Benchmarks continue their surge; Nifty breaches 5850 level

The Indian equity markets are trading firm in the afternoon session it seems bulls are in no mood to put a halt to their ongoing party, continuing their gains for the eight straight day in a row. Markets are stable till now however activity may turn volatile in the latter part of the day as it being the F&O series expiry. Mirroring their larger counterparts, broader markets too are trading in the green with BSE Mid-cap and Small-cap indices gaining 0.12% and 0.49%, respectively. All the sectoral indices on BSE are trading in green. Asian markets too were trading mostly in green, barring Shanghai Composite that has plunged by more than a percent. The market breadth on the BSE was in favour of advances in the ratio of 1422:1153 while 103 scrips remained unchanged.

In a development that has hit hard the domestic mining industry but will boost prospects of the steel industry, India's iron ore exports have declined by 18% to 85.43 million tonne in April-February compared with the same period in the previous fiscal as a four-fold increase in export duty and ban imposed by the state of Karnataka weighed. The major steel companies were taking cautious approach to the latest development, Tata Steel was up by 0.02%, SAIL was up by 0.57%, JSW Steel was down by 0.88% and Jindal Steel was up by 1.14%.

The BSE Sensex surged 233.40 points or 1.21% at 19,523.58. The index touched a high and a low of 19,575.16 and 19,339.75, respectively.

The BSE Mid-cap and Small-cap indices gained 0.12% and 0.49%, respectively.

All the sectoral indices on the BSE are trading in the green. IT up 2.42% TECk up 1.67%, FMCG up 1.35%, Oil & Gas up 1.25% and Capital Goods up 1.15% were the major gainers.

The top gainers on the Sensex were Hero Honda up 3.74%, TCS up 3.61%, Infosys up 2.60%, ONGC up 2.02% and Sterlite Industries up 1.95%.

On the flip side, RCom down 2.05%, M&M down 1.98%, Cipla down by 1.80%, Bharti Airtel down 1.13% and SBI down 0.81% were the losers on the index.

Meanwhile, a study by the Reserve Bank of India has concluded that the fiscal position of states has improved in the last financial year with the tax collections remaining buoyant and fiscal deficit to gross domestic product (GDP) ratio coming down significantly. Poor state level finances have been a major concern for country's overall fiscal consolidation efforts.

The central bank noted in its study that the budgetary position of States in 2010-11 indicated a turnaround from the expansionary fiscal stance in 2008-09 and 2009-10 to a fiscal consolidation path, much in line with the effort made by the Union government and the recommendations of the thirteenth finance commission (TFC) as well.

The study placed consolidated revenue deficit of states at 0.3% of the country's GDP during 2010-11 against 0.7% of GDP in 2009-10. With an improvement in the consolidated revenue account of states, the gross fiscal deficit as a ratio of gross state domestic product (GSDP) is estimated to decline to 2.5% in 2010-11 from 3.3% in 2009-10. An improvement in state finances was also evident with a majority of the states budgeting either a revenue surplus or a lower revenue deficit in 2010-11, noted the Indian central bank.

The broad-based economic recovery seen in India over last few quarters following the global financial crisis is also being reflected in higher tax buoyancy for the states (including own tax and tax devolution from the centre). With improvement in overall business conditions and hence tax buoyancy, 11 of the 17 non-special category states and all the special category states have budgeted lower GFD-GSDP ratios during the current year. Going forward, as the economic recovery continues, there will be further improvement in state finance, noted the RBI.

Nonetheless, there is also a lot of room for progress in general fiscal practices at state level. "States need to amend their Fiscal Responsibility and Budget Management Acts and work out a fiscal reform path...The emerging pattern of expenditure shows that as a ratio to GSDP, development expenditure, capital outlay and social sector expenditure are budgeted to be lower in many states," said the RBI. It has recommended that states should follow common practices in computing macro aggregates which will help being uniformity in fiscal practices across the country. 

The S&P CNX Nifty gained 67.25 points or 1.16% at 5854.90. The index touched high of 5872.00 and a low of 5803.05, respectively.

The top gainers on the Nifty were Hero Honda up 3.75%, TCS up 3.67%, Infosys up 2.72%, ONGC up 2.27% and Dr. Reddy's up 2.20%.

On the other hand, RCom down 2.00%, M&M down 1.86%, Cipla down 1.80%, Ambuja Cement down 1.30% and Bharti Airtel down 1.22% were the major losers on the index.

All the Asian markets are trading in green barring Shanghai Composite which was down by 1.06%, Hang Seng advanced 0.46%, Jakarta Composite was up 0.68%, KLSE Composite up 0.61%, Nikkei 225 was higher by 0.48%, Straits Times up 0.44%, Seoul Composite advanced 0.73% and Taiwan Weighted  was up 0.43%.

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