Indian equities gain strength; trade continues at the highest point of day

Indian equities gained strength to trade firm hovering near the highest point of the day in the late afternoon session as investors started aggressively picking front line counters. In the fight between bulls and bears to gain control over the market, bulls have aggressively outpaced the bears in high spirit fuelling the momentum and leading the benchmark upwards. Traders were seen piling up the position in Bankex, Metal and IT sector. Sterlite, Hindalco, Tata Steel, SAIL, Jindal Steel and Sesa Goa from Metal pack were seen trading with a gain of around more than one to four percent pulling the markets up. Index heavyweight RIL was firm in green with gain of around one percent giving the much needed support for the markets. Kotak Bank, ICICI Bank, HDFC Bank, Axis Bank, SBI and PNB from Banking counters were firm pushing the markets trade higher. Interest rate sensitive banking stocks extended recent gains triggered by hopes that slowing economy could prompt the Reserve Bank of India (RBI) to pause on rate increases this month. However, Ranbaxy Laboratories and Hero MotoCorp were seen trading weak in red exerting pressure on the markets.

In the scrip specific development, shares of digital TV service providers Dish TV, Hathway Cable & Datacom and Den Network were trading firm in green on reports that the government may hike the foreign direct investment limit in the TV distribution platforms to 74%, from 49%. Kingfisher Airlines is trading weak in red on reports that the Mumbai International Airport has sent a notice to the company to pay Rs 90 crore outstanding dues besides putting the company on cash-and-carry mode from Saturday, December 03, 2011. On the global front, all Asian markets were seen trading on a mix note while the European markets were trading in green on optimistic note. In Europe, a manufacturing gauge based on a survey of purchasing managers in the 17-nation euro region fell to 46.4 from 47.1 in October, London-based Markit Economics stated. This is the lowest since July 2009. Besides, German Chancellor Angela Merkel stated that strengthening economic and monetary union would be central theme at European Union summit. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 5,000 and 16,700 evels, respectively. The market breadth on the BSE was in favour of advances in the ratio of 1626:1000 while 123 scrips remained unchanged.

The BSE Sensex is currently trading at 16,771.69 up by 288.24 points or 1.75% after trading as high as 16,775.55 and as low as 16,428.66. There were 29 stocks advancing against 1 decline on the index.

The broader indices were trading on a positive note; the BSE Mid cap index climbed 1.08% while Small cap gained 0.81%.

On the BSE sectoral space, Bankex up 2.62%, Metal up 2.37%, IT up 2.00%, Power up 1.94% and TECk up 1.83% were the major gainers while there were no losers in the space.

Sterlite up 4.17%, Hindalco up 4.04%, JP Associates up 3.54%, Tata Motors up 3.17% and Tata Steel up 3.03% were the major gainers on the Sensex, while Hero MotoCorp down 0.28% was the only losers in the index.

Meanwhile, finance minister Pranab Mukherjee has lowered the economic growth projection to around 7.5% for the current financial year from his budgetary estimate of 9% on the back of sharp decline seen in the economic growth in the second quarter of 2011-12. Mukherjee said, 'I am modest, I am not saying that I will be reaching the figure which I projected earlier during the budget -- 9% plus minus 0.25%. I am reducing it at around 7.5%.'

In the first quarter of the current financial year, the gross domestic product (GDP) growth declined to 7.7% and it further declined to 6.9% in the second quarter. As a result, in the first six months of the current financial year, India’s economic growth slumped to 7.3% from 8.85% in the same period of last financial year.

Mukherjee said the government was not in a position to boost growth through stimulus as it did during the global financial crisis in 2008-09. However, by adding further he said that certain policy changes can improve the situation little bit which we are doing.  He also expressed his hope that the government would be able to make national consensus on key economic reforms, which are crucially important to boost the economic growth.

The stimulus packages had helped the Indian economy recover from the global financial crisis in 2008-09. 'At that time, through three stimulus packages we could generate domestic demand and provide some support to industrial sector through which the process of deceleration was checked dramatically and we ended the year with a growth of 6.8% in 2008-09,' Mukherjee said.

He also said the projection of around 9% growth for the current financial year was based on the kind of recovery and resilience the Indian economy showed in 2008-09 and in the subsequent years.

The S&P CNX Nifty is currently trading at 5,030.45, higher by 93.60 points or 1.90% after trading as high as 5,031.10 and as low as 4,918.40. There were 48 stocks advancing against 2 declines on the index.

The top gainers on the Nifty were BPCL up 7.11%, Ambuja up 6.01%, IDFC up 5.71%, Sterlite up 4.21% and Hindalco up 4.11%.

Ranbaxy down 1.39% and Hero MotoCorp down 0.28% were the only losers on the index.

Asian markets traded on a mixed note, Nikkei 225 climbed 0.54%, Hang Seng jumped 0.20%, KLSE Composite inched higher 0.25% and Straits Times was up by 0.06%. On the flipside, Shanghai Composite plunged 1.10%, Jakarta Composite shed 0.30%, Seoul Composite fell 0.01% and Taiwan Weighted dipped 0.53%.

The European markets were trading in green with, France’s CAC 40 jumped 1.96%, Germany’s DAX surged 1.46% and Britain’s FTSE 100 ascended 1.42%.