Indian equity benchmarks trade higher in early deals

Key domestic benchmarks after a negative start have got their positive trajectory back on Monday with frontline gauges trading above their crucial 5,850 (Nifty) and 19,450 (Sensex) bastions. Sentiments remained up-beat as foreign institutional investors (FII) bought shares worth Rs 11.24 billion on June 28, 2013, snapping a 13-day selling streak. Some support also came in after Prime Minister Manmohan Singh stated that the government aims to invest Rs 1.15 lakh crore in PPP (public private partnership) projects across infrastructure sectors in rail, port and power in the next six months. Meanwhile, the Confederation of Indian Industry (CII) has made a strong push for speedy action to implement the proposed Goods and Service Tax (GST) and has said that the industry hopes that political developments would not overshadow its progress.

However, the gains remained capped as cues from the global markets remained somber with the US markets snapping their gaining streak in last session and ending lower, though there was sign that Fed may not scrap its bond buying program so early. While, all the Asian equity indices were trading in the red at this point of time, as sentiments got dampened after Chinese factory activity shrank for a second consecutive month in June and reached its lowest in nine months as new orders fell despite price cuts by producers. The HSBC/Markit Purchasing Managers’ Index (PMI) for June retreated to 48.20, the lowest level since September 2012 and down from May’s final reading of 49.20.

Back home, on the sectoral front, power witnessed the maximum gain in trade followed by capital goods and realty, while software, consumer durables and technology remained the few losers on the BSE sectoral space. The broader indices were outperforming benchmarks while, the market breadth on the BSE was positive; there were 891 shares on the gaining side against 341 shares on the losing side while 54 shares remain unchanged.

The BSE Sensex opened at 19352.48; about 43 points lower compared to its previous closing of 19395.81 and has touched a high and a low of 19496.09 and 19347.57 respectively. The index is currently trading at 19462.57, up by 66.76 points or 0.34%. There were 21 stocks advancing against 9 declines on the index.

The overall market breadth has made a strong start with 69.28% stocks advancing against 26.52% declines. The broader indices were trading in green; the BSE Mid cap and Small cap indices down by 0.99% and 0.71% respectively. 

The top gaining sectoral indices on the BSE were, Power up by 1.66%, Capital Goods up by 1.56%, Realty up by 1.12%, PSU up by 1.07% and Oil & Gas up by 0.94%, while IT down by 0.90%, Consumer Durables down by 0.46% and Teck down by 0.35% were the top losers on the sectoral index.

The top gainers on the Sensex were Jindal Steel up by 2.99%, Tata Power up by 2.27%, BHEL up by 1.98%, NTPC up by 1.84% and L&T up by 1.60%.

On the flip side, Infosys was down by 1.10%, TCS was down by 1.08%, Bajaj Auto was down by 0.91%, Wipro was down by 0.80% and Hindalco Industries was down by 0.45% were the top losers on the Sensex.

Meanwhile, as the Current Account Deficit (CAD) touched a record level of 4.8 percent of GDP in 2012-13, India Inc suggested the government to take all policy measures, in order to boost exports and foreign exchange inflows to cut down CAD. Increase in gold and oil imports are the major reasons for the rise in CAD. However, in January-March quarter, it came down to 3.6 percent of GDP because of the steps taken by the government to arrest the imports of gold and partly due to lower imports of oil. Stagnation in non-oil and non-gold imports due to the economic slowdown also helped to moderate the deficit.

According to Chandrajit Banerjee, the CII Director General, CAD is much above the comfort level of 2.5 percent which is a big concern. In order to increase FII inflows, and scale up the foreign exchange reserves, the government needs to take bold policy decisions keeping the objective of cutting down the deficit. Boosting exports must be an important part of the policy, whereas the government should also introduce attractive financial instruments to divert household savings in non-productive assets like gold.

As per, D S Rawat, Assocham Secretary General, modification is needed in the foreign trade and industrial competitiveness strategies. The policy makers also have to consider cutting down imports of non-essential items which include second hand and re-manufactured goods, particularly non-competitive goods from China. The industry leaders stated that the effect of reduction in CAD in Q4 will appreciate rupee.

The CNX Nifty opened at 5,834.10; about 8 points lower as compared to its previous closing of 5,842.20, and has touched a high and a low of 5,870.35 and 5,822.20 respectively.

The index is currently trading at 5,858.20, up by 16.00 points or 0.27%. There were 37 stocks advancing against 12 declines, while one stock remains unchanged on the index.

The top gainers of the Nifty were Jindal Steel up by 3.01%, IndusInd Bank up by 2.46%, Bank of Baroda up by 2.05%, BHEL up by 2.04% and Tata Power up by 1.97%.

On the flip side, Infosys down by 1.33%, Bajaj-Auto down by 1.25%, TCS down by 1.06%, Hindalco Industries down by 0.85% and BPCL down by 0.74% were the major losers on the index.

Most of the Asian equity indices were trading in green; Shanghai Composite declined 14.76 points or 0.75% to 1,964.44, Jakarta Composite dropped 41.42 points or 0.86% to 4,777.48, KLSE Composite slipped 1.41 points or 0.08% to 1,772.13, Straits Times dipped 12.31 points or 0.39% to 3,138.13, Nikkei 225 decreased 11.79 points or 0.09% to 13,665.53, KOSPI Composite contracted by 3.32 points or 0.18% to 1,860.00 and Taiwan Weighted was down by 25.64 points or 0.32% to 8,036.57.