Markets Trim Morning Gains

The Indian equity markets are still trading in positive, but have curtailed their morning gains. The BSE Sensex is trading up by 0.6%, while the 50-share Nifty is up by 0.7%. Since the past few sessions, the markets have been gaining on anticipation of a rate cut. However, the latest comment by Nilesh Shah of Axis Direct that the liquidity situation is still tight for a possibility of a CRR cut has sent out a negative signal to the market.

The world stock markets have rallied after the bailout package for Spain. The Asian markets have gained on the same, with Nikkei and Hang Seng trading nearly 2% up. Shanghai has gained 1%. Other Asian markets such as the Taiwanese index, KOSPI and Straits Times are also trading in positives.

Europe saw an extremely positive opening. FTSE is trading up by 1.52% at the moment, while CAC and DAX are both up over 2%.

Meanwhile, the Finance Minister, Pranab Mukherjee, has said that the GDP will grow by 7% in FY13. He has also said that the monsoon will be normal in this fiscal. The minister is also expecting a turnaround in the economy this year, with low crude oil prices.

The shares of the Power companies have ralllied on the buzz that they will be allowed to raise tariffs by upto Rs 1/unit. This will mainly be applicable to companies using imported coal such as Tata Power, Reliance Power, etc. Most of the Power shares are up by 2%-4%, and the index itself is up by nearly 2%.

Among the sectoral indices, CD has gained over 2%. The interest rate-sensitive Realty and Bankex are up by over 1% each, as is the PSU index. HC is the only index trading in the red at the moment.

Among the Sensex stocks, Sterlite Industries is up about 4%. Tata Power is up 3.93% on the buzz that that power companies will be allowed to impose a tafiff hike. On the same lines, NTPC is also up by about 1%. Coal India, which has set its coal production target for FY17 to 615 MT, is also trading up 2.5%. Cipla, Sun Pharma, ONGC and Wipro are the only losing Sensex stocks.

In other stocks, the shares of BEML tanked 6% on news that its chief has been suspended by Ministry of Defence in connection with the Tatra case. After the initial loss though, the share price has shown some recovery.

Auto parts maker Shanthi Gears has surged by nearly 3% following news that its promoters will sell stake to Bharat Forge. There is no official announcement as of this as yet.

The shares of BPCL and Videocon Industries have surged by 3% and 5% respectively over the gas discovery in Mozambique.

The market breadth is currently positive, with more stocks advanced. 

Even though the global indices have surged and the positive news flow have continued, we believe that investors and market watchers will keenly watch the IIP data, which is due to be released tomorrow. However, the markets are expected to remain positive today.