Markets continue their northward journey

Local equity markets continue ascending to new intra-day highs on the back of positive global cues. While, rest of the Asian markets, with an exception of Straits Times, which was down by 0.12% were trading in the green; the US index futures too were trading in positive territory. Back home, though the BSE Sensex was trading above the crucial 18,000 level, the NSE Nifty was trading a tad lower than its psychological 5,400 mark. Moreover, all the sectoral indices on the BSE with an exception of Consumer Durables (CD), which was down by 0.55% were trading in the green. Oil & gas, metal, banking, PSU and capital goods were the major gainers in the BSE sectoral space. Broader markets have also extended their gains in the afternoon trade with BSE mid-cap and small-cap indices gaining around 0.46% and 0.85%, respectively. The market breadth on the BSE was in favour of advances in the ratio of 1478:843 while 109 scrips remained unchanged.

The BSE Sensex surged 159.96 points or 0.90% at 18,007.20. The index has touched a high of 18,041.39 and a low of 17,862.88, respectively.

The BSE Mid cap and Small-cap indices gained 0.46% and 0.85%, respectively.

All the sectoral indices on the BSE with an exception of Consumer Durables (CD), which was down by 0.55% were trading in the green. Oil & Gas up 1.84%, Metal up 1.83%, Bankex up 1.07%, PSU up 0.82% and Capital Goods (CG) up 0.61% were the major gainers in the BSE sectoral space.

The top gainers on the Sensex were Sterlite Inds up 2.87%, Tata Steel up 2.44%, RIL up 2.35%, Hindalco Inds up 2.28% and ONGC up 2.02%.

On the flip side, M&M down 0.85%, ITC down 0.63%, Infosys down 0.36% and BHEL down 0.31% were the only losers on the index.

Meanwhile, the Organization for Economic Cooperation and Development (OECD) has projected the Indian economy to expand 8.5 percent in 2011-12, much lower than the growth of 9.6 percent witnessed in 2010-11 financial year, indicating that economic expansion would be slower. The OECD stated that India's growth slowed to a more sustainable pace towards the end of 2010, after strong post-crisis rebound driven by a surge in private investment. Going forward, growth will pick up somewhat, underpinned by buoyant corporate sentiment and demand for infrastructure spending. Tighter monetary policy and a modest reduction in the deficit will help cool demand somewhat.

The OECD a group of 34 developed and developing nations worldwide regularly turn to one another to identify problems, discuss and analyze them, and promote policies to solve them. It has stated that after moderating towards the end of 2010, inflation has veered up again and remains high. Moreover, inflationary pressures have become more generalized, with non-food prices accelerating, the OECD also stated that further liberalization of foreign direct investment in the retail sector would promote competition and help modernize supply chains, thereby reducing food inflation pressures.

The recent development is much in line with RBI lowering its gross domestic product (GDP) forecast for FY-12 to 8 percent, sharply lower than the 9 per cent estimates of the Government. RBI Governor D Subbarao, during his policy review in the beginning of the month has stated that facing downside risks including sovereign debt problems in the euro-zone, high commodity prices, especially of oil, and accentuation of inflationary pressure in the emerging market economies, the Indian economy is likely to grow 8 per cent in 2011-12. Not only that, later on Finance Minister Pranab Mukherjee too has conceded that it would not be possible to achieve the targeted GDP growth rate of nine per cent during the current fiscal owing to volatility in global commodity prices. However, he expressed confidence that headline inflation has moderated to 7.0-7.5 per cent from the current high of near nine per cent.

Two other international bodies, the International Monetary Fund and the World Bank too had forecast that India's economy would grow at 8 per cent and 9 per cent, respectively. Prior to that ADB has also lowered its growth forecast for the Indian economy to 8.2% for the current fiscal from the earlier projection of 8.7% on the back of surging global oil prices and the RBI's tight monetary policy.

The S&P CNX Nifty jumped 47.60 points or 0.89% at 5396.55.  The index has touched a high and a low of 5406.55 and 5356.35, respectively.

The top gainers on the Nifty were Sterlite Inds up 2.93%, Hindalco Inds up 2.61%, Tata Steel up 2.51%, RIL up 2.42% and Cairn India up 2.16%.

On the flip side, M&M down 1.19%, BPCL down 0.94%, Ambuja Cement down 0.80%, Ranbaxy Lab down 0.64% and ITC down 0.61% were the major losers on the index.

Rest of the Asian markets, with an exception of Straits Times, which was down by 0.12% were trading in the green. Shanghai Composite climbed 0.58%, Hang Seng soared 0.73%, Jakarta Composite jumped 0.75%, Nikkei 225 surged 1.39%, KLSE Composite advanced 0.59%, Seoul Composite zoomed 2.80% and Taiwan Weighted added 0.70%. 

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