Markets remain firm, PSUs surge ahead of Budget

Broader markets gain in line with benchmark index

Markets continued to trade firm this morning, an hour ahead of the Union Budget announcement. The Sensex, after touching a high of 19,322 is now up 109 points at 19,261. Nifty is up 31 points at 5,828. Investors will be cautious ahead of the futures and options expiry as well.

Finance Minister P. Chidambaram will present one of the most highly anticipated Indian budgets of recent years, a blueprint for austerity that forms the centerpiece of India's efforts to stave off a damaging credit ratings downgrade. The anouncments made today will be dictating the market moves in noon deals.

Experts expect a removal of the cap on foreign institutional investments in rupee-denominated corporate bonds, or at least in infrastructure bonds. They also see the Budget removing withholding tax on corporate bonds that have no restrictions on maturity or lock-in periods, or bring it down substantially.

The rupee today gained 26 paise to 53.60 against the dollar in early trade at the Interbank Foreign Exchange on increased selling of the US currency by exporters.

In Asia, all the markets were in the green with Japan's Nikkei being the top gainer. The index gained 1.7% after a two-day losing run on Thursday after a well-bid Italian debt auction eased concerns that an inconclusive election could reignite the euro zone debt crisis.

Broader markets gained in line with the benchmark index. BSE midcap index was up 0.5% at 6493. Smallcap index added 0.5% at 6364.

BSE capital goods index has surged 1.3% at 2,094. PSU, realty and oil & gas indices are up 1% each. However, some weakness can be seen in the CD space as the BSE consumer durables has slipped marginally to 7,106.

ONGC has surged 1.2% at Rs 319 after the company started supplying gas under direct marketing from its isolated fields in the K-G Basin to Steel Exchange India Limited at the rate of 10,000 standard cubic metres per day (scmd).

Coal India is the top gainer - up 3% at Rs 321. The state-run company aims to acquire at least one foreign coal asset in fiscal 2013-14, its chairman has said.

Larsen & Toubro jumped 1.6% after it secured orders worth Rs 1,504 crore order during the ongoing month from India and abroad. Tata Motors advanced 1.5% on news that the company is readying a range of sophisticated combat, tactical, logistical and armoured vehicles including high-end missile launchers for the Indian defence forces.

Wipro, Bharti Airtel and Sterlite are up 1% each. However, Maruti Suzuki has slipped 1.3% at Rs 1,391  as the company gets removed from the MSCI today. Dr Reddy's is down 0.6% at Rs 1,743. ITC, Cipla and GAIL are in red as well.

Jet Airways (India) has surged 7%, extending its previous day’s 19.4% rally, on reports that the company has sold (and leased-back for own use) three pairs of Heathrow Airport parking slots at London for $70 million to Etihad Airways.

BSE market breadth is positive. Out of 2,048 stocks traded, 1198 shares have advanced while 756 shares have declined.