Markets rallies for second day; Sensex surges over 300 points

Indian equity markets continued trading firm in the late morning session on Friday, following reforms in gas and energy sector coupled with supportive global cues. Snapping the worst hit in the last few days, markets sentiments improved on the hopes that, increase in gas price will mean a larger royalty to government and bigger profit for the PSU oil companies. In currency market, Indian rupee appreciated against greenback, breaching 60 dollar mark, amid increased US currency’s selling by banks and exporters. On sectoral front, energy stocks were on fire, after Cabinet Committee on Economic Affairs’ (CCEA) decision to hike gas price to higher-than-expected at $8.4 mmBtu from $4.2 mmBtu. Power and fertilizer stocks also extended gains after the Finance Minister made an important clarification on the new gas pricing mechanism, that policy is to fix only output prices and not input prices, at which Power and Fertiliser Ministries will buy gas.

On the global front, Asian markets were trading higher as Japanese stocks shot up after the country reported higher-than-expected industrial output growth. While, US stocks rallied for a third session yesterday on upbeat economic data and reiterations from Federal Reserve officials that monetary policy depends on the economic outlook. Back home, the market breadth was favoring positive trend; there were 1309 shares on the gaining side against 650 shares on the losing side, while 103 shares remained unchanged.

The BSE Sensex is currently trading at 19,200.36, up by 324.40 points or 1.72% after trading in a range of 19,251.35 and 19,093.18. There were 26 stocks advancing against 3 declines on the index and one remained unchanged.

The broader indices were trading in green; the BSE Mid cap index was up by 1.20% and Small cap index was up by 1.07%.

The top gaining sectoral indices on the BSE were, Capital Goods up by 3.17%, Metal up by 2.92%, PSU up by 2.21%, OIL & Gas up by 2.11% and Power up by 2.02%, while Consumer Durables down by 0.71%, IT down by 0.61% and TECk down by 0.04% were the top losers on the BSE.

The top gainers on the Sensex were Coal India up by 4.46%, BHEL up by 4.29%, Tata Motors up by 3.73%, L&T up by 3.64% and Jindal Steel up by 3.13%.

On the flip side, Wipro was down by 0.98%, Infosys was down by 0.82% and Hindustan Unilever was down by 0.66% were the top losers on the Sensex.

Meanwhile, concerned over the prevailing economic downturn, the Reserve Bank of India (RBI) governor D Subbarao has said that slowdown in growth is the most worrisome factor and volatile capital flows have made the country vulnerable to face economic challenges. The RBI governor further stated that service and industry sector are growing below the trend and the perception of difficulties in doing business in India still persist, which is inhibiting investments in the country. Indian economic growth slowed down to decade low of 5 per cent in FY13. 

Referring to the current fiscal growth, the governor said that central bank is expects that economy’s growth will improve to 5.7 per cent in the current fiscal on the back of recent measures taken to ease the supply bottlenecks.  On the current account deficit (CAD), which had widened to a record high of 4.8 percent in the FY13, Subbarao said that short-term efforts are directed at financing the CAD and in the last quarter a massive improvement was seen in CAD, which contracted to 3.6 percent of GDP from 6.7 percent of GDP recorded in the third quarter of previous fiscal.

The RBI in its recently released report on the ‘Financial Stability’ noted that the macroeconomic risks to the economy have increased over the past six months, mainly on the dimensions of domestic growth, external sector and corporate sector performance. The report mentioned high CAD a key concern on the external front and a stress point for the economy as evident from the recent rupee depreciation on global cues. However, it noted that improvement in the quality of fiscal consolidation will be crucial for ensuring sustainable high growth and macroeconomic stability.

The CNX Nifty is currently trading at 5,776.95 up by 94.60 points or 1.66% after trading in a range of 5,794.70 and 5,749.50. There were 44 stocks advancing against 6 declines on the index.

The top gainers of the Nifty were BHEL up by 4.73%, Coal India up by 4.37%, L&T up by 3.66%, BPCL up by 3.63%, and Reliance Infra up by 3.62%.

On the flip side, Ranbaxy down by 2.55%, HCL Tech down by 2.46%, Infosys down by 0.85%, Hindustan Unilever down by 0.65% and Ultra Tech Cement down by 0.35% were the major losers on the index.

The Asian equity indices were trading in green; Shanghai Composite rose 0.22%, Hang Seng surged 0.99%9, Jakarta Composite soared 1.67%, KLSE Composite jumped 0.87%, Nikkei 225 zoomed 3.53%, Straits Times increased 1.25% to 3,147.57, KOSPI Composite added 1.50% and Taiwan Weighted was up by 2.26%.