Indian equities sustain the sanguine trend; Metal, Rate Sensitive’s lead

Indian equity markets extended the exuberance in Thursday afternoon trades as investors continued to relentlessly build positions across the counters which kept the frontline indices afloat above the psychological 16,550 (Sensex) and 4950 (Nifty) levels. The encouraging weekly inflation numbers too underpinned buying interests in the rate sensitive pockets like Banking, Real Estate and Automobile, at a time when the pace of economic expansion slowed to 6.9% in the second quarter, the lowest in over two years. The inflation data showed that food inflation eased for the fourth straight week in the week ended November 19 and rose by 8%, its slowest pace in nearly four months. Meanwhile, investors overlooked disappointing reports that growth of eight core infrastructure industries for the month of October 2011 declined to six year low-level of 0.1% compared to 7.2% in October 2010. However, local bourses remained largely influenced by the wonderful tidings on the global front. Amid the ongoing global credit crunch and lingering Euro-zone woes, the consortium of world’s top central banks’ move to pump liquidity into the global financial system, sent equities across the globe soaring. The six leading central banks including US, Canada, UK, Japan, Switzerland and Europe acted in concert by joining forces to lend dollars more cheaply to foreign banks. Back home, on the BSE sectoral space, the Metal sector kept shining brightly, as it remained the top gainer in the space with close to five percent gains followed by the rate sensitive’s like Bankex, Realty and Auto counters which traded with over three percent gains each. Though there were no sectoral laggards in the space, but some individual names like Bharti Airtel and HUL bucked the optimistic trend and traded in the negative terrain.

Moreover, the broader markets too traded on an enthusiastic note but were outperformed by their larger peers. The bourses spurted on good volumes of over Rs 0.60 lakh core. The market breadth on BSE was in favor of advances in the ratio of 1761:765 while 92 scrips remained unchanged.

The BSE Sensex is currently trading at 16,553.00 up by 429.54 points or 2.66% after trading as high as and 16,718.11 as low as 16,526.81. There were 28 stocks advancing against 2 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap index surged 1.77% and Small cap soared 1.22%.

On the BSE sectoral space, Metal up 4.74%, Bankex up 3.90%, Realty up 3.36%, Auto up 3.08% and Consumer Durables up 2.97% were the major gainers while there were no major losers in the space.

Sterlite up 7.35%, Hindalco up 7.01%, Tata Motors up 6.15%, ICICI Bank up 6% and Tata Steel up 5.16% were the major gainers on the Sensex, while Bharti Airtel down 0.96% and HUL down 0.33% were the major losers in the index.

Meanwhile, India’s gross domestic production (GDP) growth for the second quarter of 2011-12 has declined to its 8 quarter lowest level of 6.9%, Finance Minister Pranab Mukherjee has expressed concerns and said that the figure has fallen short of government expectations.

'Second quarter GDP figure has come. Of course, there was speculation in the market that it would be somewhere between 6.5 % and to 7 % and it is 6.9 %. No doubt, it is well below my projections during the time of the Budget,' Mukherjee said. By adding further he said 'I cannot ignore certain facts which have taken place after the presentation of the Budget, the international financial crisis is having its adverse impact and resulting in slow growth of the Euro and also in America.'

To curb the ascending inflation, the Reserve Bank of India (RBI) has increased its key policy rates by 13 times in last 21 months. However, the headline inflation measured by Wholesale Price Index (WPI) has been hovering above 9% mark from December 2010. 

For the current financial year, Finance Minster expects Indian economy to grow by 7.3% which is significantly low as compared to original estimates of 9% made at the start of the year. 'Taking into account the two quarters together, now it appears, it will be around 7.3 % GDP growth. Of course, had it been ten years ago, this would have elated me. But today, I cannot have that satisfaction because we reached the higher trajectory growth and from there we are slipping. Nonetheless, we shall have to try to face the situation and to see what best we can do at this given situation,' Finance Minster added.

Confirming the economic slowdown country’s GDP in the second quarter of 2011-12 fell to 6.9% compared to 8.4% in same period of last financial year. This decline in GDP growth is because of the poor performance of the manufacturing, agriculture and mining sectors. In the second quarter, growth in the manufacturing sector dipped to a meager 2.7% from 7.8% in the corresponding period of 2010-11. The GDP growth in the first half of 2011-12 also moderated to 7.3% from 8.6% in the April-September 2010.

The S&P CNX Nifty is currently trading at 4,957.35, higher by 125.30 points or 2.59% after trading as high as 5,011.90 and as low as 4,951.35. There were 46 stocks advancing against 4 declines on the index.

The top gainers on the Nifty were Sterlite up 7.45%, Hindalco up 6.87%, SAIL up 6.86%, ICICI Bank up 6.23% and Tata Motors up 6.05%.

Dr Reddy’s down 1.77%, BPCL down 1.66%, Bharti Airtel down 1.17% and HUL down 0.62% were the major losers on the index.

Asian markets traded on an encouraging note, Shanghai Composite surged 2.37%, Hang Seng soared 5.35%, Jakarta Composite jumped 2.37%, KLSE Composite ascended 0.90%, Nikkei 225 spurted 1.93%, Straits Times gained 2.41%, Seoul Composite rallied 3.72% and Taiwan Weighted garnered 3.98%.