Benchmarks turned higher after a flat start helped by gains in selected index heavyweights. Sentiments remained up-beat with Finance Minister P Chidambaram’s statement that India's economy has stabilised in past few weeks and the investment cycle must start again for high growth. Further, Capital inflows by foreign funds also support the sentiments. Gains on up side remained capped as traders turned cautions with global ratings agency Moody’s said that the Indian economy is unlikely to return to previous growth rates of around 7-8% in the near future even if the new government pursues a strong reform agenda. The agency also said that the country is also vulnerable to capital outflows given a history of sizeable current account deficits.
On the global front, the US markets made a mixed closing and the trade remained lackluster despite the release of a report from the Labor Department showing that jobless claims pulled back by more than expected in the week ended May 3rd. The Asian markets traded mixed. Back home, on the sectoral front, Metal, Power and Health Care witnessed the maximum gain in trade, while Health Care, Capital Goods and Oil & Gas were the top losers on the BSE. In scrip specific movement, Tata Power Company traded higher by 2% after Supreme Court dismissed the appeal filed by BEST in which it sought to restrain the company from laying its network to provide power supply to consumers in its license area.
The market breadth on BSE remains positive with advances to declines in the ratio of 713:509. BSE Sensex and NSE Nifty were comfortably trading near their psychological 22,300 and 6,650 levels respectively.
The BSE Sensex is currently trading at 22382.35, up by 38.31 points or 0.17% after trading in a range of 22396.47and 22317.18. There were 19 stocks advancing against 11 declines on the index. The broader indices were trading in green; the BSE Mid cap index was up by 0.14% and Small cap index gained 0.26%.
The top gaining sectoral indices on the BSE were, Metal up by 0.56%, Power up by 0.22%, Health Care up by 0.22%, Auto up by 0.20% and Realty up by 0.19%, while Health Care down by 0.29%, Capital Goods down by 0.12%, Oil & Gas down by 0.03% and Auto down by 0.01% were the losers.
The top gainers on the Sensex were Tata Power up by 1.70%, Hindalco Inds up by 1.39%, Coal India up by 1.27%,BHEL up by 0.92% and HDFC up by 0.89%. On the flip side, ONGC was down by 0.94%,Dr Reddys Lab was down by 0.83%, Cipla was down by 0.68%, Tata Steel was down by 0.63% and Gail India down by 0.59% were the top losers on the Sensex.
Meanwhile, global rating agency Moody’s in its latest report has stated that India will not be able to revert to high economic growth path of 7-8 percent anytime soon, even if the new government formed after the general election pursues strong reforms agenda. The report added that India’s government has only limited opportunities to provide some fiscal stimulus to offset a possible slowdown in capital flows. The global credit rating agency has forecast India’s economic growth at 4.5-5.5 percent in 2014 and 5-6 percent in 2015. Indian economy’s growth slowed down to a decade low at 4.5 percent in FY13 and 4.6 percent during the first three quarter of FY14.
The Moody’s report highlighted that Indian economy is hampered by lack of reforms in recent years and is now vulnerable to capital outflows. It expects the debt-to-GDP ratio to rise to more than 65 percent this year. Although, the country witnessed significant improvement in current account deficit (CAD), this curtailing is unlikely to be sustained once restrictions on gold imports are lifted. During the April-December’FY14, CAD stood at $31.1 billion (2.3% of GDP) versus $69.8 billion (5.2% of GDP) reported in the same period of previous fiscal year. On inflation front, the report added that high inflation, at more than 8 per cent indicated that the central bank has no room to ease monetary policy in the short term and may even tighten the policy rates further.
The rating agency further noted that during the past two months, the foreign investments in India increased at brisk pace, which indicate that international investors continue to perceive attractive investment opportunities in India. Capital flows increased amid expectations that new government will take strong reforms to boost the economic growth. However, these expectations could be disappointed if a coalition government lacks the political flexibility to pass reforms.
The CNX Nifty is currently trading at 6,666.60 up by 6.75 points or 0.10% after trading in a range of 6,674.50 and 6,652.15. There were 29 stocks advancing against 21 declines on the index.
The top gainers of the Nifty were Tata Power up by 1.70%, Hindalco up by 1.28%, Coal India up by 1.06%, BHEL up by 0.95% and Power Grid up by 0.82%. On the flip side, ONGC down by 1.02%, DR Reddy down by 0.89%, SSLT down by 0.64%, BPCL down by 0.63% and Tata Motors down by 0.54% were the top losers on the index.
Asian equity indices were traded on mixed; Shanghai Composite was down by 6.88 points or 0.34% to 2,008.39, Hang Seng was marginally down by 0.88 points to 21,836.24, Taiwan Weighted was down by 38.31 points or 0.43% to 8,892.59.
On the other hand, Nikkei 225 was up by 55.34 points or 0.39% to 14,219.12, Straits Times gained 2.52 points or 0.07% to 3,250.11, Seoul Composite was up by 1.30 points or 0.07% to 1,951.90 and Jakarta Composite added 9.31 points or 0.19% to 4,870.20.
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