Equity benchmarks surged Thursday led by strengths in shares from the banking, capital goods and auto sectors, with the Sensex closing above the psychological 19000-mark.
Brokers said the narrowing of March trade deficit to a two-year low of USD 10.3 billion helped sustain the positive sentiment created by a decline in gold and crude oil prices.
The Sensex closed at 19016.46, up 285.30 points over its previous close, and the Nifty gained 94.40 points to close at 5783.10.
HDFC, Bharti Airtel, Tata Motors, L&T, Axis Bank, and Oriental Bank of Commerce were the key gainers among frontline shares, rising between 3-5 percent.
IndusInd Bank shares gained 7 percent on better than expected. Shares of JSW Steel and Sesa Goa rose briefly after the Supreme Court lifted a one-and-a-half-year ban on mining in Karnataka. But the stocks gave up much of the gains, with JSW Steel closing in the red and Sesa Goa ending the day marginally higher.
Falling commodity prices are a big positive for India and this could even prompt many foreign investors to increase their weightage for the country in their portfolio, said Tirthankar Patnaik of Religare Capital in an interview to CNBC-TV18 earlier today.
However, Andrew Holland of Ambit struck a cautious note saying that news flow from Europe could worsen and could trigger a global sell-off. He sees the Nifty falling to 5200 by May.
The market began to firm up after the March trade deficit numbers were released, which showed a decent improvement in exports.
Borkerage house Nomura attributed the better-than-expected March trade deficit number partly to seasonal factors, but said falling imports would help improve outlook on India’s stretched current account deficit.
"The improvement is partly seasonal as exports tend to rise at the end of the financial year it also reflects a combination of higher exports and weak imports. While part of the seasonal improvement in the March trade deficit will reverse in April, the recent fall in oil and gold prices can lead to a saving of 1% of GDP on the current account deficit on an annualised basis, if the current price fall sustains," the Normura note said.
Bank shares continued to rise, despite concerns that Indian banks’ asset quality may not be what it appears to.
An IMF report two days back cautioned that debatable asset restructuring practices and vague definitions of distressed assets was leading to asset quality problems being underestimated in countries like India and China.
"India's banks remain well capitalized, but credit quality has tended to deteriorate recently, particularly among the state-owned banks, which account for 73 per cent of banking assets," said the IMF’s Fiscal Monitor Report.
The Sensex is trading firm in last one hour of the final trading day of this week. The exchanges will be shut tomorrow on account of Ram Navami. The current rally is more fundamentally driven then a mere technical bounce back or short covering.
It was a stable session for the market as the Nifty held above 5700 firmly led by strength in banking, capital goods and auto. The Nifty was up 53.85 points at 5742.55 while the Sensex gained 169.28 points to be at 18900.44.
The equity benchmark indices are trading strong in the afternoon trade. A sharp fall in global crude prices bodes well for India’s current account deficit problems. India will also benefit from the appreciation in rupee which is also hovering around 54.
It was a steady session for the market in trade today. The Nifty was hovering around 5700 mark after Indian crude basket slumped to USD 97.66 per barrel. India being the net importer of crude and gold will benefit the most from recent fall in commodities.
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