Benchmarks trade firm after a cautious start

The Indian equity markets have made a cautious start but immediately started moving up side and are trading on a firm note on the back of fresh buying by funds and retail investors on expectations of better fourth quarter earnings. All Asian counterparts barring KLSE Composite were trading in the positive terrain, also boosted the investors' sentiment. On the sectoral front, Consumer durables witnessed the maximum gain in trade followed by metal and power with no losers on the BSE sectoral space. The broader indices were out performing benchmarks. Moreover, public sector undertaking (PSU) oil marketing companies (OMCs) viz., Bharat Petroleum Corporation (BPCL), Hindustan Petroleum Corporation (HPCL) and Indian Oil Corporation all were trading higher as crude oil prices eased a bit and closed lower for the first time in last four sessions. The market breadth on the BSE was positive; there were 1,466 shares on the gaining side against 422 shares on the losing side while 64 shares remained unchanged.

The BSE Sensex opened at 19,698.61; about 12 points higher compared to its previous closing of 19,686.82, and has touched a high of 19,799.04 while low remain its opening.

The index is currently trading at 19,790.40, up by 103.58 points or 0.53%. There were just 3 stocks advancing against 27 declines on the index.

The overall market breadth has made a positive start with 75.10% stocks advancing against 21.62% declines. The broader indices were outperforming benchmarks; the BSE Mid cap and Small cap indices were up 0.92% and 1.06% respectively. 

The top gaining sectoral indices on the BSE were, CD up by 1.34%, Metal up by 1.16%, Power up by 1.02%, Oil and Gas up by 0.93% and Auto up by 0.89%. While, there were no losers on the index.

The top gainers on the Sensex were ONGC up by 1.59%, BHEL up by 1.29%, Tata Power up by 1.26%, Sterlite Industries up by 1.26% and JP Associates up by 1.17%.

Wipro down by 0.41%, HDFC Bank down by 0.28% and Bharti Airtel down by 0.06%, were the only losers on the index.

Meanwhile, India's central bank accepted on Tuesday that inflation in the country continue to remain at elevated and unacceptable  levels despite the continued monetary tightening delivered by it throughout the last financial year. The Reserve Bank of India (RBI) had hiked its key policy rates including repo and reverse repo eight times over the fiscal 2010-11.

Deputy Governor of the RBI Subir Gokarn said that inflation was still at higher levels despite policy rate hikes and the recent surge seen in international crude oil prices has only aggravated inflationary pressure. Brent crude oil prices continue to remain above the $110 a barrel level following political unrest in Middle-East. Since India relies on imported crude for nearly 80% of its needs, elevated global crude prices can result in imported inflation. 

Gokarn said that the view of the RBI was that economic growth has been more robust during the low inflation period, and therefore the challenge for monetary policy would now be to prevent the supply side inflation from spilling into generalized inflation. This, according to the Deputy Governor, can be achieved by managing expectations and reigning in excess demand without causing any particular disruption in growth and investment activities.

"The challenge for the fiscal policy is to bring down fiscal deficit on revenue account. This needs to be done by effective implementation and ensuring resource allocation in backdrop of global uncertainties and rising oil prices," he said adding that the RBI will continue to balance its policy formulation in a way that both growth and inflation concerns are addressed.

There has been some pressure on the RBI to speed up the process of monetary tightening as so far the inflation has not shown much response. Not only the elevated food inflation is a concern, but even the core inflation is becoming a worry. In the month of February, core inflation had shown a significant increase reflecting that capacities were coming under pressure and the RBI might just be 'behind the curve' in checking demand side of the economy.

The S&P CNX Nifty opened at 5,908.00; about 2 points lower compared to its previous closing of 5,910.05, and has touched a high and a low of 5,941.95 and 5,907.80 respectively.

The index is currently trading at 5,941.15, up by 31.10 points or 0.53%. There were 46 stocks advancing against just 4 declines on the index.

The top gainers of the Nifty were Sesa Goa up by 3.80%, Grasim up by 2.33%, BPCL up by 2.25%, IDFC up by 2.12% and JP Associates up by 1.69%.

The top losers of the index were Sun Pharma down by 0.63%, Wipro down by 0.45%, Infosys down by 0.35% and HDFC Bank was down by 0.32%.

Most of the Asian equity indices were trading in the green; Shanghai Composite was up 24.05 points or 0.81% to 2,991.46, Hang Seng was up 128.57 points or 0.53% to 24,279.15, Jakarta Composite was up 10.48 points or 0.28% to 3,696.41, Nikkei 225 was up 10.65 points or 0.11% to 9,626.20, Straits Times was up 12.82 points or 0.41% to 3,159.57, Seoul Composite was up 3.14 points or 0.15% to 2,133.57 and Taiwan Weighted was up by 146.43 points or 1.68% to 8,851.56.

On the flip side, KLSE Composite was down by 2.05 points or 0.13% to 1,551.02.

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