Benchmarks start tremendously on supporting global cues

The Indian equity markets have made a firm start taking positive cues from across the globe. The US markets closed with a gain of over one percent overnight as unexpected drop in the unemployment benefit claim and good retail sales number boosted the morale of the investors. Moreover, all the Asian markets were trading in the positive terrain at this point of time indicating strong investors' sentiments. Back home, markets were trading tremendously well led by banking sector as private banks viz., ICICI Bank, HDFC Bank and Axis Bank all were trading with a gain of over one percent after Union Cabinet on Thursday approved the Banking Laws Amendment Bill, a part of the seven key financial sector legislative changes announced by finance minister Pranab Mukherjee in the Budget, which will allow shareholders of private banks to vote in line with their shareholdings. On the sectoral front, technology, fast moving consumer goods and software were the top gainers in the trade; while there were no losers on the BSE sectoral space. The broader indices too were going neck to neck with benchmarks. The market breadth on the BSE was negative; there were 1176 shares on the gaining side against 392 shares on the losing side while 42 shares remained unchanged.

The BSE Sensex opened at 18,622.70; about 133 points higher compared to its previous closing of 18,489.76, and has touched a high of 18,736.97 while low remain its opening.

The index is currently trading at 18,670.59, up by 180.83 points or 0.98%. There were 28 stocks advancing against just 2 declines on the index.

The overall market breadth started in the positive terrain, with 73.04% stocks advancing against 24.35% declines. The broader indices were trading in line with benchmarks; the BSE Mid cap and Small cap indices were up by 0.86% and 0.80%, respectively.

All the sectoral indices on the BSE remained higher, Bankex up by 1.55%, Auto up by 1.53%, IT up by 1.26%, Metal up by 1.02% and TECk was up by 1.00%, were the major gainers on the index.

The top gainers on the Sensex were Tata Power up by 2.55%, M&M up by 2.49%, Hero Honda up by 2.45%, Bajaj Auto up by 2.00% and ICICI Bank was up by 1.87%.

Bharti Airtel down by 0.97% and ONGC down by 0.22% were the only losers on the index.

Meanwhile, for a nation that is 75% dependent on imported crude oil to meet its energy needs, further increase in crude prices may spell bad news for the Government as it will be forced to take the tough decision of deregulating the diesel prices. According to Kaushik Basu, Chief Economic Adviser in the Ministry of Finance, if global crude touches $150 to $160 a barrel, the government will have to take the tough decision of freeing up the diesel prices soon which may aggravate rising prices situation.

Meanwhile, crude oil prices in the international market are ruling above $100 a barrel at present and with the crisis worsening in Libya and other Middle East countries, they may go up further. Also, with rise in crude prices, petrol prices are also expected to be raised because in wake of rising prices it will be left with only two options either deregulation of diesel prices or shelling out more subsidies for already loss making oil marketing companies (OMCs).

The government is having a tough task at hand as diesel fuel is considered life blood of both the agriculture and the commercial transport sectors and higher diesel prices could lower profits for businesses. Also, the government has set itself a target of limiting the fiscal deficit to 4.6% of GDP in 2011-12, though it is perceived that it could be a tough call to keep it within the band against the backdrop of high global oil and commodity prices.

Though the government had in June last year allowed oil marketing firms to set petrol prices, it has shied away from deregulating diesel prices due to stiff opposition from political parties and on fears that such a move would stoke inflation. Hence, the deregulation of diesel has been kept in abeyance.

The S&P CNX Nifty opened at 5,586.20; about 50 points higher compared to its previous closing of 5,536.20, and has touched a high and a low of 5,608.20 and 5,581.75 respectively.

The index is currently trading at 5,595.85, up by 59.65 points or 1.08%. There were 44 stocks advancing against just 6 declines on the index.

The top gainers of the Nifty were M&M up by 2.78%, Tata Power up by 2.64%, Kotak Bank up by 2.56%, Hero Honda up by 2.46% and Bajaj Auto up by 2.22%.

The top losers of the index were Bharti Airtel down by 0.70%, ONGC down by 0.26%, Siemens down by 0.22%, GAIL down by 0.19% and Power Grid was down by 0.15%.

All the Asian equity indices were trading in the green; Shanghai Composite was up 6.13 points or 0.21% to 2,909.11, Hang Seng was up 291.77 points or 1.26% to 23,414.19, Jakarta Composite was up 35.42 points or 1.01% to 3,529.96, KLSE Composite was up 14.11 points or 0.94% to 1,520.99, Nikkei 225 was up 120.73 points or 1.14% to 10,706.75, Straits Times was up 35.85 points or 1.18% to 3,073.20, Seoul Composite was up 24.84 points or 1.26% to 1,995.50 and Taiwan Weighted was up 64.41 points or 0.74% to 8,802.78.

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