Local equity markets continue to trade upbeat on sustained buying activities

After getting a gap-up start, local equity markets continue to trade upbeat on sustained buying activities by funds and retail investors, which apparently have picked up fundamentally strong stocks available at cheaper valuation after last three session’s drubbing. Digesting RBI’s hawkish stance in third monetary policy on Tuesday, investors are now looking forward to FOMC meeting to be held today. Additionally, positive regional counterparts also are aiding the further upside of the markets. Near day’s high, Sensex and Nifty are comfortably trading above the crucial 20,750 and 6,150 levels respectively with gains of over half a percent. Meanwhile, broader indices outperforming larger peers are trading with gains of over 3/ 4 of a percent.

On the global front, Asian markets rose on Wednesday following a lead from Wall Street ahead of a Federal Reserve decision on its stimulus programme and as concerns over emerging markets eased. Last month the Fed said it would reduce the bond-buying by $10 billion a month to $75 billion from January, citing an improved US economy.

Closer home, in the upbeat session of trade, most of the sectoral indices were trading in green, with the only exceptions being stocks from Metal counter. On the flip side, Healthcare, Auto and Capital Goods counters emerged were the top gainers of the session. In stock-specific action, Maruti Suzuki’s shares rebounded over as much as 8 percent, recovering almost fully from an 8.2 percent drop on Tuesday due to concerns about Suzuki Motor's plans to invest $488 million to build a car plant in India's Gujarat state. Additionally, ICICI Bank gains over a percent ahead of its December-quarter results later in the day. The market breadth on BSE was positive, out of 1,934 stocks traded, 1,249 stocks advanced, while 586 stocks declined on the BSE.

The BSE Sensex is currently trading at 20787.82, up by 104.31 points or 0.50%, after trading in a range of 20828.68 and 20761.10. There were 22 stocks advancing against 8 stocks declining on the index.

The overall market breadth has made a strong start with 64.58% stocks advancing against 30.30% declines. The broader indices too were trading in green; the BSE Mid cap index up was by 0.85% and Small cap gained 0.73%. 

The top gaining sectoral indices on the BSE were, Healthcare up by 1.68%, Auto up by 1.38%, Capital Goods up by 1.15%, Realty up by 0.84% and Power up by 0.66%, while Metal down by 0.54% was the only loser on the sectoral index.

The top gainers on the Sensex were Maruti Suzuki up by 6.34%, Sun Pharma up by 2.94%, BHEL up by 2.01%, Cipla up by 1.32% and Coal India up by 1.31%. On the flip side, Tata Steel was down by 1.61%, Hindalco was down by 1.14%, SBI was down by 0.81%, SSLT was down by 0.70% and HDFC was down by 0.35% were the top losers on the Sensex.

Meanwhile, Prime Minister's Economic Advisory Council (PMEAC) Chairman C Rangarajan has underscored the Reserve Bank's latest move for hiking the key lending rate by 0.25 percent a reflection of its ‘strong commitment’ to check inflation. Rangarajan added that the price stability is the main objective of the monetary policy and latest hike may be last in the series of increasing in policy rates if inflation moves along the central bank’s expected direction. The RBI increased the repo rate under the liquidity adjustment facility (LAF) by 25 basis points to 8.0% from 7.75%.

By adding further, Rangarajan asserted that the decision to increase the interest rate is once again reflection of shift in focus from wholesale price inflation to retail inflation, which has been still elevating at close to double digits. The CPI inflation recorded at 9.87% on y-o-y basis in the month of December as against 11.24% in the previous month. While, WPI inflation eased to five month low at 6.16%  in the month of December from a year earlier as against 14-month high of 7.52% in November. 

Referring to the economic growth, PMEAC Chairman expects that growth rate for the current year to be around 5 percent, and 6-6.5 per cent in next fiscal. Meanwhile, Rangarajan projection for growth was higher than what the RBI has indicated. Central bank projected the GDP growth to be less than 5 percent in current fiscal and around 5.5 percent for next fiscal.

The CNX Nifty is currently trading at 6,159.95, up by 33.70 points or 0.55% after trading in a range of 6,170.45 and 6,151.60. There were 36 stocks advancing against 14 declining on the index.

The top gainers of the Nifty were Maruti Suzuki up by 6.13%, Sun Pharma up by 3.12%, BPCL up by 2.21%, BHEL up by 2.07% and Ranbaxy up by 1.90%. On the flip side, Tata Steel down by 1.60%, Hindalco down by 1.10%, IndusInd Bank down by 0.80%, SBI down by 0.77% and SSLT down by 0.75% were the top losers on the index.

Most of the Asian equity indices were trading in green; Shanghai Composite gained 0.38%, Hang Seng strengthened 0.97%, Jakarta Composite increased 1.84%, KLSE Composite added 0.66%, Nikkei 225 surged 2.41% and Seoul Composite was up by 1.21%. On the flip side, Straits Times declined 0.70%.  Taiwan Weighted remained closed for the trade today.