Markets back into green on support of IT segment

Markets have bounced back into the green, trading with marginal gains supported by the consistent performance of information technology segment. Other key Asian markets are trading in the negative territory after rating agency Standard & Poor's on Monday downgraded the US sovereign rating outlook from stable to negative. US index futures too are trading in the red. Back home, information technology, oil & gas, technology, banking and consumer durables segments were the major gainers. On the flip side, realty, power, public sector undertakings, healthcare and auto were the major laggards in the BSE sectoral space. Expectations about a further rate hike by the Reserve Bank of India in its May 3 policy meeting also spooked the investor sentiment. However, boarder markets too are trading in positive territory; the BSE Mid cap and Small cap indices rose 0.05% and 0.17% respectively. The market breadth on the BSE remained negative in the ratio of 1344:1120 while 94 scrips were unchanged.

The BSE Sensex gained 38.06 points or 0.20% at 19,129.23. The index has touched a high of 19,201.92 and a low of 18,976.19 respectively.

The BSE Mid cap and Small cap indices rose 0.05% and 0.17% respectively. 

The top gainers on the BSE sectoral front were Information Technology (IT) up 0.47%, Oil & Gas up 0.46%, TECk up 0.45%, Bankex up 0.43% and Consumer Durables (CD) up 0.36%.

On the flip side, Realty down 1.02%, Power down 0.76%, Public Sector Undertakings (PSU) down 0.41%, Healthcare (HC) down 0.38% and Auto down 0.27% were the major losers in the BSE sectoral space.

The top gainers on the Sensex were M&M up 1.43%, HDFC Bank up 1.35%, Reliance Communications up 1.14%, Cipla up 0.82% and TCS up 0.81%.

On the flip side, Hero Honda down 3.15%, BHEL down 1.89%, Tata Power down 1.28%, DLF down 0.66% and Maruti Suzuki down 0.66% were the top losers on the index.

The International Monetary Fund (IMF) and the World Bank on Monday cautioned against downside risks even as global recovery seemed strengthening. The IMF said that even as the growth in emerging economies continued to remain robust, there were emerging signs of potential overheating in these economies and policy makers needed to ensure policies were tightened appropriately and in a timely manner.

The multilateral body feels that ongoing high fuel and food prices along with the easy money policies still prevailing in many economies have impacted overall level of inflation for emerging economies. The Fund also expects that inflation may continue to remain higher in near term and it would require a combination of fiscal and monetary policy to be brought down, particularly if oil prices remain high.

The global economic recovery was gaining strength, but output gaps and unemployment remained high in advanced economies, while at the same time new macroeconomic challenges were being faced by the emerging economies including India and China. "All countries face a new challenge of higher commodity prices, which have increased due to strong demand and supply uncertainties", said the IMF, adding that inflation as a result continued to remain high, particularly in emerging nations, and to some extent in many advanced economies as well.

Overall, both the IMF and World Bank feel that while recovery was proceeding, there were downside risks. "We may be coming out of one crisis- the financial and economic crisis- but we are facing new risks and wrenching challenges," said World Bank President Robert Zoellick. The impacts of surging food prices on political stability in developing countries cannot be under-estimated, Zoellick stressed. "We are one shock away from a full-blown crisis."

The multilateral bodies are also wary of the worsening conditions in the Middle East and North Africa that could keep the oil prices at highly elevated levels and easily derail global growth. "If oil prices were to rise sharply and durably - either because of increased uncertainty or due to a significant disruption to oil supply - global growth could slow by between 0.3% and 1.2% points in 2011 and 2012, respectively," said the World Bank. Most economists expect India to growth by around 8% in FY12, but that would require global commodity prices, particularly that of crude, to remain at normal levels.

The S&P CNX Nifty added 10.10 points or 0.18% at 5739.20.  The index has touched a high and a low of 5762.95 and 5693.25 respectively.

The top gainers of the Nifty were Cairn India up 2.31%, HCL Tech up 1.82%, Gail up 1.72%, M&M up 1.51% and HDFC Bank up 1.35%.

On the flip side, Hero Honda down 3.26%, Grasim Inds down 2.71%, BHEL down 1.68%, Kotak Mahindra Bank down 1.41% and Dr Reddy's down 1.24% were the major losers on the index.

Other key Asian markets are trading in the red. Shanghai Composite plunged 1.61%, Hang Seng plummeted 1.32%, Jakarta Composite dropped 0.38%, KLSE Composite dipped 0.47%, Nikkei 225 tumbled 1.09%, Straits Times declined 0.86%, Seoul Composite shed 0.69% and Taiwan Weighted slipped 0.87%.

 

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