Benchmarks manage to keep head above water in early deals

Indian equity benchmarks, after an initial volatility, are managing to keep their head above water in Friday’s morning deals as positive sentiments continue due to recent measures announced by the Reserve Bank of India (RBI) governor Raghuram Rajan. Sentiments also got some boost after gross direct tax collection grew by over 14 per cent in the first five months (April-August) of this fiscal to Rs 1.88 lakh crore against Rs 1.64 lakh crore in the same period last year. Meanwhile, industry body CII has expressed the hope that the central bank would shift towards an expansionary monetary policy by cutting interest rates to stimulate growth. Finance Minister P Chidambaram too has asserted in the Lok Sabha that rupee will correct itself and the growth will bounce back.

Global cues too remained supportive with the US markets ending modestly higher ahead of the monthly jobs report, continuing their gaining streak for the third straight day. Asian markets too were trading mostly in the green at this point of time as investors opted to buy battered down but fundamentally strong stocks. However, the gains remained capped on speculation that the Federal Open Market Committee will dial down bond purchases at its meeting this month if the US employment data is in line with the ADP report.

Back home, the gains remained capped as Indian rupee weakened marginally in early trades due to dollar demand from importers. Some cautiousness was seen, as according to an HSBC survey, India posted the steepest rate of decline since March 2009, further mentioning, emerging market activity turned positive again in August, after losing traction continuously since April. On the sectoral front, software witnessed the maximum gain in trade followed by healthcare and technology, while auto, oil and gas and metal remained the top losers on the BSE sectoral space. The broader indices were trading marginally in the green, while the market breadth on the BSE was positive; there were 747 shares on the gaining side against 423 shares on the losing side while 62 shares remain unchanged.

The BSE Sensex opened at 19072.02; about 92 points lower compared to its previous closing of 18979.76, and has touched a high and a low of 19105.86 and 18929.38 respectively.

The index is currently trading at 19000.03, up by 20.27 points or 0.11 %. There were 12 stocks advancing against 18 declines on the index.

The overall market breadth has made a strong start with 65.93 % stocks advancing against 29.56 % declines. The broader indices were trading in green; the BSE Mid cap up by 0.26% and Small cap indices up by 0.50%. 

The top gaining sectoral indices on the BSE were, IT up by 1.29%, Health Care up by 1.23%, Teck up by 1.21%, Capital Goods up by 0.62% and FMCG up by 0.12%, while Auto down by 1.03%, Oil & Gas down by 0.96%, Metal down by 0.78%, PSU down by 0.46% and Consumer Durables down by 0.46% were the top losers on the sectoral index.

The top gainers on the Sensex were ICICI Bank up by 3.85%, Wipro up by 2.33%, Cipla up by 2.03%, Infosys up by 1.74% and Bharti Airtel up by 1.28%.  On the flip side, Coal India was down by 3.30%,  Mahindra & Mahindra was down by 2.76%, HDFC Bank  was down by 2.67%, Tata Power was down by 2.61% and Sesa Goa was down by 2.46% were the top losers on the Sensex.

Meanwhile, global rating agency Moody's has said that India's inflation and fiscal metrics remain weaker than its peer countries. Further, the rating agency said that a higher subsidy burden and lower growth will weaken the country's fiscal metrics, however, it added that the country's current reserves can finance the current account and external debt payment needs.

In January, Moody’s had reaffirmed ‘Baa3’ (which is equivalent to BBB minus) sovereign credit rating for India that indicates investment grade but with a stable outlook. The rating agency had already raised concerns over the impact of the subsidy outgo for the Food Security Bill and had said that the bill with an annual $20 billion budget will widen the country’s fiscal deficit. Meanwhile, the government has set the target to contain the country’s fiscal deficit at 4.8 percent of GDP in FY14.

Moody’s had also highlighted inadequate infrastructure a constraint for India's sovereign rating adding that inefficient infrastructure have been impacting India’s growth potential as well as the competitiveness of its export and import-competing sectors, contributing to high current account deficits (CAD). 

The CNX Nifty opened at 5,617.45; about 24 points higher as compared to its previous closing of 5,592.95, and has touched a high and a low of 5,624.20 and 5,566.15 respectively.

The index is currently trading at 5,595.40, up by 2.45 points or 0.04%. There were 19 stocks advancing against 31 declines on the index.

The top gainers of the Nifty were ICICI Bank up by 3.86%, Asian Paint up by 3.06%, Ranbaxy up by 2.72%, Cipla up by 2.22% and L&T up by 1.96%. On the flip side, UltraTech Cement down by 3.53%, Coal India down by 3.44%, BPCL down by 3.10%, Tata Power down by 2.89% and M&M down by 2.64% were the major losers on the index.

Most of the Asian equity indices were trading in green; Shanghai Composite rose 6.76 points or 0.32% to 2,129.19, Hang Seng gained 56.45 points or 0.25% to 22,654.42, KLSE Composite increased 3.13 points or 0.18% to 1,724.10, Straits Times strengthened 7.86 points or 0.26% to 3,047.31, Seoul Composite surged 8.69 points or 0.45% to 1,960.34 and Taiwan Weighted was up by 4.17 points or 0.05% to 8,173.27.

On the flip side, Jakarta Composite declined 13.77 points or 0.34% to 4,037.09 and Nikkei 225 was down by 169.29 points or 1.20% to 13,895.53.