MARKETS REMAIN FIRM

Following a positive start, Indian equity markets remained well placed in positive territory in the late morning session, with several blue chip stocks from across various sectors trading firm on sustained buying support. Investors were busy in some hectic buying in the realty space, with expectations that the Reserve Bank of India will announce a rate cut later this month. Markets sentiments boosted with the US-based rating agency S&P's statement that it sees India's FY14 GDP growth at 6.4% and FY15 figure at 7.2% and it expects a turnaround in Indian corporate sector by mid-FY14. In currency front, rupee appreciated against the dollar on Wednesday amid selling of the US currency by exporters and banks. On sectoral front, all sectors were trading in green, except FMCG. On global front, Asian markets rallied on Wednesday, following a record-breaking performance by shares on Wall Street. Tokyo and Sydney both hit multi-year highs. Back home, the market breadth favoring positive trend; there were 1,553 shares on the gaining side against 780 shares on the losing side while 119 shares remain unchanged.

The BSE Sensex is currently trading at 19,285.53, up by 142.36 points or 0.74% after trading in a range of 19,293.39 and 19,195.47. There were 23 stocks advancing against 7 declines on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.45% and Small cap index was up by 1.50%.

The top gaining sectoral indices on the BSE were, Realty up by 5.17%, Capital Goods up by 2.67%, Metal up by 2.31%, IT up by 1.25% and PSU up by 1.14% while, FMCG down by 0.23% was the only loser on the BSE.

The top gainers on the Sensex were Sterlite Industries up by 4.49%, L&T up by 3.19%, Hindalco up by 2.99%, Tata Steel up by 2.44% and Tata Motors up by 2.28%.

On the flip side, Gail India was down by 0.91%, Hindustan Unilever was down by 0.79%, ITC was down by 0.67%, Mahindra & Mahindra was down by 0.52% and Bharti Airtel was down by 0.45% were the top losers on the Sensex.

Meanwhile, terming the widening current account deficit (CAD), as India's biggest concern, Chief Economic Advisor to the Finance Minister, Raghuram Rajan, has said that 'CAD is our biggest concern right now because as you finance from outside, you are dependent on the interest of foreign investors. They've been supporting us so far due to the search for yields. But can we continue to rely on that forbearance.'

As per Rajan, the government should think about freezing the subsidy on diesel at the current levels until it reaches the level of world prices so that the budget is not exposed to the risks of an increase in global oil price.

As a short-term way out, Rajan suggested that the government needs to focus more on financing CAD through foreign inflows, since reducing it will take time - the best way is to increase exports relative to imports however, which again is dependent on growth of foreign countries. By adding further he said, there is a need to cut fertilizer subsidies, but did not give a timeline for the same.

Further, cautioning the government against 'distortionary' spending, which is consumption-led in nature, Rajan said, there is not much room to cut non-plan spending. The weight of these cuts has to come from Plan spending. Lots of plan spending is also about consumption. Cutting plan spending, if done carefully and judiciously, is not a sacrifice for long-term growth.'

On the growth front, he said, the GDP expansion will reach the 8% mark in the next two-three years. However, he hinted that in the current fiscal growth will be higher than what has been estimated recently. He also said food inflation persisting at a high level was not easy for the central bank to manage.

In the September quarter, the CAD widened to a record high of 5.4% of GDP as export growth slowed more steeply than imports, with a similar gap expected in the December quarter likely to prolong weakness in the rupee. Further, the CAD is likely to stay at record high for the entire 2012-13.

The CNX Nifty is currently trading at 5,823.25 up by 39.00 points or 0.67% after trading in a range of 5,828.25 and 5,795.05. There were 34 stocks advancing against 16 declines on the index.

The top gainers of the Nifty were DLF up by 4.33%, JP Associate up by 4.18%, Bank of Baroda up by 3.60%, Sesa Goa up by 3.09% and L&T up by 3.09%.

On the flip side, Gail down by 1.04%, Hindustan Unilever down by 0.97%, ITC down by 0.87%, BPCL down by 0.73% and Bharti Airtel down by 0.64% were the major losers on the index.

All Asian equity indices were trading in the green; Shanghai Composite rose 0.97%, Hang Seng surged 0.95%, Jakarta Composite strengthened 1.24%, KLSE Composite jumped 0.40%, Nikkei 225 soared 1.91%, Straits Times increased 1.05%, KOSPI Composite added 0.06% and Taiwan Weighted was up 0.22%.