Local equity markets continue to trade with modest gains; Nifty nears 5500 mark

Local equity markets, after recovering from day’s low, continue to trade with modest gains on account of sustained buying activities in index heavyweights like, HDFC Bank, TCS and L&T, thanks to supportive regional counterparts.

On the global front, Asian stocks rose and gold hit a near three-month high while the dollar nursed losses on Monday, extending a move started late last week when a steep drop in U.S. new home sales tempered expectations the Federal Reserve will soon reduce stimulus.

Nevertheless, a mixed European market could temper the optimism seen at Dalal Street. Currently, Sensex trading with gains of over half a percent is comfortably cruising past the crucial 18,600 level, while Nifty advancing over quarter of a percent is fast approaching the crucial 5,500 level. Broader indices too are trading with gains of over half a percent.

Rupee’s weakness also seems to be cause of worry for market-participants. On the currency front, rupee yet again breached ‘64/$’ level on Monday, tracking weaker offshore rates, as sustained foreign selling in equities continued to raise concerns about the gaping current account deficit. On the BSE sectoral front, stocks from Information Technology, Health Care and Power counter counters are major advocates of market uptrend, while those from Oil & Gas, Banking and Consumer Durable continue to languish at the bottom. The overall market breadth on BSE is in the favour of advances which are outnumbering declines in the ratio of 1164:827; while 125 shares remained unchanged.

The BSE Sensex is currently trading at 18626.64, up by 107.20 points or 0.58% after trading in a range of 18728.19 and 18540.98. There were only 21 stocks advancing against 9 declines on the index.

The broader indices continued to trade firmly; the BSE Mid cap and Small cap index were up by 0.67% and 0.83% respectively.

The top gaining sectoral indices on the BSE were, IT up by 1.81%, Teck up by 1.55%, Healthcare up by 1.45%, Power up by 1.32% and FMCG up by 0.89%. While, Oil and Gas down by 0.56%, Bankex down by 0.56%, Consumer Durables down by 0.42% were the top losers indices on the BSE.

The top gainers on the Sensex were, Sterlite Inds up by 3.30%, Dr Reddys Lab up by 3.05%, BHEL up by 2.76%, Wipro up by 2.59%, and Sun Pharma up by 2.55%. On the flip side, Gail India down by 2.67%, Tata Steel down by 2.46%,ICICI Bank down by 2.23%, ONGC down by 2.10% and Tata Motors down by 1.30% were the top losers on the Sensex.

Meanwhile, amidst mounting concerns over Rupee’s perilous slide, Planning Commission Deputy Chairman Montek Singh Ahluwalia said neither government nor Reserve Bank of India (RBI) has drawn any red line on the definite value of the Indian rupee, which he felt has over depreciated.

According to Ahluwalia, the steps taken by the RBI, including control of capital transfers, have been misconstrued by the market-participants. Earlier, RBI Governor-designate Raghuram Rajan and Economic Affairs Secretary Arvind Mayaram too had ruled out bringing back capital controls.

Further, dismissing the possibility of India going to IMF for funds, Ahluwalia underscored that scale of facility the country would need to get from IMF would be very small compared to the (foreign exchange) reserves that the country has.

Additionally, Ahluwalia backed the use of foreign exchange reserves as a measure to limit the current account deficit (CAD). The government aims to cut it down to $ 70 billion, or 3.7 per cent of the Gross Domestic Product (GDP) this fiscal. According to Ahluwalia, the CAD would be lower than previous fiscal’s figure of 4.8% of the GDP on account of reduced gold imports and there would be a slack in demand of petroleum products due to sluggish economic growth.

The CNX Nifty is currently trading at 5,492.85, up by 21.10 points or 0.39% after trading in a range of 5,528.70 and 5,469.85. There were 33 stocks advancing against 17 declines on the index.

The top gainers of the Nifty were Sesa Goa up by 9.02%, JP Associates up by 3.99%, Ambuja Cement up by 3.95%, BHEL up by 2.97% and Dr Reddy’s Lab up by 2.92%. On the flip side, IDFC down by 8.48%, ONGC down by 3.23%, Gail India down by 2.89%, Tata Steel down by 2.52% and ICICI bank down by 2.46% were the major losers on the index.

The most of the Asian equity indices were trading in green; Straits Times up by 0.22%, KLSE Composite up by 0.51%, Taiwan Weighted up by 0.28%, Jakarta Composite up by 0.13%, Seoul Composite up by 0.95%, Hang Seng up by 0.78% and Shanghai Composite up by 1.84%. While, Nikkei 225 down by 0.18% was the lone loser amongst Asian pack.

European markets got off to a mixed start, with CAC 40 was trading lower by 0.04% and DAX rising by 0.12%. Meanwhile, UK market shut on account of ‘Summer Bank holiday’.