GAP UP OPENING

Key domestic bourses have made a gap up opening following a relief rally in Asian markets. The sentiment buoyed after RBI slashed short-term lending rate by 0.50 percent to 8 percent yesterday and a firming trend on other Asian bourses, following overnight gains on the US market on easing concerns over Europe's debt crisis. Back home, sustained buying in mostly all the key heavyweights along with broader indices supported BSE's -- Sensex -- and NSE's -- Nifty -- to regain their crucial 17,500 and 5,300 mark respectively. Auto witnessed the maximum gain in trade followed by metal and realty while, there were no losers on the BSE sectoral space. The broader indices were going neck to neck with benchmarks. Meanwhile, the oil marketing companies like BPCL, HPCL and IOC edged higher by over one and a half percent as they have virtually threatened to increase petrol prices by around Rs 9 a litre, asking the government to either cut excise duty on petrol or give them Rs 49 crore a day in compensation. The market breadth on the BSE was positive; there were 1,204 shares on the gaining side against 348 shares on the losing side while 61 shares remained unchanged.

Meanwhile, HCL Tech shot up over 5 percent post better than expected growth in net profit. The fourth largest software services provider by market cap reported a growth of 5.24 percent q-o-q in its consolidated net profit of Rs 603 crore for the third quarter of FY12. Its rival TCS and Wipro gained 1.5 percent.

The BSE Sensex opened at 17,447.26; about 90 points higher compared to its previous closing of 17,357.94, and has touched a high of 17,522.80 while low remain its opening.

The index is currently trading at 17,505.61, up by 147.67 points or 0.85%. There were 29 stocks advancing against only 1 decline on the index.

The overall market breadth has made a strong start with 74.64% stocks advancing against 21.57% declines. The broader indices were trading in line with benchmarks; the BSE Mid cap and Small cap indices rose 1.04% and 0.83% respectively.

The top gaining sectoral indices on the BSE were, CD up by 2.01%, Auto up by 1.69%, Metal up by 1.34%, Realty up by 1.31% and CG up by 1.12%. While, there were no losers on the index.

The top gainers on the Sensex were Bajaj Auto up by 3.22%, Hindalco up by 2.58%, Gail up by 2.11%, Tata Motors up by 1.97% and Sun Pharma up by 1.96%. While, Infosys down by 0.49% remained the lone loser on the Sensex.

Meanwhile, the RBI governor, D Subbarao, on the sidelines of monetary policy, has made a case for raising the prices of diesel, kerosene and LPG. The RBI is of the opinion that the government should hike oil prices to control its fiscal deficit.

Crude oil prices have been rising swiftly in the recent past. However their domestic prices have not been increased in tandem. Moreover, petrol prices even though deregulated, continue to be influenced by the government. As a result oil companies are reporting huge losses which are being catered to by the government. However this is affecting the subsidy bill and is causing the fiscal deficit to rise.

Any slippage in the fiscal deficit increases inflationary pressures that force the RBI to follow a restrictive policy. Hence the governor has made a case to restrict the subsidy bill by allowing domestic oil prices to rise in tandem with international prices.

Moreover fuelled by gold demand, crude oil prices and decelerating growth in emerging economies, India's current account deficit (CAD), widened to 4% of GDP in April-December 2011, up from 3.3% a year ago. Also India's fiscal deficit rose to a sharp 5.9% of GDP in the last fiscal.

The government proposes to contain it at 5.1% of GDP in 2012-13. To attain this number it has proposed to restrict the subsidy bill to below 2% of GDP this fiscal and 1.75% in the subsequent years. However this is not possible if the prices of diesel, kerosene and LPG are not hiked in the country and brought in line with international prices as India imports about 80% of its crude oil requirement.

The S&P CNX Nifty opened at 5,320.70; about 31 points higher compared to its previous closing of 5,289.70, and has touched a high of 5,340.75 while low remain its opening.

The index is currently trading at 5,338.00, higher by 48.30 points or 0.91%. There were 48 stocks advancing against just 2 declines on the index.

The top gainers of the Nifty were HCL Tech up by 4.60%, Bajaj Auto up by 3.39%, ACC up by 2.48%, Hindalco up by 2.46% and Sun Pharma up by 2.02%.

On the flip side, Infosys down by 0.54% and RCom down by 0.06% remained the only losers on the index.

All the Asian equity indices were trading in the green; Shanghai Composite was up 31.13 points or 1.33% to 2,366.11, Hang Seng was up 246.55 points or 1.20% to 20,808.86, Jakarta Composite was up 4.58 points or 0.11% to 4,161.94, KLSE Composite was up 4.92 points or 0.31% to 1,601.11, Nikkei 225 was up 178.21 points or 1.88% to 9,642.92, Straits Times was up 17.04 points or 0.57% to 3,003.63, Seoul Composite was up 19.26 points or 0.97% to 2,004.56 and Taiwan Weighted was up by 32.38 points or 0.43% to 7,618.25.