Benchmarks trade higher in early deals on Wednesday

After a massive fall of around three and a half percent in previous session, Indian equity benchmarks have made a decent recovery and are trading with a gain of over a percentage point in Wednesday’s morning deals as investors opted to buy battered down but fundamentally strong stocks. Investors shrugged off weakness in rupee, which depreciated in early trades as dollar demand from importers continued, coupled with FIIs exiting from their investments in domestic markets. Besides that with crude oil prices rising on fears about a potential US military strike on Syria, there are concerns that the current account deficit will rise.

Global cues too remained sluggish with all the Asian equity indices trading in the red on renewed worries over possible US military intervention in Syria. Risk appetite remained on the negative side after key congressional leaders John Boehner and Eric Cantor both pledged their support for military action to punish President Bashar al-Assad for his suspected use of chemical weapons against civilians. Though, the US markets ended higher overnight after a long weekend though major upside was restricted on lingering concerns about the situation in Syria and the outlook for the Federal Reserve’s stimulus program.

Back home, some support also came in after Prime Minister’s Economic Advisory Council Chairman C Rangarajan has pegged economic growth at 5-5.5 per cent for the current financial year and has said that the economy still had the potential to grow more than the previous year’s growth rate of five per cent. On the sectoral front, software witnessed the maximum gain in trade followed by technology and healthcare, while fast moving consumer goods and realty remained the only losers on the BSE sectoral space. The broader indices too were trading with traction, while the market breadth on the BSE was positive; there were 719 shares on the gaining side against 393 shares on the losing side while 56 shares remain unchanged.

The BSE Sensex opened at 18314.68; about 80 points higher compared to its previous closing of 18234.66, and has touched a high and a low of 18476.76 and 18188.43 respectively.

The index is currently trading at 18385.54, up by 150.88 points or 0.83%. There were 22 stocks advancing against 8 declines on the index.

The overall market breadth has made a strong start with 61.56% stocks advancing against 33.65% declines. The broader indices, the BSE Mid cap and Small cap indices were up by 0.51% and 0.32% respectively. 

The few gaining sectoral indices on the BSE were, IT up by 1.96%, Teck up by 1.81%, Health Care up by 1.58%, Oil & Gas up by 1.28% and Metal up by 1.07%, while Realty down by 1.84% and FMCG down by 0.42% were the only losers on the sectoral index.

The top gainers on the Sensex were Infosys up by 2.73%, Tata Motors up by 2.61%, Hero MotoCorp up by 2.46%, RIL up by 2.16% and BHEL up by 2.14%. On the flip side, Sesa Goa was down by 2.36%, ITC was down by 2.35%, Maruti Suzuki was down by 2.28%, NTPC was down by 1.25% and L&T was down by 0.68% were the top losers on the Sensex.

Meanwhile, global rating agency Standard & Poor' (S&P) considers chances of a credit ratings downgrade for India higher than that for Indonesia. It has also warned that India’s sovereign rating faces more than one in-three chance to be downgraded to the junk status within next two year.

S&P currently retains its 'negative' outlook on India's BBB-minus - or, lowest investment-grade -- long-term sovereign debt rating, while a further downgrade would push Asia's third largest economy to 'junk' status. Meanwhile, S&P has rated Indonesia at 'BB-plus.'

Few days back, sending an ominous warning for India, the international ratings agency cautioned that India's running high deficit could face more turbulence ahead. In its report, S&P underscored that the high current account deficit could be funded in normal times, but things may be difficult when there is turbulence.  It said, “In times of normal risk appetite, this dependency may not be a problem.” Further rating agency added, when markets become risk averse, economies with current account deficits often find themselves facing external financing pressure”.

India's current account deficit rose to $ 88.2 billion or 4.8% of the GDP in 2012-13. The government has already outlined a plan to bring it down to $70 billion or 3.7% of GDP and finance it fully with fresh capital flows.

The CNX Nifty opened at 5,358.65; about 17 point higher as compared to its previous closing of 5,341.45, and has touched a high and a low of 5,413.60 and 5,318.90 respectively.

The index is currently trading at 5,385.20, up by 43.75 points or 0.82%. There were 36 stocks advancing against 13 declines, while one stock remains unchanged on the index.

The top gainers of the Nifty were Ranbaxy up by 3.20%, Infosys up by 2.79%, Hero MotoCorp up by 2.67%, Tata Motors up by 2.57% and IndusInd Bank up by 2.54%. On the flip side, DLF down by 3.77%, Sesa Goa down by 2.47%, Maruti Suzuki India down by 2.32%, Bank of Baroda down by 1.42% and ITC down by 1.15% were the major losers on the index.

The Asian equity indices were trading in red; Shanghai Composite slipped 0.69 points or 0.03% to 2,122.42, Hang Seng dropped 86.22 points or 0.39% to 22,308.36, Jakarta Composite declined 78.63 points or 1.89% to 4,085.38, KLSE Composite contracted 8.14 points or 0.47% to 1,716.07, Nikkei 225 decreased 60.74 points or 0.43% to 13,917.70, Straits Times tumbled 31.85 points or 1.04% to 3,022.93, Seoul Composite dipped 0.89 points or 0.05% to 1,932.85 and Taiwan Weighted was down by 26.60 points or 0.33% to 8,061.77.