Benchmarks witness consolidation in early deals

After plunging close to nine percent in two weeks, Indian equity indices are witnessing consolidation in Thursday’s morning deals with frontline indices trading tad above their neutral line. Some support came in from Planning Commission Deputy Chairman Montek Singh Ahluwalia’s statement that the economy is likely to grow at 5.5 percent this financial year. Also, net direct tax collections went up by 10.37 per cent to Rs 1.17 lakh crore during the April-July period of the current fiscal year as against Rs 1.06 lakh crore mopped up during the same four months of 2012-13. However, the gains remained capped as selling witnessed in oil and gas counter after Parliamentary panel has recommended review of the Government’s decision to raise gas prices and said that Reliance Industries should deliver its shortfall in production of the fuel at the old rate.

On the global front, the US markets extended their falling momentum overnight, pulling back from the days’ low the major indices however, managed to ended lower. Asian markets were rallying at this point of time as sentiments remained jubilant after Bank of Japan maintained its stimulus policy. Sentiments also got bolstered after Chinese exports rose 5.1 per cent in July from a year earlier, above expectations, while imports jumped 10.9 per cent, leaving the country with a trade surplus of $17.8 billion for the month.

Back home, on the sectoral front, auto witnessed the maximum gain in trade followed by consumer durables and realty, while healthcare, oil and gas and public sector undertaking remained the top losers on the BSE sectoral space. The broader indices were outperforming benchmarks, while the market breadth on the BSE was positive; there were 749 shares on the gaining side against 408 shares on the losing side while 36 shares remain unchanged.

The BSE Sensex opened at 18687.30; about 22 points higher compared to its previous closing of 18664.88, and has touched a high and a low of 18734.60 and 18621.67 respectively.

The index is currently trading at 18667.66, up by 2.78 points or 0.01%. There were 14 stocks advancing against 16 declines on the index.

The overall market breadth has made a strong start with 62.21% stocks advancing against 34.62% declines. The broader indices were trading in green; the BSE Mid cap up by 0.62% and Small cap indices up by 0.60%. 

The top gaining sectoral indices on the BSE were, Auto up by 1.75%, Consumer Durables up by 1.64%, Realty up by 0.87%, Capital Goods up by 0.55% and Metal up by 0.35%, while Health Care down by 1.38%, Oil & Gas down by 0.79%, PSU down by 0.50%, IT down by 0.14% and Power down by 0.09% were the top losers on the sectoral index.

The top gainers on the Sensex were Maruti Suzuki up by 3.08%, Tata Motors up by 2.03%, Mahindra & Mahindra up by 1.27%,  HDFC Bank up by 1.17% and HDFC up by 1.00%.  On the flip side, Sun Pharma was down by 3.42%,  Tata Power was down by 1.88%, Wipro was down by 1.71%, ONGC was down by 1.49% and Gail India was down by 1.28% were the top losers on the Sensex.

Meanwhile, as part of an all-out effort to hold back the widening current account deficit (CAD), which has sent the rupee into a free fall and further weakened the economy, the Finance Ministry is set to announce a major package next week, comprising of a combination of import compression, long-term external commercial borrowing and foreign capital flow management.

Indian rupee’s further depreciation to fresh lows against dollar on Tuesday, confirmed that emergency measures introduced by the Reserve Bank of India last month to curb volatility had failed. This further built pressure on government to introduce new measures to steam its ongoing freefall.

Given that higher CAD is a direct outcome of export earnings falling short of the import bill leading to shortage of dollars, the customs duty on non-essential commodities such as electronic goods, cars and high-end bikes is likely to go up in order to discourage their import. Meanwhile, the government also expects to contain gold imports to the last year's level of 845 million tonnes to save a considerable amount of foreign exchange, which would help contain CAD.

Further, the finance ministry is also counting on the Reserve Bank of India (RBI) easing interest rates and pumping more liquidity into the system to revive the economy once the rupee stabilises and volatility in the currency market has ebbed.

India’s currency has depreciated around 13% of its value over the past four months, prompting the RBI to introduce a series of reforms in mid-July designed to drain liquidity from the economy, including measures to raise short-term lending rates for banks.

The CNX Nifty opened at 5,510.05; about 9 points lower as compared to its previous closing of 5,519.10, and has touched a high and a low of 5,544.20 and 5,510.05 respectively.

The index is currently trading at 5,520.85, up by 1.75 points or 0.03%. There were 27 stocks advancing against 23 declines on the index.

The top gainers of the Nifty were Ranbaxy up by 8.49%, Maruti Suzuki up by 3.84%, Ambuja Cements up by 2.96%, DLF up by 2.75% and Tata Motors up by 2.12%. On the flip side, Lupin down by 3.60%, Sun Pharmaceuticals down by 2.95%, Bank of Baroda down by 2.27%, Punjab National Bank down by 2.21% and Tata Power down by 2.01% were the major losers on the index.

The Asian equity indices were trading in green; Shanghai Composite surged 9.86 points or 0.48% to 2,056.64, Hang Seng increased 166.39 points or 0.77% to 21,755.23, Nikkei 225 soared 158.94 points or 1.15% to 13,983.88, Seoul Composite strengthened 15.78 points or 0.84% to 1,894.11 and Taiwan Weighted was up by 7.10 points or 0.09% to 7,928.39.

Markets in Indonesia, Malaysia and Singapore remained shut for the trade today.