Equity indices continue to trade firm; Nifty above 5800 mark

The domestic equity bourses have maintained their rally for the eight consecutive day with the BSE Sensex surpassing the 19,400 mark and the NSE Nifty trading well above 5800 milestone in the mid morning session. After making a firm start tracking positive cues from global indices, the Indian equity markets are continuing the rally some mild profit booking too has appeared but recovery was instant and the indices are trading on a firm note. It seems that bulls have taken total grip of the bourses and are in no mood to relent. However market may see some volatility in the latter part of the trade due to expiry of March F&O series.
Meanwhile, the rally in the domestic market continues on buying supported from institutional, domestic and retail front. The FIIs on Wednesday were the net buyers in equities. The Asian markets were trading mostly in green, barring Shanghai Composite that has plunged by more than a percent.

The BSE Sensex is currently trading at 19,422.80, up by 132.62 points or 0.69%. The index has touched a high of 19,443.48 and a low of 19,339.75 respectively. 19 stocks were advancing against 11 declines on the index.

In the broader markets, BSE Mid cap and Small cap indices climbed 0.34% and 0.66% respectively.

The top gaining sectoral indices on the BSE were, CG up by 1.17%, IT up by 1.09%, Realty up by 0.91%, Oil & Gas up by 0.82% and CD was up by 0.80%. While the Auto index remained the sole loser in the space down 0.50%.

The top gainers on the Sensex were Hero Honda up by 3.24%, TCS up by 2.25%, BHEL up by 1.70%, ONGC up by 1.66% and L&T was up by 1.47%.

On the flip side, M&M down by 2.77%, Cipla down by 1.88%, RCom down by 1.73%, Bharti Airtel down by 1.54% and Maruti Suzuki down by 1.47% were the top losers on the index.

Meanwhile, despite the Indian government looking to further ease the regulations governing the foreign direct investment (FDI), the direct capital inflows into the country declined for a second consecutive month in February to $1.2 billion. The figure is about 30% below the FDI worth $1.7 billion received in the same month a year ago.

Various agencies have been raising concerns over declining FDI amidst a widening current account deficit (CAD). Cumulative FDI into India during the first 11-months of the current fiscal year has declined by 25% to $18.3 billion, putting pressure on the government to fine-tune its policies in order to attract greater amount of overseas investment. The country had received FDI worth $24.6 billion during the corresponding period of last financial year.

The Reserve Bank of India (RBI) had said recently that it preferred greater amount of long-term and stable flows through FDI into the country rather than often short-term oriented foreign institutional investment (FII) to bridge the current account deficit (CAD) that the country faces. The Governor of the central bank D Subbarao said that while inflow of foreign capital was welcome for bridging the CAD, the RBI would always prefer the stable inflows in terms of FDI, which comes with a long term commitment, rather than volatile portfolio inflows which can reverse in case of even a small change in either domestic of global economic scenario.

The decline in FDI in India has been rather against the trend seen in other developing countries. A recent report by the United Nations Conference on Trade and Development (UNCTAD) had observed that in the last calendar year, emerging market economies (EMEs) attracted more foreign investment than developed countries for the first time in history as the global economic engine shifts to the EMEs. Despite this, the FDI into India has seen a decline.

Meanwhile, the government is set to release a revised FDI policy circular later in the day hoping to attract greater amount of foreign funds in the next financial year beginning April 1. Among other modifications, the third edition of the Consolidated FDI Policy Circular (CFPC) may contain guidelines on domestic companies issuing shares to foreign entities for considerations other than cash, a move aimed at checking possible misuse of FDI policy to engage in money laundering.

The S&P CNX Nifty is currently trading at 5,823.65, higher by 36 points or 0.62%. The index has touched a high of 5,830.80 and a low of 5,803.05 respectively. There were 29 stocks advancing against 21 declines on the index.

The top gainers of the Nifty were Grasim up by 3.15%, Hero Honda up by 3%, TCS up by 2.30%, ONGC up by 2.02% and L&T up by 1.83%.

M&M down by 2.85%, HCL Tech down by 2.10%, RCom down by 1.87%, Cipla down by 1.85% and Bharti Airtel was down by 1.54%, were the major losers on the index.

Asian markets were trading mostly in the green zone; Hang Seng added 22.68 points or 0.10% to 23,474.11, Jakarta Composite climbed 22.67 points or 0.62% to 3,663.65, KLSE Composite advanced 4.71 points or 0.31% to 1,536.34, Nikkei 225 rose 26.97 points or 0.28% to 9,735.76, Straits Times gained 1.96 points or 0.06% to 3,097.28 and Seoul Composite moved up 6.36 points or 0.30% to 2,097.74.

