Benchmarks gain some lost ground; Sensex up 80 points

Local equity markets have gained some lost ground and are trading well in the positive territory on the back of firm trend in the Asian markets helped by a decline in the US jobless rate which boosted stocks on Wall Street. Meanwhile, markets in China and Taiwan continue to remain shut on account of last week's Lunar New Year. Among the sectoral space, Fast Moving Consumer Goods, Realty, Oil & Gas, Public Sector Undertakings and technology counters are among the prominent gainers. Healthcare, consumer durables and capital goods stocks are mostly subdued and metal stocks are also seen struggling to move up. Though broader markets saw some buying in the morning trade, they have plunged in the red zone at this point of time, declining 0.24% and 0.34%, respectively. The market breadth on the BSE was in favour of declines in the ratio of 1347:1200 while 66 scrips remained unchanged.

The BSE Sensex gained 80.14 points or 0.45% at 18,088.29. The index touched a high and a low of 18,135.02 and 17,995.45, respectively.

The BSE Mid-cap and Small-cap indices shed 0.24% and 0.34%, respectively.

The top gaining sectoral indices on the BSE were Fast Moving Consumer Goods (FMCG) up 1.26%, Realty up 1.17 %, Oil & Gas up 0.59%, Public Sector Undertakings (PSU) up 0.51% and TECk up 0.49%.

On the flip side, Healthcare (HC) down 1.26%, Consumer Durables (CD) down 0.78%, Capital Goods (CG) down 0.41% and Metal down 0.07% were the only losers on the BSE sectoral indices.

The top gainers on the Sensex were Hero Honda up 2.71%, Bharti Airtel up 2.49%, ITC up 2.16%, HDFC Bank up 2% and JP Associates up 1.86%.

Cipla down 3.42%, Hindalco Inds down 2.30%, Tata Power down 1.26%, Wipro down 1.26% and Tata Motors down 1.16% were the top losers on the index.

The central statistical organization (CSO) has released the advanced estimate for national income in Indian economy for current fiscal, predicting some slowdown in growth in the second half of the fiscal. The CSO pegged the growth in gross domestic product (GDP) for FY11 at 8.6%, which, given the growth of 8.9% registered in the first half, indicates a growth of 8.3% in the second half.

In an absolute sense though the growth is fairly robust at 8.6%, 60 basis points higher compared with 8% revised estimate for the last fiscal. The challenge for the government from here on will be to ensure around 8.5% growth at least in the next fiscal as well given the slowdown in the second half that the CSO numbers inherently assume and most other economists also expect.

The government had earlier pegged its growth target for current fiscal at 8-8.5%, but with strong performance in the first half increased the same to 8.75%. However, most economists believe that here will be some slowdown in the Indian economy in second half, particularly in the March quarter, due to a very high base from the last year. Also, the high inflation currently being seen is impacting consumer demand, and further expected monetary tightening by the RBI will affect both household consumption and corporate investment demand.

A much bigger surprise came from the CSO on the fiscal deficit front, where the organization pegged the fiscal gap for the current fiscal at 4.8% compared with a budgeted figure of 5.5%. This certainly is a huge downside to the Budget estimate and even though the figure looks very pretty to eyes, it will be interesting to see that if it does turn out to be the right estimate, what the finance ministry does in the next year.

The sharp downside in deficit becomes clearer in light of the fact the Thirteenth Finance Commission (TFC), in its fiscal consolidation targets under the fiscal responsibility and budget management act, pegged the 4.8% deficit targeted for FY12. The government on the other hand targeted 4.7% for FY12. With 4.8% deficit looking in sight in FY11 itself, it will be interesting to see if the finance ministry attempts further, cut in deficit in next fiscal to say 4.5%. The problem will be that in the next fiscal there will be no onetime receipt like the one in current fiscal in terms of revenue from auction of telecom spectrum at Rs 1.06 lakh crore.

The S&P CNX Nifty rose 14.85 points or 0.28% to 5410.60. The index touched a high and a low of 5431.50 and 5385.10, respectively. 

The top gainers of the Nifty were Suzlon Energy up 3.54%, Hero Honda up 3%, Bharti Airtel up 2.27%, ITC up 2.25% and HDFC Bank up 2.07%.

The top losers of the index were Cipla down 3.33%, GAIL down 2.60%, Hindalco Inds down 2.35%, Tata Motors down 1.90% and Ranbaxy down 1.89%.

Asian markets were trading on a mixed note; Jakarta Composite was up by 0.10%, KLSE Composite was up by 0.22%, Nikkei 225 was up by 0.46%, Seoul Composite was up by 0.47%.

On the flip side, Hang Seng was down by 0.49%, and Straits Times was down by 0.28%. 

Unit-8, 3rd Floor, First Mall, The Mall, Ludhiana-141001, Punjab (INDIA).

To unsubscribe or change subscriber options visit: http://www.aweber.com/z/r/?TJzsLEwstCyc7OysHMyctEa0nAwMLEycLA==