Benchmarks trade in narrow range; Sensex above 18,500 mark

Indian equity indices continued to trade in a narrow range with positive bias after paring of early gains as investors piled up positions not only in heavyweight stocks but in the broader markets as well, overlooking data that showed the nation's economic expansion slowed last quarter. India's economy grew 7.8% in the January-March quarter. This is the slowest pace in five quarters as industrial and manufacturing sector growth slowed down due to rising interest rates which affected demand. Leads from markets across the globe remained uninspiring as the Asian equity indices exhibited mixed trends while the European counterparts too were trading in red, limiting the upside chances for the local bourses. Back home, the reports from the Ministry of Commerce opined that India's April trade deficit narrowed to $8.98 billion from $11.03 billion in the same period a year earlier, however, the trade deficit rose (month on month) to $8.98 billion in April from $5.6 billion in March. The NSE Nifty and BSE Sensex were trading above their psychological 5,550 and 18,500 levels, respectively. The market breadth on the BSE was in favor of advances in the ratio of 1647:1076 while 112 scrips remained unchanged.

Moreover, two-wheeler maker, TVS Motor Company, has reported a growth 18% in its May sales. The company has sold total of 1,85,930 units in May 2011 as compared to 1,56,980 units in May 2010. The cumulative sales of the company for the period April to May 2011 thus stood at 3,53,674 units up by 16%. While car market leader - Maruti Suzuki (India) sold a total of 1,04,073 vehicles, up by 1.9% as compared to 1,02,175 vehicles in May 2010. This includes 10,554 units of exports during the month.

The BSE Sensex rose by 64.75 points or 0.35% at 18,568.03. The index touched a high and a low of 18,636.12 and 18,514.66 respectively.

The BSE Mid-cap index advanced 0.64% and Small-cap index climbed 0.77%.

On the BSE sectoral front, Capital Goods up 1.23%, PSU up 0.84%, Power up 0.74%, Teck up 0.71% and IT up 0.49% remained the major gainers. While, Consumer Durables down 0.72%, Realty down 0.64%, Healthcare down 0.37% and Oil & Gas down 0.36% were the only  laggards in the BSE sectoral space.

The top gainers on the Sensex were NTPC up 3.17%, RCom up 3.02%, L&T up 2.19%, Bharti Airtel up 1.96% and Reliance Infra up 1.56%. On the flip side DLF down 1.43%, Tata Steel down 1.23%, Tata Motors down 0.99%, ICICI Bank down 0.79%, and RIL down 0.66% were the major losers on the index.

Meanwhile, Indian economic expansion slowed in the January-March quarter mainly on account of weak performance by mining and quarrying, manufacturing, contraction and trade, hotels, transport, and communication. However, for the fiscal year ending March 2011, the gross domestic product (GDP) maintained a robust growth rate, reassuring policy makers that the economy is in good shape despite sustained monetary tightening over the past year.

According to the data released by Central Statistics Office (CSO), India's GDP at factor cost at constant (2004-05) prices for the full fiscal year ended March 31 showed a growth rate of 8.5% over the 8% GDP growth for the year 2009-10. While the quarterly estimates of GDP for the fourth quarter showed a growth rate of 7.8% against 9.4% year-on-year and 8.3% quarter on quarter.

On sectoral basis, farm sector recorded smart growth of 7.5% against 1.1% registered in the same period a year ago, boosted by a good winter harvest, but manufacturing growth figures disappointed as they came in at 5.5% in the three months through March from a year earlier, compared with a 6% gain in the previous quarter and 15.2% year-on-year. The manufacturing activity has been slowed by nine interest rate hikes in the past 15 months to tackle the rampant inflation.

Nonetheless, the GDP figures reflect the resilience of Asia's third-largest economy which has expanded at a swift pace despite the odds that emerged not only from the domestic macro-economic front but also from the global front including turbulences like civil upheaval in the Middle East and North African nations and the Euro-zone debt crisis. Continued domestic demand on the back of rising income levels helped the Indian economy to clock the robust growth, second only to neighboring China among major economies. But the steady growth is expected to give the Reserve Bank of India more confidence to continue raising interest rates to rein in uncomfortably high inflation.

The S&P CNX Nifty amassed 21.00 points or 0.38% at 5,581.15. The index touched high and low of 5,595.75 and 5,559.45 respectively.

The top gainers on the Nifty were RCom up 3.97%, NTPC up 3.68%, SAIL up 3.41%, L&T up 2.54% and Reliance Capital up 2.40%. On the other hand, Ranbaxy down 2.37%, DLF down 1.57%, Sun Pharma down 1.52%, Tata Motors down 1.28% and Tata Steel down 1.20% were the major losers on the index.

On the Asian front, Hang Seng eased 0.24%, KLSE Composite declined 0.12% and Seoul Composite inched down 0.05%. On the flipside, Shanghai Composite tad up by 0.02%, Jakarta Composite added 0.11%, Nikkei 225 gained 0.27%, Straits Times climbed 0.38% and Taiwan Weighted surged 0.82%.

The European markets are trading in red with France's CAC 40 eased 0.15%, Germany's DAX declined down 0.17% and London's FTSE shed 0.10%.

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