Andrew L Dcunha

Mumbai, Aug 30: In a strong pull-back rally, the benchmark Sensex today spurted for the second day, closing  up 260 points  at 16,676 on across-the-board buying led by realty, capital goods, metal and banking segments. Nifty has regained its 5,000-mark..  Stocks of recently battered, realty, technology, banking and metal sectors, were back in the limelight on frenzied buying by funds as well as retail investors at attractive levels, lifting the benchmark Sensex notably higher.   Reliance, HDFC, HDFC Bank, Infosys and ICICI Bank together contributed around 177 points to the Sensex's up move. Reliance gained 3.6% at 782.  ICICI Bank and Infosys were up around 2% each. 

Shares of non-banking finance companies (NBFCs) rallied in early trades but pared gains by noon.. This followed after RBI released draft guidelines for licensing of new banks in the private sector on Monday. The existing NBFCs, if considered eligible, may be permitted to either promote a new bank or convert themselves into banks. The minimum capital requirement will be 500 crore and the aggregate foreign shareholding in the new bank shall not exceed 49 per cent for the first 5 years after which it will be as per the extant policy

Global markets, however, continued to remain positive. Europe's FTSE has surged 2.6% to 5,265. However, CAC and DAX slipped 0.3% each in trades, erasing early gains. Asian stocks rallied Tuesday, with resources and banking firms among the best performers, as investors showed more appetite for riskier assets in the wake of strong U.S. equity gains.  In Asia, Nikkei closed up 1% and Hang Seng gained 1.7% in trades.

Gold up – strong rupee limits gain

At the Multi Commodity Exchange, September gold recovered by Rs 55 to Rs 26,793 per 10 grams in futures trade today as speculators enlarged their positions amid a firming trend overseas. The metal had closed 3.26% lower at Rs 26,738 per 10 grams in the previous session. the rising rupee value limited the gains, as it plays an important role in determining the landed cost of the yellow metal, which is quoted in dollars.The October gold rose by Rs 48, or 0.18 per cent, to Rs 27,050 per 10 grams, with a business turnover of 48 lots.  

India’s Q1 GDP at 7.7% - in line with expectation

India's economy grew 7.7 percent in the June quarter from a year earlier, almost in line with expectations.  The government has projected overall economic growth in the current fiscal at around 8.5%, while the Reserve Bank has projected the growth to moderate to 8% from 8.5% in FY'11.  The Planning Commission has estimated GDP growth at 8-8.3% in the 2011-12 financial year. The Indian economy expanded by 8.5% in the 2010-11 fiscal.   

During the quarter ending June 30, 2011, growth in the manufacturing sector dipped to 7.2% from 10.6% in the corresponding period of 2010-11. In addition, the mining and quarrying sector grew by just 1.8% during the quarter under review, as against 7.4% growth in the first quarter of the previous fiscal. However, farm output showed an improvement, expanding by 3.9% during the quarter under review, compared to 2.4% in the corresponding three-month period last fiscal. Furthermore, the trade, hotels, transport and communications segments grew by 12.8% in the quarter under review, up from 12.1% in the year-ago period. The services sector, including insurance and real estate, grew by 9.1% in the June quarter this year, compared to 9.8% expansion in the corresponding period last year.

Andrew L D Cunha, Managing Director, WinWin Fin  Advisory Pvt. Ltd. Mangalore. Email:  finadvisoryltd@yahoo.com