has bagged Rs 231 crore order from Power Grid Corporation of India for supply of 765kV transformers and reactors at its various substations. Oil India surged after the state-owned company said it will raise $800-900 million in foreign debt to finance its share in the $2.5 billion acquisition of a stake in super-giant Mozambique gas field it is making with ONGC. Reliance Power tanked as the Central Electricity Regulatory Commission cancelled the commissioning date of the Sasan Power Ltd's ultra mega power project on the ground that the company has flouted norms.

Meanwhile, the NSE Nifty and BSE Sensex were trading just above their psychological 5,600 and 18,700 levels respectively. The market breadth on BSE was showing positive trend with advances to declines in ratio of 988:577. The BSE Sensex is currently trading at 18750.13, up by 198.01 points or 1.07% after trading in a range of 18775.47 and 18705.73. There were 25 stocks advancing against 5 declines on the index. The broader indices were trading on green; the BSE Mid cap index was up by 0.48% and Small cap index was up by 0.69%.

The top gaining sectoral indices on the BSE were, IT up by 1.45%, Realty up by 1.32%, Health Care up by 1.26%, Bankex up by 1.25%, Teck up by 1.25%, and while Consumer Durables down by 0.65% was the sole losers on the BSE.

The top gainers on the Sensex were ONGC up by 3.23%, Bajaj Auto up by 3.18%, RIL up by 2.49%, Gail India up by 1.89% and Sterlite Inds up by 1.88%. On the flip side, NTPC was down by 0.74%, Tata Motors was down by 0.68%, Maruti Suzuki was down by 0.64%,  Coal India was down by 0.23%, and Wipro was down by 0.01% were the top losers on the Sensex.

Meanwhile, The Cabinet Committee on Economic Affairs (CCEA) is likely to take a decision soon on the issue of natural gas pricing. It is expected that CCEA will raise natural gas prices by around 60 per cent to $6.775 per million British thermal unit (mbtu) as against the present rate of $4.2 per mbtu for all domestically produced natural gas, which will impact the power and fertilizer sectors hard.

Meanwhile, the CCEA proposed price $6.775 mbtu is lower than the $8 to $8.5 mbtu suggested by the Rangarajan panel, which recommended domestic gas pricing at an average of rates at key international hubs. Further, CCEA draft also states that the natural gas prices will be revised on the quarterly basis and for the April-June quarter of 2014, it comes to $6.775 per mbtu. The pricing will be applicable to gas produced from all sources, conventional as well as unconventional like shale gas, CBM etc.

Earlier, Oil minister M V Moily said that the revision in rates was a contractual requirement which will help remove policy uncertainties and spur investments, citing that the current rate of $4.2 per mbtu is uneconomical to produce gas from deep-sea fields.

Meanwhile, the move is facing stiff resistance as it would result in a rise in electricity tariff and fertiliser cost. The power ministry suggested that that gas price should not be more than $5 and rates should not be hiked for gas produced by state-owned firms like the Oil and Natural Gas Corporation Limited. However, the power ministry's suggestion was rejected by oil ministry.  

The CNX Nifty is currently trading at 5,649.60 up by 60.90 points or 1.09% after trading in a range of 5,662.25 and 5,639.60. There were 44 stocks advancing against 5 declines while 1 stock remained unchanged on the index.

The top gainers of the Nifty were ONGC up by 3.42%, Bajaj Auto up by 3.28%, UltraTech Cement up by 3.06%, Ranbaxy Laboratories up by 2.21% and Axis Bank up by 2.21%. On the flip side, Tata Motors down by 0.70%, NTPC down by 0.60%, Coal India down by 0.54%, Maruti Suzuki down by 0.43% and NMDC down by 0.05% were the major losers on the index.

The Asian equity indices were trading in green; Shanghai Composite rose 7.75 points or 0.40% to 1,959.25, Hang Seng soared 299.74  points or 1.47% to 20,638.29, Jakarta Composite jumped 130.67 points or 2.85% to 4,718.40, KLSE Composite increased 11.97 points or 0.69% to 1,752.73, Nikkei 225 surged 341.20 points or 2.66% to 13,175.21, Straits Times added 45.54 points or 1.47% to 3,150.26, KOSPI Composite strengthened 54.44 points or 3.05% to 1,838.09  and Taiwan Weighted was up by 83.97 points or 1.08% to 7,868.77.