On the other hand, Shanghai Composite plunged 28.62 points or 0.97% to 2,927.15 and Taiwan Weighted shed 12.12 points or 0.14% to 8,634.19.

Benchmarks make firm start tracking positive cues from global indices

The Indian equity markets have made a firm start tracking positive cues from global indices. The US markets extended their gains overnight supported by good jobs data, even though European concerns resurfaced with Portugal nearing a bailout. However, the Asian markets were trading on a mixed note. Back home, Nifty surged to its two and a half month high and breached its crucial 5,800 level supported by sustained buying by foreign funds which boosted investors’ sentiments and India’s win over Pakistan in the cricket’s World Cup semi finals also aided the sentiments. Consumer durables witnessed the maximum gain in trade followed by software and capital goods with no losers on the BSE sectoral space. The broader indices were going neck to neck with benchmarks. Meanwhile, Paper stock, AP Paper Mills again touched the roof in the early trade and gained about 20% as in a surprising deal of International Paper Company, the US based paper and packaging giant, has bought 53.5% stake in Andhra Pradesh Paper Mills from its promoters for around Rs 1160 crore. Other Paper stocks viz., Tamil Nadu Newsprint, JK Papers and West Coast Paper mills were also trading with good gains. The market breadth on the BSE was positive; there were 1,119 shares on the gaining side against 467 shares on the losing side while 72 shares remained unchanged.

The BSE Sensex opened at 19,339.75; about 49 points higher compared to its previous closing of 19,290.18, and has touched a high of 19,443.48 while low remain its opening.

The index is currently trading at 19,420.49, up by 130.31 points or 0.68%. There were 20 stocks advancing against 10 declines on the index.

The overall market breadth has made a strong start with 67.49% stocks advancing against 28.17% declines. The broader indices were trading in line with benchmarks; the BSE Mid cap and Small cap indices surged 0.49% and 0.80% respectively. 

The top gaining sectoral indices on the BSE were, CD up by 2.06%, IT up by 1.03%, CG up by 0.87%, Realty up by 0.86% and Bankex was up by 0.84%. While there were no losers on the index.

The top gainers on the Sensex were TCS up by 2.05%, Hero Honda up by 1.70%, ONGC up by 0.66%, Jaiprakash Associates up by 1.41% and HDFC was up by 1.25%.

On the flip side, Bharti Airtel down by 1.38%, M&M down by 1.34%, Wipro down by 0.94%, RCom down by 0.50% and Sterlite Industries down by 0.49% were the top losers on the index.

Meanwhile, Government has once again delayed a decision on levying service tax on transport of goods by rail to July 1. The move to defer the levy of tax came after Railway Minister Mamata Banerjee put pressure on the government to waive off service tax as it had done in the previous year. This is the fourth time that the government is postponing a decision on service tax on rail freight which was to be implemented from April 1, 2010.

Earlier in Budget 2009-10, the government had proposed a 10% service tax on goods carried by the railways to provide a level-playing field to transport of goods by road. However, it exempted rail freight from service tax in September 2009. However, in Budget 2010-2011, Pranab Mukherjee announced that the exemption from service tax would be withdrawn.

The service tax attracted an abatement of 70% of the gross value of freight charged on goods (other than exempted goods). This translated to a tax on only 30% of the value of transported goods. The service tax on rail would result in an increase in freight rates between 6-7%, in case the railway decides to pass it on to the consumers. With high food inflation, which has again entered double digits at 10.05% for the week ended March 12, while the overall wholesale price inflation stood at 8.31% in February, this would have further fuelled prices.

The exchequer has already lost around Rs 800 crore in 2010-11 as the finance ministry decided not to levy service tax on transport of goods through rail this fiscal. Service Tax is a form of indirect tax imposed on specified services called 'taxable services'. The objective behind levying service tax is to reduce the degree of intensity of taxation on manufacturing and trade without forcing the government to compromise on the revenue needs. The intention of the government is to gradually increase the list of taxable services until most services fall within the scope of service tax.

The S&P CNX Nifty opened at 5,803.05; about 16 points higher compared to its previous closing of 5,787.65, and has touched a high of 5,830.80 while low remain its opening.

The index is currently trading at 5,823.70, higher by 36.05 points or 0.62%. There were 36 stocks advancing against 14 declines on the index.

The top gainers of the Nifty were TCS up by 2.18%, Hero Honda up by 1.63%, ONGC up by 1.63%, Sesa Goa up by 1.32% and HDFC up by 1.27%.

M&M down by 1.50%, Bharti Airtel down by 1.34%, Wipro down by 1.03%, Sterlite Industries down by 0.64% and Power Grid was down by 0.64%, were the major losers on the index.

