Sensex, Nifty extend early gains; Auto stocks lead

Following the positive start, Indian equity markets extended early gains in the late morning session on Monday. The Sensex raised 80.27 points, while the Nifty was up by 20.25 point. Investors were trading cautiously on signs that Moody's may lower FY14 GDP growth target to 5% from 5.5%. Moreover, as per Moody's  statement, current account deficit continues to remain major concern for Indian economy and fiscal deficit may be constraint due to growth constraints. In currency market, Indian rupee pared early gains and is trading lower against greenback, on the back of increased demand for dollar from corporate. On the global front, Chinese stocks fell but other Asian markets edged up Monday after Japan's ruling party won a majority in parliament's upper house and a mandate to push ahead economic reforms. Back home, the market breadth was favoring positive trend; there were 940 shares on the losing side against 889 shares on the gaining side, while 115 shares remained unchanged.

On sectoral front, automobile stocks, which opened on a firm note, continue trading in positive territory with notable gains. Bank stocks were also mostly up with notable gains. Select realty, TECk, healthcare and metal stocks were trading higher, while capital goods, power and PSU stocks were trading weak.

The BSE Sensex is currently trading at 20,230.12, up by 80.27 points or 0.40% after trading in a range of 20,236.60 and 20,065.69. There were 21 stocks advancing against 9 declines on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.59% and Small cap index gained 0.18%.

The top gaining sectoral indices on the BSE were, Auto up by 1.10%, IT up by 0.98%, Bankex up by 091%, Realty up by 0.82% and TECk up by 0.72%, while Oil & Gas down by 1.25%, Power down by 0.28%, PSU down by 0.22%, Capital Goods down by 0.18% and Consumer Durables down by 0.13%were the top losers on the BSE.

The top gainers on the Sensex were HDFC up by 2.98%, Sun Pharma up by 2.03%, Mahindra & Mahindra up by 1.77%, Hindalco up by 1.69% and Bajaj Auto up by 1.58%. On the flip side, BHEL was down by 4.40%, RIL was down by 1.64%, Gail India was down by 1.56%, ONGC was down by 1.34%, and Tata Steel was down by 1.00% were the top losers on the Sensex.

Meanwhile, a Federation of Indian Chambers of Commerce and Industry’s (FICCI) Economic Outlook Survey has cautioned that implementing the proposed food security bill will bring additional fiscal pressure and push up the fiscal deficit to five per cent of gross domestic product (GDP) in the current financial year. The survey stated that “...it will impose an additional pressure on the fiscal situation and would make fiscal sustainability plan of the country difficult to achieve”. Adding that the expected fiscal deficit to GDP ratio may come at 5 percent for 2013-14, slightly above the budgeted 4.8 percent.

Though, the survey respondents were of the view that India’s GDP will grow by around 6 percent in FY14, with the first quarter growth in the range of 5 percent. Respondents expect IIP to grow at a moderately faster pace of 3.3 percent in FY14 vis-a-vis 1.1 percent growth witnessed last year. However, the survey also indicated that passive industrial performance, elevated current account deficit and a depreciating rupee might dampen growth prospects if adequate supportive action was not taken.

The respondents indicated inflation would remain favourable as price levels were expected to remain subdued, although currency volatility could have an adverse impact though the rupee-dollar exchange rate is expected to touch 56 by the end of March 2014. Further, it said that depreciating rupee will impact the widening CAD.

The survey participants said that cut in the key policy rate would be crucial to get growth back on track and asked the RBI to cut the key policy rates to boost the economic growth. A majority of the participating economists anticipated a 50-75 basis points cut in repo rate by end of this fiscal year, and said that a fall in repo rate will give elbow room for banks to reduce deposits as well as lending rates.

The CNX Nifty is currently trading at 6,049.45 up by 20.25 points or 0.34% after trading in a range of 6,055.75 and 6,004.25. There were 34 stocks advancing against 16 declines on the index.

The top gainers of the Nifty were HDFC up by 3.05%, Bank of Baroda up by 2.98%, IndusInd Bank up by 2.09%, Sun Pharma up by 2.03 % and PNB up by 1.91%. On the flip side, BHEL down by 4.43%, Ambuja Cements down by 3.91%, ACC down by 2.09%, Ultra Tech Cement down by 2.00% and Ranbaxy down by 1.74% were the major losers on the index.

The most of Asian equity indices were trading in green; KLSE Composite rose 0.10%, Straits Times increased 0.51%, Seoul Composite added 0.48%, Taiwan Weighted was up by 0.54% and Nikkei 225 was up by 0.47%.

On the flip side, Shanghai Composite declined by 0.21%, Hang Seng dropped 0.13% and Jakarta Composite contracted 0.57%.