Domestic bourses extending previous session up move have garnered a gain of over 1% on the back of positive global leads as after positive ending of the Wall street, Asian markets are now trading in mostly positive mood. The US future indices too were showing an uptick in the screen trade. Backhome, the traders' shrugging off the worries related to higher interest rates and inflation have indulged into some buying buoyed by the easing crude oil prices, which has also led the PSU Oil Marketing Company's (OMCs ) stock soar. Crude prices declining on Thursday closed below $100 a barrel on getting disappointing economic data that fueled worries about oil demand and as the International Energy Agency raised the possibility of releasing emergency stockpiles to cool prices if producers did not increase supply. Meanwhile Fertilizers stocks like that of National Fertilizers, Rashtriya Chemicals and Fertilizers (RCF) and Nagarjuna Fertilisers and Chemicals extended their rally for the second straight session on the reports that fertiliser companies may be allowed to hike maximum retail prices of Di-ammonium phosphate (DAP) by over Rs 600 per tonne as the fertiliser ministry is planning to move a Cabinet proposal in this regard.
The benchmarks up move could also be contributed to the second straight session gain of India's largest engineering and construction firm and also the Index Heavyweight- Larsen & Turbo (L&T) on positive order book and revenue outlook, which has also led the Capital Goods Pack rally. Besides, this Tata Power Company rose 1.06% after the company's board of directors approved a 10-for-1 stock split at the time of announcing Q4 results after market hours on Thursday, 19 May 2011. Consolidated net profit after statutory appropriations declined 29.8% to Rs. 661.54 crore on 4% growth in revenue to Rs. 4985.84 crore in Q4 March 2011 over Q4 March 2011. Also, ITC Cigarette major ITC rose on expectations of good Q4 results. Meanwhile, the 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) enticing a gain of over 150 points is currently trading above its 18300 mark. Similarly, the 50-scrip S&P CNX Nifty of the National Stock Exchange (NSE) gaining over 1% is at sniffing distance of striking the 5500 mark. The broader indices which ended weak in previous session were too doing well for themselves and were up over 0.50% each. The overall market breadth on BSE was widely in the favour of advances which outnumbered declines in the ratio of 1452:663, while 103 shares remained unchanged.
The BSE Sensex is currently trading at 18,327.26, higher by 185.86 points or 1.02%. The index has touched a high and low of 18,356.80 and 18,161.38 respectively. All the 30 stocks were on the advance side on the index.
The broader indices too were doing well for themselves; the BSE Mid cap and Small cap indices gained 0.84% and 0.90% respectively.
The top gaining sectoral indices on the BSE were, Capital Goods (CG) up by 2.92%, Realty up by 1.17%, Power up by 1.08%, Bankex up by 1.03% and Auto up by 0.95%. While there were no losers on the index. The top gainers on the Sensex were L&T up by 4.30%, DLF up by 2.16%, Bharti Airtel up by 1.93%,ONGC up by 1.88% and Hindalco Industries up by 1.63%. While there were no losers on the Sensex.
Meanwhile, India would find it difficult to achieve its fiscal deficit target this year, unless it made adjustments to account for the rise in fuel and fertilizer prices", said RBI governor D Subbarao. The RBI governor's comment has raised the market fear that the government would require to increase borrowing to fund the deficit gap. In this year budget, the Indian government had projected a fiscal deficit target of 4.6% of the GDP. This deficit target was broadly considered as ambitious, after its 5.1% deficit target for last year that was met by one-time high revenue through the 2G auctions. The government had said it would borrow a gross Rs 4.17 lakh crore in the current financial year, of which it would raise Rs 2.5 lakh crore in the first half.
"Since crude, fertilizer prices have gone up since the Budget announcements, unless some adjustment is made, either on the expenditure side or the tax side, it is difficult to deliver on a 4.6% target," Subbarao said. "It is difficult to say whether the government can deliver on a 4.6% target. It depends on what decision they take and a number of issues - the adjustment of fuel prices being the most important one," he added.
The governor's comment has raised concerns among bond dealers that the government would increase its borrowing in second half of current financial year. While experts and market analyst feels there should not be any immediate impact on market now. Though oil prices have risen 44% in the past year, India increased the cost of gasoline by as much as 8.5% last week, the biggest rise in three years. Still the government has to share a major chunk of the subsidy burden to thwart the rising trend of inflation. Oil along with other subsidies will play the main spoiler to achieve the deficit target. The inflation picture is both alarming and troubling, as these rates have been high for now over two years and the governments' concentration is most likely to be in controlling them.
The S&P CNX Nifty is currently trading at 5,485.30, higher by 57.20 points or 1.05%. The index has touched a high and a low of 5,490.40 and 5,432.75 respectively. There were 46 stocks advancing against just 4 declines on the index.
The top gainers of the Nifty were L&T up by 4.40%, DLF up by 2.32%, Kotak Bank up by 2.14%, Reliance Power and IDFC were up by 2.02%.
Dr Reddy down by 0.59%, Cairn down by 0.50%, HCL Tech down by 0.21% and Ranbaxy was down by 0.10%, were the only losers on the index.
Most of the Asian equity indices were trading in the green; Shanghai Composite gained 0.07%, Hang Seng added 0.10%, Jakarta Composite rose 0.14%, KLSE Composite increased 0.08%, and Seoul Composite was up by 0.34%.
On the flip side, Nikkei 225 declined 0.13%, Straits Times decreased down by 0.38%and Taiwan Weighted slid 0.61%.
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