Local equity markets continue to trade higher after making a gap up opening led by gains across Asian markets and better than expected results posted by HCL Technologies, which has helped the IT counter to move higher after Infosys had reported disappointing result leading the segment getting beaten-up for several days. While, Asian markets are all trading in green with good gains, US index futures too are showing an up-tick in screen trade today. Back home, key benchmark indices - BSE Sensex and NSE Nifty have touched their crucial 19,300 and 5,800 mark and are still trading within the sniffing distance of these psychological levels. All the sectoral indices on the BSE were trading in the green. Realty sector has been the clear leader in boosting the local markets with a gain of more than 2%. Information technology, metal and consumer durables counters were also among the major gainers. Meanwhile, report of India's exports witnessing a bumper year in fiscal 2010-11, showing the highest growth in the post-independence period at 37.5%, has added to the already upbeat sentiments of the investors. Total merchandise exports of the country reached $246 billion in FY11, comfortably crossing the target of $200 billion worth exports set by the ministry of commerce and industry a year ago. Broader markets have also extended their gains in the afternoon trade with BSE mid-cap and small-cap indices gaining around 1.20% and 1.34%, respectively. The market breadth on the BSE was in favour of advances in the ratio of 1852:705 while 86 scrips remained unchanged.
The BSE Sensex surged 177.26 points or 0.93% at 19,299.09. The index has touched a high of 19,336.59 and a low of 19,254.98 respectively.
The BSE Mid cap and Small cap indices jumped 1.20% and 1.34%, respectively.
All the sectoral indices on the BSE were trading in the green. Realty up 2.18%, Information Technology (IT) up 1.76%, TECk up 1.68%, Metal up 1.63% and Consumer Durables (CD) up 1.53% were the top gainers.
The top gainers on the Sensex were M&M up 3.65%, TCS up 2.96%, DLF up 2.45%, Tata Motors up 2.21% and Tata Steel up 2.01%.
On the flip side, Hero Honda down 3.56% and L&T down 0.05% were the only losers on the index.
India's Planning Commission, top economic strategy maker of the country, is likely to set the economic growth target for the next Five Year Plan (FYP) that will run through 2012-2017 at around 9-9.5% per annum. For the current plan, average growth is expected to work out to be around 8.1% against a target of 9%.
A full meeting of the Commission, to be chaired by Prime Minister Manmohan Singh, is likely to be held soon where the approach paper for the next plan will be finalized. Besides all the members of the commission and Deputy Chairman M S Ahluwalia, the meeting is likely to be attended by key cabinet ministers, including Finance Minister Pranab Mukherjee and Home Minister P Chidambaram.
In the current plan the government had targeted a growth of 9% per annum and seemed to be well on track to achieve the same until the global financial crisis emerged which resulted in substantial impact on Indian economy as well. However, the government is hopeful that India will soon revert back to the 9% growth trajectory. In fact, the finance ministry is hoping for 9% growth in FY12 itself though most economists expect growth to be around 8% this fiscal.
The Commission is likely to target a higher growth in the manufacturing sector at 11-12% in order to push the overall growth beyond 9%. At present, trend growth rate of manufacturing is around 8-9%. While services sector is expected to continue growing at 9-10%, the target for farm sector, which still contributes around 14-15% of overall gross domestic product (GDP) of the country, is likely to be pegged at 4%.
However, if India wants to further improve growth rate, it will have to raise both the saving and investment rates. Capital to incremental income ratio in India is at around 400% which means for generating every additional income of Rs 1, fresh investment to the tune of Rs 4 has to be made. Thus, for achieving 9.5% growth, India will need to invest upwards of $800 billion in the first year of the 12th Plan. This will require pushing up the saving and investment rates from around 34% and 37% respectively to about 38% and 42%.
In case it is not possible to push the saving rate by this extent, then the country will have to attract greater foreign direct investment (FDI) which helps bridge the gap between saving and investment rates. However, FDI has been going down in recent months owing to various factors including delay in environmental clearances and other bureaucratic delays. In this wake, some sustainable policies aimed at attracting greater flow of direct investment will also have to be envisaged within the plan document.
The S&P CNX Nifty soared 53.10 points or 0.92% at 5793.85. The index has touched a high and a low of 5807.60 and 5782.40 respectively.
The top gainers of the Nifty were HCL Tech up 6.89%, M&M up 3.65%, TCS up 2.92%, Tata Motors up 2.51% and DLF up 2.37%.
On the flip side, Hero Honda down 0.58%, Power Grid down 0.19%, Gail down 0.07% and L&T down 0.01% were the only losers on the index.
Other key Asian markets are trading well in the green today at this point of time. Shanghai Composite added 0.01%, Hang Seng jumped 0.97%, Jakarta Composite surged 0.85%, KLSE Composite soared 0.41%, Nikkei 225 zoomed 1.90%, Straits Times advanced 0.41%, Seoul Composite gained 2.09% and Taiwan Weighted rose 2.02%
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