Benchmarks continue their northward journey in late morning

Benchmark equity indices continued their northward journey in late morning on the back of supportive cues from the global peers. Investors’ sentiment remained upbeat as the rupee strengthened against the US dollar in early trade on increased selling of the US currency by exporters.  Some support to the market also come from report that the foreign institutional investors bought shares worth Rs 206.46 crore as per the provisional data from the National Stock Exchange.

On the global front, Asian equity markets, barring Shanghai Composite were trading in green with investors indulging in buying. Some strong earnings reports from the region and bargain hunting after recent losses are also contributing to the positive trend. The Shanghai Composite Index dropped after a preliminary manufacturing index by HSBC Holdings Plc and Markit Economics fell to a seven-month low, also as China Petroleum & Chemical Corp. dropped after the biggest rally since 2009. Japanese market was trading up tracking positive cues from Wall Street and weakness in yen.

Back home, traders were buying, Bankex, Metal and FMCG stocks. IT exporters firmed up on encouraging economic data from the US. Infosys, TCS and Wipro were up over 0.3-1% each. All these companies earn major portion of their revenues from exports to the US. However, the non sectoral gauge of telecom is not looking much enthusiast about the DoT’s issuance of the much-awaited guidelines for merger and acquisition, as the telcos feel that the guidelines clause that merged entity would need to pay the market price for the entire spectrum holding minus the entry fee already paid by the seller will be a burden.

The market breadth on BSE remains positive with advances to declines in the ratio of 1306:520. BSE Sensex and NSE Nifty were comfortably trading near their psychological 20,700 and 6,100 levels respectively. The BSE Sensex is currently trading at 20708.46 up by 171.82 points or 0.84% after trading in a range of 20713.72 and 20599.91. There were 28 stocks advancing against 2 declines on the index. The broader indices were trading green; the BSE Mid cap index was up by 0.63% and Small cap index gained 0.77%.

The top gaining sectoral indices on the BSE were, Bankex up by 1.32%, Metal up by 0.97%, FMCG up by 0.97%, Capital Goods up by 0.82% and Auto up by 0.82%, while there were no losers on the sectoral space.

The top gainers on the Sensex were ICICI Bank up by 1.95%, Axis Bank up by 1.84%, Tata Steel up by 1.76%, Gail India up by 1.51% and SBI up by 1.39%. On the flip side, Bharti Airtel was down by 0.79% and Hero MotoCorp down by 0.36% were the top losers on the Sensex.

Meanwhile, the International Monetary Fund (IMF) has lauded India's ability to keep a tight check on spending and monetary policy in the face of snail-paced economic growth and soaring inflation, especially amid difference of opinion over handling these two toxic factors between the government and the Reserve Bank of India (RBI). It was all praises for Indian authorities for their ability to maintain macroeconomic and financial stability amid a challenging macroeconomic landscape.

In consonance with the views, while Finance minister P Chidambaram slashed spending and put in place several measures to ensure that the fiscal deficit was contained at desired level, RBI Governor Raghuram Rajan, a former IMF chief economist, raised the key repo rate by 75 basis points to 8.00 percent since becoming head of India's central bank in September.

IMF however has recommended RBI to go for more interest rate hikes, given the sticky nature of inflation. Further, it also revised its previous forecast upwards to a 4.6 per cent GDP growth in FY14, which would improve to 5.4 per cent in FY15. Though, the new growth estimates are higher than the IMF’s previous forecast of 3.75 per cent in the current fiscal and 5.1 per cent in the next fiscal, India is way more optimistic about economic recovery, given that Interim Budget 2014-15 has pegged the economy’s growth at 4.9 per cent this fiscal and at least 6 per cent in FY15.

Further, the report, which comes just ahead of spring meeting of IMF, said that India was successful to shore up its growth and revive investor sentiments since July last year. The report pointed that while, no further policy changes were assumed in the baseline, but slightly stronger global growth, improving export competitiveness, a favorable monsoon, and a confidence boost from recent policy actions would deliver a modest growth rebound in the near term.

The CNX Nifty is currently trading at 6,143.80 up by 52.35 points or 0.86% after trading in a range of 6,146.30 and 6,108.00. There were 46 stocks advancing against 4 decliners on the index.

The top gainers of the Nifty were ICICI Bank up by 1.97%, Axis Bank up by 1.83%, Tata Steel up by 1.70% Gail up by 1.69%, and Jindal Steel up by 1.56%. On the flip side, Ranbaxy down by 0.89%, Bharti Airtel down by 0.84%, DLF down by 0.66% and Hero Moto Corp down by 0.15% were the top losers on the index.

Most of the Asian equity indices were trading in green; Hang Seng strengthened by 109.26 points or 0.49% to 22,503.34, Jakarta Composite rose 33.03 points or 0.72% to 4,631.25, KLSE Composite increased by 0.38 points or 0.02% to 1,828.19, Nikkei 225 surged by 341.76 points or 2.37% to 14,790.94, Straits Times spurted 17.32 points or 0.56% to 3,103.96, KOSPI Composite 21.06 points or 1.09% to 1,951.63 and Taiwan Weighted was up by 61.43 points or 0.72% to 8,586.05.

On the flip side, Shanghai Composite was down by 22.92 points or 1.07% to 2,115.87.