Benchmarks open higher tracking strength in Asian markets

The Indian equity markets have made a positive start tracking strength in Asian markets. All the regional peers exhibiting firm trend as the falling Chinese inflation has created more room for further policy easing in the world’s second largest economy. Consumer prices rose 1.8 percent from a year earlier, while the producer prices fell 2.9 percent from a year earlier, the fifth straight drop. Though, the major US markets managed a flat close on Wednesday, with Dow and S&P extending their gaining streak for yet another day. On the domestic front, stocks have been rallying on hopes of reforms and clarity over tax measures. Moreover, India’s industrial output is expected to shrink to 0.9 percent as compared to 2.4 percent recorded in the month of May, which might propel the Reserve Bank of India (RBI) to cut rates. Auto witnessed the maximum gain in trade followed by software and public sector undertaking while; there were no losers on the BSE sectoral space. The broader indices were going neck to neck with benchmarks. However, the gains remained capped on the back of further fall in Bharti Airtel on the back of its poor Q1 numbers. Moreover, fall in retail stocks too dampened the sentiments. Scrips like Shoppers Stop, Pantaloon Retail and Koutons retail edged lower, as government’s claims of securing a consensus on opening up multi-brand retail to foreign direct investment (FDI) has went flat, as only one state and 3 UTs up till now have given their written affirmation for it. The market breadth on the BSE was positive; there were 892 shares on the gaining side against 511 shares on the losing side while 77 shares remained unchanged.

The BSE Sensex opened at 17,612.08; about 12 points higher compared to its previous closing of 17,600.56, and has touched a high and a low of 17,702.98 and 17,610.14 respectively.

The index is currently trading at 17,675.43, up by 74.86 points or 0.43%. There were 25 stocks advancing against 5 declines on the index.

The overall market breadth has made a strong start with 60.27% stocks advancing against 34.53% declines. The broader indices were trading in line with benchmarks; the BSE Mid cap and Small cap indices rose 0.42% and 0.32% respectively.

The top gaining sectoral indices on the BSE were, Auto up by 1.57%, Power up by 0.69%, IT up by 0.67%, PSU up by 0.66% and FMCG up by 0.65%. While, there were no losers on the index.

The top gainers on the Sensex were M&M up by 3.68%, Tata Motors up by 1.66%, ICICI Bank up by 1.15%, Bajaj Auto up by 1.12% and NTPC up by 1.10%.

On the flip side, Bharti Airtel was down by 4.15%, HDFC was down by 1.41%, Tata Steel was down by 0.43%, Dr Reddy was down by 0.12% and ONGC was down by 0.05% were the top losers on the Sensex.

Meanwhile, considering deficient monsoon rains and its impact on rural areas in India, the Reserve Bank of India (RBI) has come up with a breather to the farmers by easing repayment norms for Kisan Credit Cards (KCC). The apex bank has omitted the clause pertaining to mandatory repayment of loans by card holders within a year and has permitted banks to fix the repayment period based on the anticipated harvesting and marketing period for the crops for which loan has been granted.

The decision is expected to benefit over 10 crore KCC holders. RBI notified that KCC could now also be used for making mandatory crop insurance, while continuing with the existing options of withdrawing money from ATMs and getting benefits of asset insurance, personal accident insurance scheme and health insurance. The Finance Ministry confirmed that aids for farmers in replanting alternate crops as well as supply of drinking water and fodder will be assured to tide over the difficult situation.

Monsoon is the life-line of the agriculture sector as only 40 percent of the cultivable area is irrigated. Rain has been 20 percent lower during June-July 2012; affecting kharif crops mainly coarse cereals and pulses. Karnataka, Gujarat, Maharashtra and Rajasthan are facing drought-like situation. Last week, Empowered Group of Ministers (EGoM) on drought had approved diesel subsidy of 50 percent to farmers for saving standing crops and Rs 2,000 crore package for states affected by drought-like situation.

The government had launched KCC Scheme in 1998-99 with a view to provide adequate and timely support from the banking system to the farmers for their cultivation needs including purchase of inputs in a flexible and cost effective manner.

The S&P CNX Nifty opened at 5,348.30; about 10 points higher compared to its previous closing of 5,338.00, and has touched a high and a low of 5,368.20 and 5,348.20 respectively.

The index is currently trading at 5,358.50, higher by 20.50 points or 0.38%. There were 39 stocks advancing against 11 declines on the index.

The top gainers of the Nifty were M&M up by 3.56%, Tata Motors up by 1.66%, Grasim up by 1.49%, ICICI Bank up by 1.17% and Ranbaxy up by 1.13%.

On the flip side, Bharti Airtel down by 3.83%, Cairn down by 2.23%, HDFC down by 1.34%, HCL Tech down by 0.60% and SAIL down by 0.58%, were the major losers on the index.

All the Asian markets were trading in the green; Shanghai Composite rose by 5.03 points or 0.23% to 2,166.02, Hang Seng surged by 118.80 points or 0.59% to 20,184.32, Jakarta Composite gained 33.40 points or 0.85% to 4,125.64, KLSE Composite was up by 1.88 points or 0.12% to 1,637.89, Nikkei gained 70.14 points or 0.76% to 8,951.14, Kospi Composite was up by 25.98 points or 1.37% to 1,929.47 and Taiwan Weighted added 82.12 points or 1.14% to 7,402.08.

Straits Times remained closed on account of National Day holiday.