Benchmarks resilient on robust China services data

Benchmarks edged higher in the  late morning session on back of buying witnessed in metal stocks after China’s services industries jumped to a six-month high raising hopes that the world’s second-biggest economy will sustain a rebound after a two-quarter slowdown. Sentiments got some support after Finance Minister P Chidambaram has expressed his confidence of closing the fiscal with a better set of numbers than initially projected. The market mood was upbeat as the rupee breached 62 per dollar mark as the greenback weakened against other global currencies. The partially convertible rupee was at 61.94 per dollar, up, 51 paise, against its previous close of 62.46. However, investors remained little cautious after the Asian Development Bank (ADB) lowered India’s growth projection for 2013-14 to 4.7 percent from 6 percent earlier, saying the recent rupee depreciation and capital outflows could adversely impact the country’s economy.

On the global front, most of Asian equity markets were trading in green at this point of time amid concerns about the US government shutdown and weak private sector jobs data. Back home, traders were buying, Metal, IT and Auto while selling was seen in FMCG on the BSE. Shares of automobiles companies are trading firm in morning deals on the bourses after reporting a slightly better-than-expected sales numbers for the month of September 2013 and expectations of better monsoons may revive growth during the festival season. The market breadth on BSE remains positive with advances to declines in the ratio of 1192: 458. The BSE Sensex is currently trading at 19776.02, up by 258.87 points or 1.33% after trading in a range of 19823.95 and 19583.97. There were 27 stocks advancing against 3 declines on the index. The broader indices were trading in green; the BSE Mid cap index was up by 1.01% and Small cap index gained 0.96%.

The top gaining sectoral indices on the BSE were, Metal up by 2.81%, IT up by 2.26%, Auto up by 2.19% ,Teck up by  2.07%, and Oil & Gas up by 1.71%, while FMCG down by 0.66% was the only loser on the sectoral index.

The top gainers on the Sensex were Sesa Goa up by 4.30%, TCS up by 4.04%, Bajaj Auto up by 3.29%, Tata Steel up by 3.05% and Wipro up by 2.95% and On the flip side, Hindustan Unilever was down by 2.19%, ITC was down by 0.90% and Bharti Airtel was down by 0.08% were the top losers on the Sensex.

Meanwhile, amid rising concerns over the existing economic slowdown, Asian Development Bank (ADB) has cut Indian economic forecast to 4.7 percent for the current fiscal from 6 percent projected earlier. Presenting a sobering picture of India's economic outlook, the ADB in its report said that recent the rupee depreciation coupled with supply-side bottlenecks and long delays in structural reform could adversely impact the economy’s growth in the current fiscal. However, there could be some moderate improvement in 2014-15, with growth estimated at 5.7 percent, but below the previous forecast of 6.5 percent. 

By adding further, ADB report said that mounting inflationary pressures, weak currency and diminished employment prospects will continue to impede growth in consumer demand. The recent financial market turbulence is a timely reminder of the need for structural and fiscal reform not just to keep financial markets stable in the short-run, but also to ensure long-term growth. Therefore, the country must strengthen its structural reforms to expedite delayed large infrastructure projects to encourage foreign investment into the country. Further, it suggested that the government should allow exchange rate flexibility to ensure sufficient stock of foreign reserves while balancing its impact on inflation and corporate foreign liabilities.

Meanwhile, ADB expressed confidence that Indian economy will recover soon as the government has taken a number of steps to revive growth prospect. It added that government’s steps like containing inflation pressure, consolidating fiscal positions by reducing general subsidies, and managing well recently passed reform bills to check fiscal pressures should receive high priority. Referring to the rising inflation, ADB said that prices of food and fuel have been rising on account of currency depreciation, but tighter monetary policy will have some mitigating effect, along with depressed economic activity. ADB expects that inflation for this fiscal will remain at 6.5 percent, below the 7.2 percent forecast in April.

The CNX Nifty is currently trading at 5,865.45 up by 85.40 points or 1.48% after trading in a range of 5,878.75 and 5,802.70. There were 47 stocks advancing against3 declines on the index.

The top gainers of the Nifty were Ultra Cement up by 4.84%, Sesa Goa up by 4.34%, NMDC up by 4.28%,  Asian Paint up by 4.18% and Ambuja Cement  up by 4.11%. On the flip side, Hindustan Unilever down by 2.16%, ITC down by 0.96% and Bharti Airtel down by 0.34% were the major losers on the index.

Most of Asian equity indices were trading green; Hang Seng surged 222.56 points or 0.97% to 23,207.04, Jakarta Composite rose 32.00 points or 0.55% to 4,411.90, Nikkei 225 was up by 27.12 points or 0.19% to 14,197.61 and Taiwan Weighted was up by 139.78 points or 1.70% to 8,356.30.

On the flip side, KLSE Composite slipped 0.14 points or 0.01% to 1,770.21, and Straits Times was down by 4.40 points or 0.14% to 3,148.18.

South Korea and China are closed for National Foundation Day and National Day, respectively.