Markets continue firm trade in afternoon session

Indian equity benchmarks extended early gains and reached intra-day high level in afternoon session amid firm global cues and buying witnessed in rate sensitive stocks such as banking, auto and metal stocks. The investors sentiments got a boost as Reserve Bank of India (RBI) governor Raghuram Rajan assured investors that that there is no fundamental reason for rupee to fall again, and pegged the current account deficit (CAD) for 2013-14 at $56 billion, less than 3 percent of GDP. Further, government's initiative to prepare action plan on five service sectors soon to boost exports also added to the optimistic sentiments. All the sectoral indices were trading higher on BSE. On stock specific movement, Oil and Natural Gas Corporation (ONGC) was trading around by 2% after reporting a better-than-expected 2.8% year-on-year jump in net profit for Q2FY14 even after paying record fuel subsidy. Further, Tata motors has surged around 5% on BSE, recovering more than half of its losses recorded after announcements of July-September (Q2) earnings. On the other hand, Coal India was trading lower by nearly 3% on BSE after reported a lower than expected net profit at Rs 3,052 in Q2FY14, due to lower selling prices and higher wage and diesel costs.

On the global front, Asian markets were trading in green with Japanese indices Nikkei 225 up by 1.97% and Shanghai Composite up by 0.09% as global risk appetite has improved after the US Fed Reserve Vice Chair Janet Yellen's has said that the Fed may continue its monetary stimulus measures to support the US economy. Back home, the NSE Nifty and BSE Sensex were trading over their psychological 6,050 and 20,500 levels respectively. The market breadth on BSE was negative, out of 2,109 stocks traded, 1,339 stocks advanced, while 654 stocks declined on the BSE.       

The BSE Sensex is currently trading at 20,548.16 up by 353.76 points or 1.75% after trading in a range of 20,568.99 and 20,348.27. There were only 27 stocks advancing against only 3 declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.31%, while Small cap index up by 1.34%.

The gaining sectoral indices on the BSE were Bankex up by 3.30%, Capital Goods up by 3.11%, Auto up by 2.70%, Realty up by 2.34% and Metal up by 1.96%. There were no losing indices on BSE.

The top gainers on the Sensex were ICICI Bank up by 4.88%, Tata Motors up by 4.72%, L&T up by 3.98%, Tata Steel up by 3.40% and Bharti Airtel up by 2.89%. On the flip side, Coal India down by 2.79%, Cipla down by 1.01% and TCS down by 0.26% were the only losers on the Sensex.

Meanwhile, concerned over the weak macro-economic indicators of the country, Reserve bank of India (RBI) governor Raghuram Rajan has said that 2 percent industrial growth in September is disappointing, but expects that the economic situation would improve in the second half of current fiscal on the back of strong agriculture growth and increasing exports of the country. The governor said that sluggish growth in industry activity was mainly due to the contraction in consumer durables and tepid growth in capital goods reflecting the ongoing downturn in both consumption and investment demand. India's economic growth has slowed to a four-year low of 4.4 percent due to various global and domestic factors. Meanwhile, the central bank has projected economic growth at 5.5 percent for current fiscal.

Terming the escalation in the CPI inflation a worrying factor for India, the RBI governor said that high retail inflation at 10.09% in September is a threat for domestic economic recovery as it has been eroding consumer and business confidence in the country. Meanwhile, Rajan said that the price situation will improve once the impact of new crop is felt on the market adding that core inflation has started showing signs of easing and its impact would be visible on overall inflation. The CPI core inflation has declined to 8.1 percent in the month of October from 8.5 percent in September. Rising inflation has also become a cause of concern for the central bank, which has been increasing repo rate over the past few months in order to trim inflation.

Assuring investors amid rising concerns over weak fundamentals of the domestic economy, the RBI governor said that there is no fundamental reason for rupee to fall again, and pegged the current account deficit (CAD) for 2013-14 at $56 billion, less than 3 percent of GDP. The RBI governor has ruled out any major threat from the external front to rupee as well as the economy. He further induced confidence by saying that even if there was no more fresh Foreign Institutional Investor (FII) inflows this year, there will no problem to finance country’s CAD. The country’s CAD had widened to a record high of $88.2 billion or 4.8 percent of the GDP in 2012-13, which was cited as the main reason for rupee depreciation, which deflated over 15% against the US dollar in current year.

The CNX Nifty is currently trading at 6,094.00 up by 104.40 points or 1.74% after trading in a range of 6,101.65 and 6,036.65. There were 43 stocks advancing against 7 declining on the index.

The top gainers of the Nifty were Axis Bank up by 5.50%, JP Associate up by 4.86%, ICICI Bank up by 4.86%, Tata Motors up by 4.77% and Tata Steels up by 4.15%. On the flip side, Coal India down by 2.86%, Cipla down by 1.32%, HCL Tech down by 1.13%, Cairn down by 0.31% and TCS down by 0.17% was the major loser on the index.

Most Asian equity indices were trading in green; Nikkei 225 up by 1.97%, Shanghai Composite up by 0.09%, Taiwan Weighted up by 0.38%, Seoul Composite up by 0.55%, KLSE Composite up by 0.29%, Straits Times up by 0.82%,Hang Seng up by 0.79% and Jakarta Composite up by 1.55%.