THIN BAND

Indian equity markets gaining momentum after two days of lackluster trade are again trading listless as benchmarks virtually gyrating in thin band and are almost stand-still. Consolidation seems to be gripping the markets post two previous sessions' drubbing, which has led the benchmarks to find support near the lower levels. The markets are also seen in fine fettle ahead of the results of two banking major-ICICI Bank and Axis Bank, today.

Meanwhile, subdued global cues are relatively keeping the undertone cautious. Asian counterparts are exhibiting mixed trend following an uneven set of data from the United States, while news that Spain's credit rating had been slashed, mainly marred the sentiment. The US National Association of Realtors that reported on Thursday that pending home sales rose in March provided a lift to investors amid hopes of a recovery in the crucial sector. The pending home sales index -- which represents contracts signed but not closed -- rose 4.1 percent in March to 101.4, its highest level since April 2010 when it hit 111.3. On a 12-month basis, pending sales were up 12.8 percent. On the flip side, however, the Commerce Department said new jobless claims remained at high levels after edging up in recent weeks. It said 388,000 people made claims in the week to April 21, compared to a revised 389,000 the previous week and a four-week moving average of 381,750, adding to concerns about Washington's battle against unemployment. However, a two-notch downgrade of Spain's credit rating was mainly the factor that ambushed the markets.

Back on the home turf, stocks from Power counter was leading the pack of gainers, while stocks from Capital Good and Bankex too were plodding to occupy the second and third spot respectively. However, stocks from Oil & Gas space were acting as the sole spoil sport. The 30 share barometer index of Bombay Stock Exchange, Sensex, after fetching above 50 points was trading at a striking distance of 17200 mark. Similarly, the widely followed index of National Stock Exchange , Nifty, clawing above 20 points was oscillating above the 5200 mark.  Optimism was also seen across broader space, as both Midcap and SmallCap index were trading above 0.50%. The overall market breadth on BSE was in the favour of advances which thumped declines in the ratio of 1390:736, while 86 shares remained unchanged.

The BSE Sensex is currently trading at 17,195.94, up by 65.27 points or 0.38%. The index has touched a high and low of 17,242.15 and 17,134.85 respectively.   There were 22 stocks advancing against 8 declines on the index.

The broader indices too were trading firm; the BSE Mid cap and Small cap indices surged by 0.77% and 0.66% respectively.

The top gaining sectoral indices on the BSE were, Power up by 1.00%, CG up by 0.85%, Bankex and CD up by 0.71% and Auto up by 0.67%. While, Oil & Gas down by 0.27% was the sole loser on the index.

The top gainers on the Sensex were M&M up by 1.85%, ICICI Bank up by 1.60%, Hindalco Industries up by 1.46%, BHEL up by 1.45% and ITC up by 1.34%. While, Coal India down by 1.53%, Tata Steel down by 0.34%, RIL down by 0.65%, SBI down by 0.57%, Tata Steel down by 0.56% and Bharti Airtel down by 0.55% remained the lone loser on the Sensex.

Meanwhile, India could cut its trade deficit by a good 19% this year, as per Commerce Secretary Rahul Khullar. The trade deficit could come down provided oil prices stabilize, which have been the major drag on the import bill last year, and India too makes an effort to curb the imports of commodities like coal and fertilizers, which form a significant part of its imports. Exports on the other hand are not expected to rise by considerable amounts due to the ongoing recession abroad.

The main challenge that will face the Indian economy shall be capital inflows. Even after reducing the import bills, India will need capital inflows to the tune of $50 billion to $60 billion from overseas. This funding was traditionally provided by the European banks, which is now not possible given its economic troubles.  India will have to find other alternatives, such as accelerating foreign direct investment in key sectors to fund its capital flows.

India's trade deficit stood at $185 billion in FY'12. As per Khullar, this can be brought down to $150 billion in FY'13. The current account deficit, which was about 4% of gross domestic product in the last fiscal year, could be narrowed to 3.5% this year.

FY'12 has been a relatively difficult year for India where trade deficit has jumped by a whopping 56% due to a steep rise in the prices of oil. As a result the rupee has gone down by a good 18% against the dollar. However it is hoped that this year will see a stabilization in the oil prices. Also imports of gold, which comprised of significant amount of imports last year, are expected to come down given the increase in the import duty of gold in the Budget and a relative stabilization of the economy.

Also, like stated earlier, efforts will have to be made to reduce coal imports, fertilizers and other commodities that from a significant part of the import bill. Coal imports have jumped by a whopping 80% in the last fiscal. 

As per Khullar, exports are expected to remain subdued in the next fiscal due to the ongoing recession. Infact export markets are looking even bleaker this year than last year. Hence given the situation, if lucky, India can expect a 15% export growth at max.

The S&P CNX Nifty is currently trading at 5,213.85, higher by 24.85 points or 0.48%. The index has touched a high and low of 5223.05 and 5188.90 respectively. There were 39 stocks advancing against 11 declining one's on the index.

The top gainers of the Nifty were JP Associates up by 2.02%, M&M up by 1.88%, Axis Bank up by 1.78%, Power Grid Corporation up by 1.57% and Hindalco Industries up by 1.55%. On the flip side, Ranbaxy down by 1.80%, Coal India down by 1.49%, SBI down by 0.75%, Tata Steel down by 0.67% and Sun Pharmaceuticals down by 0.50% remained the only losers on the index.

Asian market were trading mostly in the positive terrain; Hang Seng gained 0.27%, Nikkei 225 inched up by 0.08%, Straits Times added 0.35% and Seoul Composite expanded by 0.42% .

Shanghai Composite and Jakarta Composite declined by 0.20%, and KLSE Composite slid 0.51% to 1,571.68 and Taiwan Weighted lost 0.55%.