 "Fiscal cliff vote pushes Sensex up; autos gain on Dec sales")
The Indian equity markets extended yesterday’s gains as the US lawmakers managed to hammer out a resolution to the “fiscal cliff”, which had threatened to pull the global economy into a slowdown.
The Sensex opened at 19728.93, up 0.76 percent and Nifty hovered around 5996, up 0.75 percent.
Option traders see a probability of the Nifty inching closer to 6,200 levels in the January derivative series which ends on January 31.
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Asian stocks hit a five-month high and the dollar fell as a last-minute deal looked set to end the US “fiscal cliff” crisis that threatened a US recession and roiled world financial markets.
The US Senate early on Tuesday passed a bill that aims to avoid the cliff’s automatic implementation of $600 billion in spending cuts and tax increases.
However, domestically, the widening current account deficit (CAD) is alarming. Experts say that CAD touching a record high of 5.4 percent of the GDP in the September quarter could result in higher volatility in forex market.
“Though second quarter CAD number was as per expectations, widening deficit increases the vulnerability of the domestic economy to the capital flows,” Chief Economist of the rating agency, Crisil, D K Joshi said, adding that for the current fiscal, “We hope the CAD to be around four percent”.
Stocks in news
Auto stocks such asMahindra and Mahindra (0.20 percent) and Hero Motocorp (1.13 percent) opened up on higher December sales.
Tata Motors opened up 0.88 percent Bank of America Merrill Lynch upgraded Tata Motors to ‘Buy’ from ‘Neutral’ and raised its target price by 26 percent to Rs 360 based on the strong performance by its UK-based Jaguar Land Rover (JLR) unit.
Jet Airways opened up 1.54 percent on hopes of the Etihad deal likely next week.