Benchmarks continue firm trade in afternoon session

Indian equity benchmarks continued their firm trades in afternoon session as investors’ sentiments got a boost after US Federal Reserve decided to continue with its $85 billion-a-month bond-buying program for at least another month. Buying was witnessed in nearly all sectors barring IT. Rate sensitive sectors such as automobiles, real estate, and banking have rallied over 2.5% higher on BSE on the hopes that the Reserve Bank of India (RBI) may ease interest rates in its coming monetary policy on September 20 to boost the Indian industry’s growth. Further, gain in rupee value against the dollar also added to the optimistic sentiments. On stock specific movement, SBI, ICICI Bank, Maruti Suzuki and Tata Steel were trading up by over 5.5 percent; while, Wipro and Dr Reddys Lab were trading lower on BSE. The market breadth remained positive, out of 2,026 stocks traded, 1168 stocks advanced, while 742 stocks declined on the BSE.

On global front, Asian equity indices were trading in green with Nikkei 225 was up by 1.80% and Straits Times up by 1.78% as global investors were surprised by US Fed bank, decided to continue its bond-buying program. Earlier, global markets were expecting Fed to begin tapering its QE-3 by $10-$15 billion beginning September.

The BSE Sensex is currently trading at 20,478.88 up by 516.72 points or 2.59% after trading in a range of 20,567.61 and 20,347.30. There were only 28 stocks advancing against 2 declines on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.56%, while Small cap index up by 0.92%.

The top gaining sectoral indices on the BSE were, Bankex up by 6.40%, Realty up by 4.94%, Metal up by 3.08%, and Capital Goods up by 3.02%. While, IT down by 0.15% was remained the only losing indices on BSE.

The top gainers on the Sensex were, SBI up by 7.09%, ICICI Bank up by 6.87%, Maruti Suzuki up by 6.37%, Tata Steel up by 5.86% and Mahindra and Mahindra up by 4.21%. On the flip side, Wipro down by 1.79% and Dr Reddys Lab down by 0.04% were the only losers on the Sensex.

Meanwhile, amid rising concerns over the deteriorating macroeconomic indicators of the country, the Department of Economic Affairs (DEA) secretary Arvind Mayaram said that Indian economy growth is likely to pick up in the third and fourth quarters of the current fiscal. The Indian economic growth had slowed down to a four year low at 4.4 percent in Q1 FY14.

Mayaram assured investors that there was no need to get excessively worried over the country’s fiscal deficit and said that the government would be able to achieve fiscal deficit target of 4.8 percent of GDP in the current fiscal. In order to cut government spending in non-critical areas, the government has recently announced a slew of austerity measures including banning government departments for holding meetings in 5-star hotels among others. Meanwhile, the government has been introducing austerity measures since 2008-09. Earlier, in November 2012, austerity measures announced by government helped it to contain the fiscal deficit at 4.9 percent of GDP in the previous financial year, against the budgeted target of 5.1 percent of GDP.

Referring to the rising inflation, Mayaram said that inflation would come down in near future on the back of strong farm output. Indian agricultural growth would get a boost from a strong monsoon and expected to grow by 4-5 percent in the current fiscal as against 1.7 percent in the previous fiscal. The wholesale price inflation rose to a six-month high of 6.10% in July as against 5.79% for the month of July on account of record climb in food prices.

The CNX Nifty is currently trading at 6,069.45 up by 170 points or 2.88% after trading in a range of 6,092.70 and 6,040.15. There were 47 stocks advancing against 3 declines on the index.

The top gainers of the Nifty were Axis Bank up by 7.92%, PNB up by 7.52%, SBI up by 7.07%, Kotak Mahindra Bank up by 6.99% and ICICI Bank up by 6.90%. On the flip side, NMDC down by 1.15%, Power Grid down by 0.45% and HCL Tech down by 0.37% were the major losers on the index.

The Asian equity indices were trading in green; Shanghai Composite up by 0.29%, Nikkei 225 was up by 1.80%, Straits Times up by 1.78%, Hang Seng up by 1.59%, Jakarta Composite up by 4.37% and KLSE Composite up by 1.07%.