Domestic bourses trade in green; hold early gains

Domestic bourses, holding their early gains, are trading in fine fettle in mid morning session with frontline gauges surpassing their crucial 21,350 (Sensex) and 6,350 (Nifty) bastions, as investors cheered a sharp decline in the Current Account Deficit (CAD), which are at a 4 year low as exports picked up and gold imports reduced. Appreciation in Indian Rupee against dollar too aided sentiments. The rupee was trading at 61.44, its highest level since January 17 and above its close of 61.75 on Wednesday, on the back of positive sentiment about equity market inflows ahead of general elections next month.

On the global front, Asian equity markets were trading mostly higher at this point of time with Japanese stocks gaining after a committee advising the ministry that oversees the world’s largest pension fund said it no longer needs to focus on domestic bonds. Back home, the markets sentiment was also boosted by data showing that foreign funds remained net buyers of Indian stocks on March 5, 2014. Foreign institutional investors (FIIs) bought shares worth a net Rs 737.29 crore on Wednesday, as per provisional data from the stock exchanges.

Meanwhile, publc sector oil marketing companies viz. BPCL, HPCL and IOC edged higher on BSE as crude oil prices eased and the Indian rupee strengthened against the dollar. On the sectoral front, realty witnessed the maximum gain in trade followed by power and oil and gas while, fast moving consumer goods remained the only loser on the BSE sectoral space. The broader indices were going neck-to-neck with benchmarks while, the market breadth on the BSE was positive; there were 1,359 shares on the gaining side against 814 shares on the losing side while 129 shares remain unchanged.

The BSE Sensex is currently trading at 21376.53, up by 99.67 points or 0.47% after trading in a range of 21398.56 and 21329.88. There were 24 stocks advancing against 6 stocks declining on the index.

The broader indices were outperforming the benchmarks; the BSE Mid cap index was up by 0.86%, while Small cap index gained 0.81%.

The top gaining sectoral indices on the BSE were Realty up by 1.86%, Power up by 1.71%, Oil & Gas up by 1.25%, PSU up by 1.05% and Capital Goods was up by 0.85%. On the other hand, FMCG down by 0.28% was the only loser on the sectoral space.   

The top gainers on the Sensex were Hero MotoCorp up by 2.18%, Gail India up by 1.92%, ONGC up by 1.70%, Dr Reddys Lab up by 1.68% and BHEL was up by 1.50%. On the flip side, ITC down by 0.59%, Hindustan Unilever down by 0.52%, Tata Motors down by 0.50%, Cipla down by 0.45% and TCS down by 0.16% were the major losers on Sensex.

Meanwhile, In a big sigh of relief to Indian policymakers concerned over the deteriorating macro-economic situation of the country, the Current Account Deficit (CAD) for the third quarter of the current financial year narrowed sharply to $4.2 billion (0.9% of GDP) as compared to $5.2 billion (1.2% of GDP) in Q2 FY14 mainly driven by a sharp decline in the trade deficit as merchandise exports picked up and imports moderated, particularly gold imports. During the April-December’FY14, CAD stands at $31.1 billion (2.3% of GDP) versus $69.8 billion (5.2% of GDP) reported in the same period of previous fiscal year.

The value of exports increased by 7.5 percent to $79.8 billion in Q3 FY14 on y-o-y basis on the back of significant growth witnessed in the exports of engineering goods, readymade garments, iron ore, marine products and chemicals. On the other hand, merchandise imports witnessed a contraction of 14.8 percent to $112.9 billion in the reported quarter from a year earlier led by a steep decline in gold imports, which amounted to $3.1 billion in Q3 FY14 as against $3.9 billion in Q2 FY14 and $17.8 billion in Q3FY13. Therefore, trade deficit contracted by around 43 percent to $33.2 billion in the reported quarter as compared to $58.4 billion in Q3 FY13.

Net services receipts grew by 8.9 percent to $18.1 billion during the reported quarter on y-o-y basis. Net outflow due to primary income (profit, dividend and interest) lowered to $5.4 billion in Q3 FY14 than $5.8 billion in the corresponding quarter as well as $6.3 billion in the preceding quarter. During Q3FY14, the gross private transfer receipts increased by 4.8 percent to $17.3 billion on y-o-y basis. Further, India’s foreign exchange reserves witnessed a net accretion of $19.1 billion in Q3FY14 as compared to drawdown of $10.4 billion in the preceding quarter.

The decline in CAD was mainly attributed to a decline in the trade deficit as merchandise exports picked up and imports moderated, particularly gold imports. The significant curtailing of country’s CAD has eased some pressure on the macro-economic front as it is a major macro-economic problem that has created huge volatility in the domestic equity markets and currency.

The CNX Nifty is currently trading at 6,356.85, up by 28.20 points or 0.45% after trading in a range of 6,363.95 and 6,339.70. There were 43 stocks advancing against 7 declining on the index.

The top gainers of the Nifty were Ambuja Cements up by 2.45%, JP Associate up by 2.12%, Gail up by 2.07%, Hero MotoCorp up by 2.02% and Cairn was up by 1.95%. On the flip side, ITC down by 0.75%, Hindustan Unilever down by 0.63%, Cipla down by 0.60%, Lupin down by 0.58% and Tata Motors was down by 0.46% were the major losers on the index.

Most of the Asian equity indices were trading in green; Hang Seng increased by 0.46%, Jakarta Composite added 0.21%, KLSE Composite strengthened by 0.16%, Nikkei 225 soared 1.77%, Straits Times rose by 0.62%, KOSPI Composite was up by 0.08% and Taiwan Weighted was up by 0.99%. On the flip side, Shanghai Composite was down by 0.09%.