Benchmarks change gears to trade in green; Nifty scales past 5850 level

Benchmark equity indices, recouping colossal losses are now trading in positive territory, albeit with modest gains. In a knee-jerk reaction to the lower Indian GDP projection for 2013-14 by PMEAC, benchmarks changing gears plunged to day’s lowest point. Trade took a turn for the worse after a report by the Prime Minister's economic panel suggested it would be a challenge for the government to meet its fiscal deficit target of 4.8% of GDP in the current year. Nevertheless, buying which emerged at lower levels aided the benchmarks in recouping their lost ground. Bouncing off day’s low, while Sensex is trading just shy of 19,800 mark, Nifty is well-placed above the crucial 5,850 psychological level. Meanwhile, broader indices too adding some ground are trading with gains of over half a percent.

On the global front, in-line with negative Asian counterparts, European shares too got off to a negative start as caution set that the US central bank may announce a tapering of its $85-billion-a-month asset-purchase program next Wednesday. Meanwhile, worries over Syria lingered as US Secretary of State John Kerry and Russian Foreign Minister Sergei Lavrov held open talks on disarming Syria's chemical weapons programs, but differences emerged at the outset of the expected two-day negotiations.

Closer home, while stocks from Information Technology, Consumer Durables and Fast Moving Consumer Goods were negating the sentiment, stocks from Capital Goods, Power and Realty counters were the top performers. The overall market breadth on BSE was in the favour of advances which have thumped declines in the ratio of 1189:876; while 128 shares remained unchanged.

The BSE Sensex is currently trading at 19797.88, up by 16.00 points or 0.08% after trading in a range of 19,899.37 and 19,675.68. There were 20 stocks advancing against 10 declines on the index.

The broader indices too added some ground; the BSE Mid cap and Small cap indices were trading higher by 0.50% and 0.57% respectively.

The top gaining sectoral indices on the BSE were, Capital Goods up by 1.96%, Power up by 1.84%, Realty and PSU were up by 1.68%, Bankex up by 0.83%. While, IT down by 1.24%, TECK down by 1.13%, Consumer Durables down by 0.96% and FMCG down by 0.22% were the losing indices on BSE.

The top gainers on the Sensex were, BHEL up by 4.45%, Hero Moto Corp up by 2.27%, Mahindra and Mahindra up by 2.20%, Tata Power and L&T up by 2.16%. On the flip side, Wipro down by 3.47%, Bharti Airtel down by 2.08%, Tata Steel down by 1.49%, Infosys down by 1.19% and HDFC down by 0.76% were the only losers on the Sensex.

Meanwhile, finally coming in line with projections of the central bank and many private agencies, who expect Asia's third-largest economy to grow at around 5%, Prime Minister's Economic Advisory Council (PMEAC) too has sharply lowered its growth forecast for the current fiscal to 5.3% from 6.4% projected earlier. However, what came as a concern was the PMEAC chairman Rangarajan, highlighting that containing the fiscal deficit within the budgeted target of 4.8% of GDP could be a ‘challenge’ for the government.

Further, C. Rangarajan expects inflation to likely end at 5.5% in 2013-14 against 7.4% in 2012-13 and hoped that the current account deficit be lower than $70 billion as projected earlier, which turns out to be at 3.8% of GDP in 2013-14 from 4.8% a year ago.

Regarding rupee, he underscored that the Rupee at the current level was well corrected and said that “Stability is returning to the foreign exchange market and as capital flows return and as CAD begins to fall, this tendency will strengthen”. However, he added the current stance of monetary policy should continue until stability in rupee is achieved.

Meanwhile, in order to promote growth, Rangarajan suggested that the government should liberalise FDI investment norms, resolve tax concerns of the industry, fast track public sector investment and initiate measures to contain fiscal deficit.

Nevertheless, C Rangarajan expects the situation in 2013-14 to be better than 2012-13 due to number of reasons, including good growth in agriculture, full impact of structural reforms in the second half, strong emphasis on key infrastructure sector, removal of hurdles in projects clearance by the Cabinet Committee on Investment and signs of improvement in export sector.

The CNX Nifty is currently trading at 5,866.15, up by 15.45 points or 0.26% after trading in a range of 5,884.30 and 5,822.90. There were 38 stocks advancing against 12 declines on the index.

The top gainers of the Nifty were BHEL up by 4.89%, PNB up by 4.29%, Axis Bank up by 3.38%, JP Associates up by 3.13%, DLF up by 3.05%. On the flip side, HCL Tech down by 2.56%, Bharti Airtel down by 2.07%, Tata Steel down by 1.40%, Ultra Tech Cement down by 1.19% and Infosys down by 1.16% were the major losers on the index.

The Asian equity indices were mostly trading in red; Seoul Composite down by 0.49%, KLSE Composite down by 0.36%, Shanghai Composite down by 0.72%, Taiwan Weighted down by 0.69%,  Straits Times down by 0.18% and Hang Seng down by 0.44%. While, Nikkei 225 was up by 0.12% and Jakarta Composite up by 0.21% were the gainers amongst Asian pack.

European markets got off to a negative start with DAX declining by 0.16%, FTSE 100 losing 0.19% and CAC 40 gaining marginal 0.03%.