Local markets continue to trade in high spirits; Sensex nears 19K

The Indian markets have edged higher in the mid-morning session on sustained buying by funds and retail investors in stocks with strong fundamentals, after initial choppiness. Expectations of better Q4 earnings are mainly influencing the trading sentiment. Stocks of most-weighted firm Reliance Industries earlier evoked increased buying support and traded nearly 1 per cent higher after the company reported it will set up a joint venture with D E Shaw group for the financial services business. Earlier, local bourses tracking losses in Asia and weighed down by geopolitical concerns in the Middle East got a cautious start but later the gains posted by the stocks from Capital Goods; Bankex and Fast Moving Consumer Goods (FMCG) counters led the benchmark indices cut their losses. On the global front, Asian shares too slipped in trade today as turmoil in the Middle East and Japan's nuclear crisis left investors with little appetite for riskier assets. The US Future Indices were trading mixed in the screen trade. Meanwhile, Crude oil continues to be a matter of concern, though the prices some respite last week. Rising oil prices continue to haunt the economy as India is largely dependent on oil imports and already runs a large fiscal deficit. Further, in the latest development, Libya's ramshackle rebel army has pushed west to retake a series of towns from the forces of Muammar Gaddafi who are being pounded by Western air strikes.

Back Home, on the BSE sectoral front, stocks from Capital Goods (CG) up by 1.46%, Bankex up by 1.39%, Fast Moving Consumer Goods (FMCG) counter aided the market to keep the momentum at the positive end, while, stocks from IT, Healthcare (HC), TECk counters held up the market momentum. The 30 share benchmark indices flirted with its 19000 mark, while, S&P CNX Nifty was trading well above the 5600 level. The broader indices too were ruling up by 0.50% each. The Overall market breadth on BSE was in the favour of advances which were outnumbering declines in the ratio of 1413:986, while, 83 shares remained unchanged.

The BSE Sensex is currently trading at 18,956.51, up by 140.87 points or 0.75 %. The index has touched a high of 18,967.18 and a low of 18,799.57 respectively.  There were 23 stocks advancing against 7 declines on the index.

The broader indices were trading in line with benchmarks; the BSE Mid cap and Small cap indices were up by 0.61% and 0.62%, respectively.

The top gaining sectoral indices on the BSE were, Capital Goods (CG) up by 1.46%, Bankex up by 1.39%, Fast Moving Consumer Goods (FMCG) up by 1.19%, Auto up by 1.15% and Consumer Durables (CD) up by 0.65%. While, IT down by 0.52%, Healthcare (HC) down 0.34%, TECk down by 0.28%, Oil and Gas down by 0.19% were the major losers on the index.

The top gainers on the Sensex were HDFC up 2.50%, Hindustan Unilever (HUL) up 2.36%, Tata Motors up by 2.22%, L&T up by 2.13% and ICICI Bank was up by 1.79%.

Sterlite Industries down by 1.63%, Jaiprakash Associates down by 1.60%, Infosys down by 1.08%, Reliance Communication down by 0.37% and RIL down by 0.25% were the top losers on the index.

Meanwhile, having witnessed the stickiness of high headline inflation in the country, the Union Finance Minister Pranab Mukherjee seems to have finally accepted the wisdom of conventional economics when he said that along with supply boosting measures, fiscal consolidation of good quality was a must to achieve a lower inflation.

"The first objective is to bring about a stronger fiscal consolidation to enlarge the resource space for private enterprise," Mukherjee said while deliberating on the key focus of budget proposals for 2011-12 in an interactive session with the Associated Chambers of Commerce and Industry (ASSOCHAM). The finance minister said a very high level of borrowing by the government can drain the funding resources and hence bring down the private investment.

Capacity augmentation was necessary for improving the supply side which will in turn help curb to inflation. However, for augmenting capacity greater investment and capital formation would be needed that would require that ample funds be available for the private players to invest. Mukherjee said that the government has been cautious of this fact and therefore has been looking to cut the deficit as quickly as possible.

He further added that despite the need to bring down the fiscal deficit, the government refrained from a 2% rollback in excise duty in Budget 2011-12. This, according to the minister, was done to both to promote the profitability of Indian businesses and to pave the way for a unified rate under the upcoming Goods and Services Tax (GST) regime. The government had cut excise duty across the board by 4% following global financial crisis. While 2% of the cut was rolled back in FY10, the government let the remaining 2% stimulus remain in the system in next fiscal's budget.

The S&P CNX Nifty is currently trading 5,687.95, up by 33.70 points or 0.60%. The index has touched a high of 5,693.75 and a low of 5,643.20 respectively. There were 35 stocks advancing against 14 declines on the index.

The top gainers of the Nifty were IDFC  and HUL were up by 2.47%, HDFC up by 2.24%, L&T up 2.13% and Tata Motors up by 2.06%.

The top losers of the index were Sun Pharmaceuticals down by 2.62%, JP Associates and Sterlite Industries were down by 1.66% each, Sesa Goa down by 1.29% and Infosys was down by 1.23%.

Asian equity indices were trading mostly in the red; Hang Seng slid 0.72%, Jakarta Composite declined 0.45%, KLSE Composite lost 0.13%, Nikkei 225 shed 1.04%, Straits Times was down by 0.76% and Seoul Composite trimmed 0.15% and Taiwan Weighted slid 0.60%.

On the other hand, Shanghai Composite gained 0.70%.

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