Asian markets were trading on a mixed note; Hang Seng was up 22.68 points or 0.10% to 23,474.11, Jakarta Composite was up 15.81 points or 0.43% to 3,656.79, KLSE Composite was up 5.36 points or 0.35% to 1,536.99 and Seoul Composite was up 2.04 points or 0.10% to 2,093.42.

On the flip side, Shanghai Composite was down 28.62 points or 0.97% to 2,927.15, Nikkei 225 was down 26.46 points or 0.27% to 9,682.33, Straits Times was down 1.42 points or 0.05% to 3,093.90 and Taiwan Weighted was down by 23.86 points or 0.28% to 8,622.45.

Markets bounce back;metals, auto stocks lead

The Indian equity markets have bounced back from the negative territory to the positive in late morning session as investors turn slightly positive about on metals stocks and some short covering was being seen in the Auto stocks too. Meanwhile, most of the other Asian markets were also trading in green and US index futures were showing similar trend. Though, the markets are trading in green but investors remain jittery after Western forces struck targets in Libya. Brent climbed more than $2 on Monday to top $116 after western forces launched a military campaign against Libya. Back home NSE Nifty and BSE Sensex were trading below their physiological level of 5,400 and 18,000 mark respectively. In the BSE sectoral indices Realty, IT and TECk counters were still facing some selling pressure. Broader markets were trading mixed the BSE Mid cap index was down 0.01%, while Small cap index was up by 0.10%.  The overall market breadth on BSE was in the favour of declines which slightly outnumbered advances in the ratio of 1266:1212, while, 110 shares remained unchanged.

Tata Steel trades higher as the company has successfully completed the issuance of perpetual hybrid securities worth Rs 1,500 crore. With the issuance of this bond the company became the first Indian corporate to issue securities of such kind. ICICI Bank and J.P. Morgan Securities India were the mandated lead arrangers for the issuance. The unique features of the securities are that they are perpetual in nature with no maturity or redemption and are callable only at the option of the company. The distribution rate (which may be deferred at the company’s option) on the securities is set at 11.8 percent, with a step up provision if the securities aren’t called after 10 years.

The BSE Sensex gained 43.81 points or 0.25% to 17,922.62. The index has touched a high of 18,007.73 and a low of 17,792.17 respectively.

The BSE Mid cap index was down 0.01%, while Small cap index was up by 0.10%. 

In the BSE sectoral indices Auto up 0.59%, FMCG up 0.44%, HC up 0.44%, CG up 0.38% and CD up 0.34% were the main gainers. However, Realty down by 0.44%, IT down by 0.34% and TECk down by 0.29% were the losers on the index.

The top gainers on the Sensex were M&M up 1.52%, HDFC up by 1.35%, Tata Steel up 1.12%, Sterlite Industries up by 1.04% and Tata Motors and up were up by 0.93%.

Hindalco Industries down by 2.18%, Cipla down by 0.78%, Reliance Communication down 0.77%, Infosys down by 0.71% and Maruti Suzuki down 0.31% were the top losers on the index.

Tyre stocks are trading lower on account of higher rubber prices which continued their recovery mood. Apollo Tyres climbed 1.69%, CEAT gained  1.32%, MRF advanced 1.41  and JK Tyre & Industries surged 0.99% .Rubber prices rebounded on easing of demand concerns caused by Japan earthquake and closure of automobile plants and market returned back to fundamentals. Natural rubber continues to be supported by higher prices of crude oil and tight supplies in producing countries.

The S&P CNX Nifty advanced 13.75 points or 0.26% at 5,387.45. The index has touched a high of 5413.30 and a low of 5348.20 respectively.

The top gainers of the Nifty were Sun Pharma up by 2.20%, M&M up by 1.85%, SAIL up by 1.53%, Dr Reddy up by 1.49% and Suzlon up 1.32%.

The top losers of the index were Ranbaxy down by 4.47%, Hindalco down by 2.13%, Reliance Communication down by 0.91%, Reliance Power down by 0.87% and Infosys down by 0.71%.

Ranbaxy declined over 4% on reports that Mylan has sued US FDA for Lipitor. The company is seeking to block Ranbaxy's lipitor copy. Lipitor was estimated to add $ 500-600 million to Ranbaxy's sales.

All other Asian equity indices barring; Shanghai Composite,  were trading in the positive terrain at this point of time. Hang Seng surged 1.07%, Jakarta Composite added 0.42%, KLSE Composite inched up 0.08%, Straits Times increased 1.26%, Seoul Composite rose 1.13% and Taiwan Weighted was up by 0.87%.

