Benchmarks trade in fine fettle in early deals on Thursday

Snapping six days of continuous fall, Indian equity benchmarks have made a positive start with frontline gauges garnering gains of around a percentage point supported by firm cues from other regional peers. Most of the Asian equity indices were trading in the green at this point of time with Chinese Shanghai increasing around a percent after the nation’s official manufacturing activity data came in better than expected, easing some concerns of a sharp slowdown in the world’s second-largest economy. The purchasing managers’ index (PMI) rose to 50.3 from June’s 50.1. Though, the US stocks ended flat overnight as the Federal Reserve gave no hint that a reduction in the pace of its bond-buying program is imminent.

Back home, some strength also came in from Prime Minister Manmohan Singh’s statement that our strategy must not only aim at faster growth but must also ensure that the growth processes are more inclusive. He has further stated that there is no reason to be disheartened over the decline in growth rate. Sentiments also got some support as public sector oil marketing companies edged higher after announcement of raising the price of petrol by 70 paise and diesel by 50 paise a litre, both excluding local taxes, coming into effect from Wednesday midnight. However, the investors remained little cautious on account of dismal growth figures of Core Sector growth, as eight key infrastructure sectors grew at dismal 0.1% in June compared with an expansion of 7.9% in the same month last year.

On the sectoral front, fast moving consumer goods witnessed the maximum gain in trade followed by capital goods and power, while consumer durables, software and oil and gas remained the top losers on the BSE sectoral space. The broader indices too were trading with traction in early deals, while the market breadth on the BSE was positive; there were 782 shares on the gaining side against 409 shares on the losing side while 43 shares remain unchanged.

The BSE Sensex opened at 19,443.29; about 97 points higher compared to its previous closing of 19,345.70, and has touched a high and a low of 19,569.20 and 19443.00 respectively.

The index is currently trading at 19521.35, up by 175.65 points or 0.91%. There were 20 stocks advancing against 10 declines on the index.

The overall market breadth has made a strong start with 63.37% stocks advancing against 33.14% declines. The broader indices were trading in green; the BSE Mid cap up by 0.25% and Small cap indices up by 0.70%. 

The top gaining sectoral indices on the BSE were, FMCG up by 1.87%, Capital Goods up by 1.33%, Power up by 1.32%, Bankex up by 1.13% and Health Care up by 0.72%, while Consumer Durables down by 1.00%, IT down by 0.50%, Oil & Gas down by 0.48% and Teck down by 0.44% were the top losers on the sectoral index.

The top gainers on the Sensex were Hindustan Unilever up by 3.11%, HDFC up by 2.93%, HDFC Bank up by 2.51%, Gail India up by 2.35% and NTPC up by 2.30%.  On the flip side, ONGC was down by 1.36%,  Wipro was down by 0.91%, SBI was down by 0.84%, Tata Steel was down by 0.79% and Hindalco Industries was down by 0.72% were the top losers on the Sensex.

Meanwhile, the Reserve Bank of India (RBI) has opposed the issue of sovereign bonds to bridge a widening current account deficit (CAD) as the benefits of raising foreign exchange from such an instrument outweigh the costs. RBI Governor D Subbarao said that the central bank has done the cost-benefit analysis of the sovereign bond issue and made it clear that sovereign bond issue is not an appropriate option in the current circumstances as costs outweigh benefits. The country should issue sovereign bonds during its high growth phase and we are much vulnerable position right now, he added.

Citing the advantages of sovereign bonds, the RBI chief said that there are perceived benefits of sovereign bond issue as it will buffer reserves, lower interest rates, establish a benchmark for government borrowing and broaden the investor base. However, the high cost of this move would overcome all these benefits.

Earlier this month, the government had planned to come out with a sovereign bond issue to shore up the country’s foreign exchange reserves and strengthen the rupee, saying it was an option to tackle forex volatility. It is estimated that India can mop up $20 billion from NRI bonds. NRI bonds have helped the economy earlier, however the situation is a lot different now as the rupee has depreciated more than Rs 10 in this fiscal alone, languishing at Rs 61 against the dollar. The CAD is at a record high of 4.8 percent of the GDP or $88 billion making things worse and the economy lot vulnerable in the global environment now.

The CNX Nifty opened at 5,776.90; about 35 points higher as compared to its previous closing of 5,742.00, and has touched a high and a low of 5,808.50 and 5,775.00 respectively.

The index is currently trading at 5,792.30, up by 50.30 points or 0.88%. There were 32 stocks advancing against 18 declines on the index.

The top gainers of the Nifty were Hindustan Unilever up by 3.30%, Cairn up by 2.88%, HDFC up by 2.75%, HDFC Bank up by 2.50% and GAIL up by 2.36%. On the flip side, JP Associate down by 2.90%, PNB down by 2.30%, DLF down by 1.60%, ONGC down by 1.38% and IDFC down by 1.32% were the major losers on the index.

Most of the Asian equity indices were trading in green; Shanghai Composite rose 17.06 points or 0.86% to 2,010.85, Hang Seng increased 126.61 points or 0.58% to 22,010.27, KLSE Composite jumped 5.88 points or 0.33% to 1,778.50, Nikkei 225 surged 187.07 points or 1.37% to 13,855.39, Straits Times added 16.84 points or 0.52% to 3,238.77 and Seoul Composite was up by 7.03 points or 0.37% to 1,921.06.

On the flip side, Jakarta Composite dipped 12.72 points or 0.28% to 4,597.66 and Taiwan Weighted was down by 37.76 points or 0.47% to 8,070.18.