Benchmarks extend gains on strong rupee

Benchmarks extended their gains as the Indian rupee appreciated against the US dollar. The rupee traded at 64.26, up 1.5 per cent against Friday's close at 65.24 per dollar. A surge in exports also helped sentiments. India's merchandise exports posted double-digit growth in the month of August, while imports were 'contained', trade secretary S. R. Rao said on Monday, offering some respite for the troubled rupee. Official data is due later this week. The rupee tracked higher euro, which gained against the dollar after disappointing US jobs data raised hopes that the Fed Reserve may be hesitant to announce tapering of stimulus as early as next week. Sentiment in the currency has improved since Reserve Bank of India governor Raghuram Rajan unveiled a slew of proposals to support the rupee and open up markets on Wednesday, providing a breath of fresh air for investors unnerved by the country's worst economic crisis in two decades.

On the global front, The US markets surged overnight, extending their previous week’s gain on upbeat Chinese data as well as the latest developments regarding the situation in Syria. Moreover, most of the Asian equity benchmarks were trading in fine fettle with Chinese Shanghai trading in the green in morning deals as investors were hopeful that industrial output and retail sales will provide more evidence the world's second biggest economy has averted a sharp slowdown. Back home, traders were buying, Auto, Capital Goods, and Realty on the BSE. Meanwhile, the benchmarks NSE Nifty and BSE Sensex were trading near the psychological 5,800 and 19,700 levels respectively. The market breadth on BSE was showing positive trend with advances to declines in the ratio of 1139: 410.

Telecom stocks like, Bharti Airtel, Idea Cellular and Reliance Communication edged higher after the Telecom Regulatory Authority of India (Trai) on Monday proposed a 37 per cent reduction in base price, from Rs 2,379cr to Rs 1,496cr per MHz of pan India spectrum. Aviation stocks were trading in green as the aviation ministry has called for state governments across the country to discuss on a possible mechanism to reduce the tax on aviation turbine fuel (ATF) whose price was hiked by a steep 6.9% last week.

The BSE Sensex is currently trading at 19749.28, up by 479.22 points or 2.49% after trading in a range of 19813.92 and 19444.66. There were 28 stocks advancing against 2 declines on the index. The broader indices were trading in green; the BSE Mid cap index was up by 1.24% and Small cap index up by 1.09%.

The top gaining sectoral indices on the BSE were, Auto up by 3.95%, Capital Goods up by 3.02%, Realty up by 2.94% FMCG up by 2.78% and Bankex up by 2.35% while there were no losers on the sectoral index.

The top gainers on the Sensex were Tata Motors up by 7.46%, HDFC up by 5.91%, Bharti Airtel up by 5.68%, L&T up by 4.16% and ITC up by 3.87%. On the flip side, BHEL was down by 1.80% and Dr Reddys Lab was down by 0.39% were the top losers on the Sensex.

Meanwhile, the Engineering Export Promotion Council (EEPC) said that high imports of engineering goods besides crude oil and gold, are adding substantially to the country's current account deficit (CAD). India’s CAD widened to a record high of $88 billion or 4.8 percent of the GDP in the previous fiscal from $78.2 billion in FY12, about 4.2 percent of the GDP. India’s engineering import-export gap remained negative at $17 billion in FY13, despite the fact that engineering goods exports constitute around one-fourth of the country's total merchandise shipments followed by gems and jewellery, textiles and chemicals. During April to July period, engineering exports declined by 5.77 percent with total consignments of $18.03 billion for the four months against $19.14 billion in the corresponding period in the previous fiscal. 

EEPC said there are no domestic alternatives available to reduce the imports of crude oil and gold, however, India can contain the imports of engineering goods by giving a boost to the capital goods sector. Referring to the rising engineering items imports, EEPC said that there are at least 79 tariff lines of different engineering products such as automotive engines, which have shown an annual compound average growth as high as 35 percent in some cases. Imports of engines of cylinder capacity greater than 250 CC were only $114 million in 2005-06, which has now crossed $1 billion, it added.

By adding further, EEPC said that India should lower the manufacturing/engineering trade deficit by promoting the production of capital goods sector in the country and therefore recommended the government to immediately launch a Technical Upgradation Scheme.

The CNX Nifty is currently trading at 5,830.70 up by 150.30 points or 2.65% after trading in a range of 5,847.20 and 5,738.20. There were 44 stocks advancing against 6 declines on the index.

The top gainers of the Nifty were Tata Motors up by 7.55%, Axis Bank up by 6.79%, HDFC up by 5.99%, Bharti Airtel up by 5.58% and Ultra Cement up by 4.94%. On the flip side, BHEL down by 1.62%, BPCL down by 0.88%, Dr reddy down by 0.42%, Lupin down by 0.35% and NMDC down by 0.25% were the major losers on the index.

Most of the Asian equity indices were trading in green; Shanghai Composite rose 5.00 points or 0.23% to 2,217.52, Hang Seng jumped 134.74 points or 0.59% to 22,885.39, Jakarta Composite soared 83.57 points or 1.99% to 4,274.83, KLSE Composite increased 13.37 points or 0.77% to 1,760.40, Nikkei 225 surged 194.48 points or 1.37% to 14,371.53, Straits Times added 7.46 points or 0.24% to 3,095.66 and Seoul Composite was up by 3.89 points or 0.20% to 1,978.56.

On the flip side, Taiwan Weighted was down by 7.94 points or 0.13% to 8,181.34.