After making a flat-to-negative start tracking mixed cues from the global indices, local equity markets gained the momentum and continue to trade in the green. Most of the Asian equity indices were trading in the negative terrain at this point of time as fresh worries over high levels of radiation weighed on cautious investors' mood. Rising oil prices continue to haunt the economy as India is largely dependent on oil imports and already runs a large fiscal deficit and if international prices rise further it will get enlarged. In a latest development, Libya's ramshackle rebel army has pushed west to retake a series of towns from the forces of Muammar Qaddafi. Back home, key benchmark indices are moving southward in an aggressive manner due to profit booking at higher levels but major sectoral indices on the BSE are still trading in the green. Meanwhile, pharma major Dr Reddy's Laboratories has been charged by the Director of Factories, Andhra Pradesh for being responsible for the loss of two lives in an accident that occurred in one of its manufacturing units at Bollaram in December 2010. To this effect, the Directorate of Factories has filed a case against the pharma major over lapses in safety aspects at its manufacturing facility at Bollaram in Medak District.
Mirroring their larger counterparts gains, broader markets are also trading in the green with BSE Mid-cap and Small-cap indices gaining 0.53% and 0.42%, respectively. The market breadth on the BSE was in favour of declines in the ratio of 1317:1433 while 96 scrips unchanged. Further, it is expected that a secretarial panel will be meeting today to discuss the urea de-control model. If approved the model might free retail prices of urea partially. Fertilizer stocks rose sharply on expectations of a decontrol in prices. National Fertilisers advanced 3.14 percent, Rashtriya Chemicals rose 2.72 percent and Chambal Fertilisers was trading close to 1.30 percent on BSE.
The BSE Sensex surged 113.20 points or 0.60% at 18,928.84. The index touched a high and a low of 18,967.18 and 18,799.57, respectively.
The BSE Mid-cap and Small-cap indices soared 0.53% and 0.42%, respectively.
Most of the sectoral indices on the BSE were trading in the green. Capital Goods up 1.53%, BANKEX up 1.249%, Auto up 1.03%, FMCG up 0.73% and Power up 0.65% were the major gainers. While Health Care down 0.94%, Metal down 0.34% and Oil & Gas down 0.31% were the major losers.
The top gainers on the Sensex were Reliance Infra up 2.59%, L&T up 2.49%, HUL up 2.21%, NTPC up 2.11% and Tata Motors up 2.11%.
On the flip side, Sterlite Industries down 2.55%, JP Associates down 1.72% and Tata Power down 0.94% were the only losers on the index.
Meanwhile, after tightening its own belt in terms of fiscal deficit in the FY12 budget, the finance ministry has now asked all the states to bring down the level of their market borrowings so that their fiscal deficit is not more than 3.5% of the respective gross state domestic product (GSDP).
Traditionally, the states have been allowed to raise market borrowings maximum to the tune of 3-3.5% of the GSDP. However, the government had allowed the states to increase their borrowings to 4% of the GSDP in FY09 following the global economic slowdown which had impacted revenue of many states and forced additional spending on others.
Now, however, as the Indian economy recovers, the government wants to bring down the consolidated state deficit which include deficit of both the Union and the State governments as well as off-budget items. The finance ministry has now written to states to stick to the fiscal consolidation roadmap and achieve the targets set by the Thirteenth Finance Commission (TFC) for them.
The TFC had recommended a state specific roadmap as well in which fiscal deficit of 3% of GSDP was recommended for states. The states which at that time had a zero revenue deficit or enjoyed revenue surplus would have to reach the target level of fiscal deficit sooner compared to the states which at that time suffered with a significant revenue deficit.
Also, the finance ministry has now asked the central statistical organization to prepare fresh estimates of GSDP with a common methodology for all the states. In past, many states have been overstating their aggregate incomes in order to borrow more. Also, there are significant differences among states when it comes to the methodology adopted to compute various macro aggregates. The CSO on the other hand follows internationally accepted standards. In this wake, the finance ministry wants fresh estimates of all key state macro aggregates to track the progress of state level fiscal consolidation.
The S&P CNX Nifty gained 23.60 points or 0.42% at 5677.85. The index touched high of 5693.75 and a low of 5643.20, respectively.
The top gainers on the Nifty were Reliance Infra up 2.98%, L&T up 2.65%, HUL up 2.45%, IDFC up 2.15% and Tata Motors up 1.98%.
On the other hand, Sun Pharma down 3.66%, Sterlite Industries down 2.40%, JP Associates down 1.83%, Sesa Goa down 1.67% and Tata Power down 1.18% were the major losers on the index.
Most of the Asian markets are trading in the red. Shanghai Composite sprang 0.16%, Hang Seng down 0.68%, Jakarta Composite declined 0.38%, KLSE Composite down 0.05%, Nikkei 225 down 0.60%, Straits Times declined 0.54%, Seoul Composite advances 0.11% and Taiwan Weighted down 0.67%.
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