Benchmarks re-gain momentum on fresh buying activities; outperform globe

Recovering from earlier set-back, Indian equity markets in the topsy-turvy session of trade have yet again regained momentum on initiation of fresh buying activities tailing the appreciation of Indian currency to seven week high level against dollar on Thursday. Benchmarks equity indices, outperforming the rest of the globe, took a hit in the late morning deals after the activity in services sector, which makes up of nearly 60% of country’s economic output shrank at the fastest pace in more than four years in September. Nevertheless, benchmarks soon bounced back with vigor to trade in proximity of day’s high level. Now, lapping up gains of over quarter of percent, both Sensex and Nifty, are trading at striking distance of 20,000 and 5,950 psychological levels respectively. Meanwhile, broader indices too adding ground are trading up and about with gains of over quarter of a percent.

However, negative European market start and downtick in Asian counterparts may hinder the northbound journey of the bourses. On the global front, European shares extending their two-week slide and  tracking losses on Asian market, dipped on Friday on worries that Washington's budget deadlock could have negative implications on much more critical legislation to raise the U.S. federal debt ceiling.

Closer home, CCEA’s nod to Jet-Etihad’s Rs 5300 crore deal heartened investors at Dalal Street as the deal paves the way of for the biggest foreign investment in the country's aviation sector. Nevertheless, the optimistic trade of the bourses was witnessed mainly on account of hectic buying activities in Realty, Consumer Durables and Auto counters, while Power, Capital Goods and Banking counters capped further gains. The overall market breadth on BSE is in the favour of advances which have thumped declines in the ratio of 1046:985; while 125 shares remained unchanged.

The BSE Sensex is currently trading at 19966.69 up by 64.62 points or 0.32% after trading in a range of 20034.76 and 19833.17. There were only 18 stocks advancing against 12 declines on the index.

The broader indices too clinched additional ground; the BSE Mid cap and Small cap indices were trading up by 0.21% and 0.49% respectively.

The gaining sectoral indices on the BSE were Realty up by 2.31%, Auto up by 1.93%, Consumer Durables up by 1.58%, Health Care up by 0.54% and Fast Moving Consumer Goods up by 0.41%. While, Power down by 0.33 %, Capital Goods down by 0.23% and Bankex down by 0.17% were the losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 4.03%, Hindalco Industries up by 2.17%, M&M up by 1.49%, Coal India up by 1.47% and Bharti Airtel up by 1.37%. On the flip side, Dr. Reddy Lab down by 1.41%, Jindal Steel down by 1.33%, Gail India down by 1.32%, Tata Power down by 1.23% and ICICI Bank down by 0.95% were the top losers on the Sensex.

Meanwhile, amid rising doubts over the country’s fiscal deficit number touching around three-fourths of the budget estimate in the first five months of the fiscal, global rating agency Fitch has warned India that fiscal slippage could have negative impact on India's sovereign rating. The rating agency affirmed India's sovereign rating at 'BBB-', which is at the lowest investment grade with stable outlook.

The rating agency Fitch in its report titled 'Emerging Asia: Slowing Growth Amid Market Pressures' said that prevailing high inflation and recent rises in current account deficit (CAD) suggested that India credit profiles have limited tolerance for policy slippage. Fitch expects that the India’s inflation and CAD will stay high or rise further in coming future as the country is experiencing greatest pressure on currency as well as reserve levels.  

Presently, the government is taking measures to contain the fiscal deficit and CAD within the target limit. The government has set target to contain the CAD at 3.7 percent and fiscal deficit at 4.8 percent of GDP in the current financial year. On fiscal deficit front, the government had announced slew of austerity measures including reduction in non-plan expenditure, ban on holding seminars in five-star hotels and creation of new jobs. While, to contain country’s CAD, the government has recently put several restrictions on rising imports especially of gold and also taking measures to boost Indian industry exports.

The CNX Nifty is currently trading at 5,927.90 up by 18.20 points or 0.31% after trading in a range of 5,949.15 and 5,885.00. There were 27 stocks advancing against 22 declines on the index.

The top gainers of the Nifty were Tata Motors up by 3.79%, Lupin up by 2.71%, Hindalco Industries up by 2.21%, BPCL up by 2.15% and Ultra-tech Cement up by 2.01%. On the flip side, Jindal Steel down by 1.56%, Dr Reddy’s Lab down by 1.31%, Tata Power down by 1.29%, GAIL India down by 1.14% and Axis Bank down by 1.08% were the major losers on the index.

Most of Asian equity indices were trading in red; Jakarta Composite down by 0.77%, Seoul Composite down by 0.12, Hang Seng down by 0.55%, Straits Times down by 0.19% and Nikki 225 down by 0.94% While, KLSE Composite up by 0.20% and Taiwan Weighted up by 0.07%.

European markets got off to mostly negative start with DAX sliding by 0.31%, FTSE 100 declining by 0.29%, while CAC 40 added 0.10%.