Domestic markets slip further; RIL drags

The domestic equity markets have taken the turn for the worst and while the global cues remain positive the local indices have plunged by over a percent in the mid morning session. Oil & gas sector is witnessing a sharp plunge partially by the rise in international crude prices and partially by the sudden fall in the index heavyweight reliance Industries, which has lost over 3 percent, declining below Rs 1000 mark again after it replied to DGH that the production of national crude oil and gas could fall further. Oil regulator Directorate General of Hydrocarbons (DGH) has asked Reliance Industries to fulfill its commitment of drilling 22 wells in the KG-D6 field to boost production. It has written last month to the company asking it to drill two more wells by April to meet its commitment of drilling 22 wells in the phase-1 development of the Dhirubhai-1 and 3 or D1 and D3 gas fields in the KG-D6 block. Back on street the broader indices too have lost their stem and were marginally trading in red while the metal index was the only gaining gauge on the BSE.

The BSE Sensex is currently trading at 17,959.06, down by 190.81 points or 1.05%. The index has touched a high of 18,259.61 and low of 17,953.24 respectively. There were 11 stocks advancing against 19 declines on the index.

The broader indices too were trading lower; the BSE Mid cap and Small cap indices were down by 0.24% and 0.12%, respectively.

The lone gaining sectoral indices on the BSE was Metal, up by 0.21%. On the other hand Oil & Gas down by 2.61%, IT down by 1.20%, TECk down by 0.85%, Bankex down by 0.80% and PSU down by 0.73% were the top losers.

The top gainers on the Sensex were Maruti Suzuki up by 1.25%, Bajaj Auto up by 0.59%, Bharti Airtel up by 0.52%, Hindalco up by 0.45% and DLF was up by 0.43%.

The top losers of the index were RIL down by 3.34%, BHEL down by 1.96%, TCS down by 1.66%, HDFC down by 1.64% and M&M was down by 1.17%.

Meanwhile, after seeing eight rounds of monetary policy tightening, the Indian Inc is finally beginning to complain about surging cost of funding, notwithstanding the high inflation which might require further tightening in the central bank’s monetary policy stance. 

The Reserve Bank of India (RBI) hiked its key policy rates by 25 basis points (bps) on Thursday, implementing eighth such step. Cumulatively, the repo rate, or the rate at which the central bank lends to the commercial banks, has gone up by 200 basis points over the FY11. This would mean that lending rates of banks too will go up by 200 basis points at least, if not more, although this transmission is often slow and uneven across the verticals. 

However, industry is already getting cautious of surging cost of financing. Lending rates have gone up significantly, even if not to the tune of tightening by the central bank. And, with continued deficit liquidity in the system, further upside to the rates is there. Coupled with the high inflation, this can dampen investment in the economy as many projects become unviable given the high cost of money.

Raising this point, the industry body FICCI said that the series of hikes in repo and reverse repo rates implemented so far have had a visible impact on the industrial production numbers, which were decelerating substantially in recent months. 'RBI's action in raising policy rates, though expected, will adversely affect growth prospects. There is also a lot of nervousness in the market given the global developments,' said the Director General of FICCI Rajiv Kumar.

Similarly, another industry chamber Assocham said the 25 bps increase in short-term lending and borrowing rates by RBI will hit the manufacturing sector which is already witnessing a slowdown due to rising input costs and wages. 'RBI should have waited till the new agriculture crop which is expected next month,' said the Assocham President Dilip Modi. The PHD chamber of commerce too in a similar tone said that while the rate hike might be justified due to high inflation, it will nonetheless impact growth going forward.

The S&P CNX Nifty is currently trading at 5,397.00, down by 49.65 points or 0.91%.The index has touched high of 5,483.05 and 5,395.80 respectively. There were 13 stocks advancing against 34 declines while 3 stocks remained unchanged on the index.

The top gainers of the Nifty were SAIL up by 2.02%, Maruti Suzuki up by 1.07%, Bajaj Auto up by 0.61%, Bharti Airtel up by 0.60% and Tata Steel was up by 0.51%.

The top losers of the index were Reliance Industries down by 3.52%, BHEL down by 2.34%, BPCL down by 2.12%, HDFC down by 1.79% and RPower was down by 1.76%.

All the Asian markets were trading in the green; Shanghai Composite was up by 0.57%, Hang Seng has gained 0.75%, Jakarta Composite up by 0.45%, KLSE Composite higher by 0.31%, Nikkei 225 surged by 2.87%, Straits Times up by 0.24%, Seoul Composite inched higher by 1.14% and Taiwan Weighted has gained 1.36%.