Markets continue to trade firm despite some profit booking

Indian bourses after showing outperformance in early deals consolidated in noon trades, holding on to their morning gains despite some profit booking by funds and retail investors. Profit booking emerged at higher levels and marginally corrected the benchmarks, however most of the sectoral indices managed to remain in green supported by gains in rate sensitive stocks such as banking, realty and auto. Selling was witnessed in defensive sectors such as IT, tech and healthcare putting some pressure on the major indices. Sentiment got a boost as early trends pointed to a comprehensive victory for the business friendly BJP-led NDA. The Indian rupee gained sharply against the US dollar amid hefty gains in domestic equity markets and high inflows from foreign institutional investors. Banking was top gaining index on BSE, up by around 6.82% followed by realty and oil and gas indices both up by around 4.40%. Apart from blue chips, broader indices too equally participated in the rally with both mid and small cap indices were trading up by around 1.85% and 0.73%. Among index heavyweights, SSLT, SBI and ICICI bank were the top gainers on BSE trading gaining over 6.5%. Among other stocks, Arvind Limited was up around 1% as the company posted 11.49 per cent growth in its standalone net profit to Rs 94.89 crore for the fourth quarter ended March 31, 2014. On the other hand, Zydus Wellness was down by around 3% at Rs 505 after the healthcare firm posted 41.83% decline in consolidated net profit at Rs 21.76 crore for Q4FY14. On global front, Asian equity indices were trading in red with Hang Seng down by 0.65% and Straits Times down by 0.22%. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 7,300 and 24,000 levels respectively. The market breadth on BSE was negative, out of 2,448 stocks traded, 1,155 stocks advanced, while 1,183 stocks declined on the BSE. The BSE Sensex is currently trading at 24,678.05 up by 772.45 points or 3.23% after trading in a range of 23,375.63 and 24,271.54. There were 25 stocks advancing against 5 stocks declining on the index. The broader indices were trading in green; the BSE Mid cap index was up by 1.85%, while Small cap index gained 0.73%. The gaining sectoral indices on the BSE were Bankex up by 6.82%, Realty up by 4.45%, Oil and Gas up by 4.34%, Auto up by 3.53% and Power up by 3.49%. On the flip side, IT down by 1.10%, Consumer Durables down by 0.69%, Teck down by 0.39% and Healthcare down by 0.23% were the losing indices on BSE.    The top gainers on the Sensex were SSLT up by 7.88%, ICICI Bank up by 7.08%, Axis Bank up by 7.01%, SBI up by 6.61% and HDFC Bank up by 6.48%. On the flip side, Dr Reddy’s Lab down by 1.99%, Infosys down by 1.72%, Wipro down by 1.40%, Cipla down by 0.79% and TCS down by 0.27%. Meanwhile, the Reserve Bank of India’s (RBI) Governor Raghuram Rajan has pointed that a subdued growth, the fiscal and current account deficits and sticky inflation are the four biggest macro-economic challenges. Presently, Indian economy is struggling with slowdown and the factors like high interest rates, low investments and slow execution of infrastructure projects have been impacting economy’s growth. Indian economy’s growth slowed down to 4.6 percent during the first three quarter of FY14 and is likely to remain at sub-5% level in FY14. On inflation front, the Governor has said that despite some improvement in price rise over the past few months, WPI inflation still remained above the Reserve Bank of India's comfort level of 5 percent. Rajan further stated that Interest rate is the best tool available with the central bank to control price rise, whereas the Government too has tools like increasing agricultural production and improving supply to check inflation. Raghuram Rajan added that the new government and the central bank need to work together to check high inflation, which has been eroding the business sentiments in the country. Rajan exuded confidence that retail inflation would come down to 6% by March 2016. The WPI inflation eased to 5.20% in April as against 5.70% in March, while, retail inflation rose to three-month high at 8.59% in April. The country is also witnessing improvement on fiscal as well as current account deficit front. During the April-December FY’14, 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. In the FY14, the CAD is likely to improve to around 2% of GDP level mainly on the back of improved trade deficit figure. Further, the country’s fiscal deficit is expected to contain at 4.5% of GDP in FY14 as compared to the 4.89% of GDP in the previous fiscal year. The CNX Nifty is currently trading at 7,357 up by 233.85 points or 3.28% after trading in a range of 7,576.50 and 7,264.40. There were 44 stocks advancing against 6 declining on the index. The top gainers of the Nifty were Grasim up by 8.43%, PNB up by 8.20%, SSLT up by 8.11%, Indusind Bank up by 7.81% and Kotak Bank up by 7.58%. On the flip side, Tech Mahindra down by 2.32%, Infosys down by 2.14%, Dr Reddy’s Lab down by 2.10%, Wipro down by 1.25% and Cipla down by 0.79% were the major losers on the index. Asian equity indices were trading in red; Hang Seng down by 0.65% to 22,582.88, Straits Times down by 0.22% to 3,265.84, Shanghai Composite down by 0.22% to 3,266.53 and Nikkei 225 down by 1.38% to 14,101.09. While, Jakarta Index up by 0.39% to 5,011.33 and Taiwan Weighted up by 0.09% to 8,888.45