Benchmarks witness consolidation ahead of Infosys Q2 earnings

Key domestic benchmarks witnessed consolidation on Thursday as investors opted to remain on the side-lines ahead of the crucial Infosys’ second quarter earnings and IIP data tomorrow. Frontline gauges traded cautiously in a specific range throughout the session but buying which emerged in dying hours helped the bourses to keep their head above water at the end. Earlier, traders remained concerned as the International Monetary Fund, after a day of lowering its growth forecast for India, said that the country’s fiscal deficit is expected to increase to 8.5 percent of the GDP this financial year, mainly due to the downward revision in GDP growth, depreciation of rupee and higher global oil prices. Sentiments also got dampened after Indian rupee weakened in early trades on account of importers rushing to cover up their near term requirements ahead of the US debt payment deadline.

But, markets got some respite from report that foreign institutional investors (FIIs) bought shares worth a net Rs 326.58 crore on October 9, 2013. Some support also came in from Planning Commission Deputy Chairman Montek Singh Ahluwalia’s statement that India’s GDP will see a turnaround in the coming quarters on account of various steps taken by the government to spur growth as well as good agricultural production.

Some strength to the domestic bourses came in late trade as firm opening of European stocks and US index futures hinted to a positive start in US indices. Meanwhile, most of the Asian equity benchmarks ended the session in the green with Japanese Nikkei ending with a gain of over a percent after core machine orders in Japan increased a seasonally adjusted 5.4 percent in August compared to the previous month. The US markets got some respite on Wednesday, but the major indices made a mixed closing as the trades remained choppy.

Back home, sentiments also got some boost from buying in Auto sector stocks led by Tata Motors, which surged 5% on expectation that the company’s UK arm Jaguar Land Rover (JLR) will report strong volume growth over next few months led by start of dispatches of new RR Sport. Moreover, real estate stocks have been gaining ground ever since the RBI announced measures to ease short-term liquidity.

Shares of some Non-banking finance companies (NBFCs) too edged higher after Reserve Bank of India (RBI) Deputy Governor K C Chakrabarty said that NBFCs have advantage over other applicants for banking licences as they already have good customer base. Additionally, shares of education companies such as Career Point, NIIT, Aptech, Educomp Solutions and MT Educare remained on buyers’ radar and ended higher by up to 20% on back of heavy volumes.

The NSE’s 50-share broadly followed index Nifty rose over ten points to hold its psychological 6,000 level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged by over twenty points to end above its psychological 20,250 mark.

Moreover, broader markets traded with great traction and ended the session with a gain of over half a percent. The market breadth remained in favour of advances, as there were 1,420 shares on the gaining side against 1,018 shares on the losing side, while 152 shares remained unchanged.

Finally, the BSE Sensex gained 23.65 points or 0.12%, to settle at 20272.91, while the CNX Nifty added 13.50 points or 0.22% to settle at 6,020.95.

The BSE Sensex touched a high and a low of 20323.77 and 20135.91, respectively. The BSE Mid cap index was up by 0.59% and Small cap index gained 0.70%.

The top gainers on the Sensex were Tata Motors up 5.00%, Mahindra & Mahindra up 1.83%, NTPC up 1.72%, Tata Steel up 1.68% and Maruti Suzuki up 1.64%, on the flip side, Tata Power down 2.21%, Hindalco Inds down 2.21%, Bajaj Auto down 1.46%, Hindustan Unilever down 1.25%, and HDFC Bank down 1.19%, were the top losers on the index. 

On the BSE Sectoral front, Auto up by 1.94%, Metal up by 0.49%, IT up by 0.44%, Healthcare up by 0.36%, and PSU up by 0.33%, were the top gainers, while Bankex down by 0.39%, Oil & Gas down by 0.09%, and FMCG down by 0.01%, were the only losers on the sectoral front.

Meanwhile, raising concerns over the prevailing global economic downturn, International Monetary Fund (IMF) has said that emerging economies including India may not be able to return to growth rates of 8 percent and more under present circumstances. Conversely, the government is committed to get the Indian economy back to its potential growth rate of 8-9 percent. The country economic growth has slowed down dramatically to decade low of 5 percent last fiscal year after recording an average of nearly 8 percent over the last nine fiscal years.IMF has also cut Indian economic forecast to 3.75 percent in 2013 from 5.7 percent projected earlier citing that poor manufacturing and service sector performance coupled with rising inflation could adversely affect the economy’s growth in the current fiscal. Meanwhile, the government has rejected IMF's growth projections of 3.75 percent for the current fiscal, saying that the country is witnessing turnaround both in terms of growth in manufacturing and domestic demand and buoyancy in exports. Therefore, domestic economic growth will exceed 5 percent in current fiscal.

Further, presenting a somber picture of India's fiscal deficit outlook, IMF said that India's fiscal deficit is likely to increase to 8.5 percent of the GDP this fiscal, mainly due to the downward revision in GDP growth, depreciation of rupee and higher global oil prices. Widening fiscal deficit has become a cause for concern for India and the government is taking measures to rein in spending and cut subsidies to meet its fiscal deficit target at 4.8 percent of GDP in the current financial year. In the first five months of this fiscal, country’s fiscal deficit has already touched around three-fourths of the budget estimate.

The CNX Nifty touched a high and low of 6,033.95 and 5,979.80 respectively.

The top gainers on the Nifty were Tata Motors up by 5.55%, Ranbaxy Laboratories up by 3.32%, NMDC up by 3.30%, Lupin up by 2.68% and Grasim Industries up by 2.07%. On the other hand, Tata Power down by 2.74%, Hindalco Industries down by 2.38%, Kotak Mahindra Bank down by 1.63%, Bajaj Auto down by 1.48%, and Hindustan Unilever down by 1.48%, were the top losers.

The European markets were trading in green, France’s CAC 40 was up by 1.50%, Germany’s DAX was up by 1.37%, and United Kingdom’s FTSE 100 was up by 1.04%.

Most of the Asian markets concluded Thursday’s trade in green as investors remained hopeful that Washington will conclude the political wrangling and break the US fiscal impasse that has sapped market confidence. Taiwan Weighted remained closed on account of National Day. Bank Indonesia will regulate currency hedging by individuals and companies, including state-owned firms, to help stabilize Asia’s most-volatile currency. Consumer confidence in Shanghai strengthened more than expected in the third quarter of this year after the city rolled out big plans like the free trade zone project. The Consumer Sentiment Index jumped 6.5 points from a year earlier to 107.1 in the July-September period. The latest reading rose further from 103.2 in the second quarter, indicating growing optimism among local residents.

Household confidence in Japan rose more-than-expected last month. The Cabinet Office stated that Japanese Household Confidence rose to a seasonally adjusted annual rate of 45.4, from 43.0 in the preceding month. Japan’s Core Machinery Orders rose to 5.4%, from 0.0% in the preceding month. Japan’s tertiary industry activity index rose more-than-expected last month. METI reported that Japanese tertiary industry activity index rose to a seasonally adjusted 0.7%, from -0.4% in the preceding month. Industrial production in the Philippines rose unexpectedly last month.The National Statistics Office stated that Philippines Industrial Production rose to a seasonally adjusted annual rate of 18.3%, from 14.9% in the preceding month whose figure was revised up from 12.1%. Malaysian Industrial Production fell to a seasonally adjusted annual rate of 2.3%, from 7.6% in the preceding month.