Benchmarks continue firm trade in late morning session

Indian equity benchmarks continued to trade firm in late morning session on renewed buying in refinery and FMCG stocks amid persistent foreign capital inflows despite weak Asian cues. The Sensex and Nifty opened marginally in the red due to profit-booking by investors ahead of the outcome of the ongoing Lok Sabha elections and a weak trend in other Asian markets. Traders were seen piling positions in Oil & Gas, PSU and FMCG stocks while selling was witnessed in Realty, Consumer Durables and Power sector stocks. In scrip specific development, shares of Reliance Communications fall as much as 2.7% after its consolidated net profit dropped more than expected in the January-March quarter. While , shares of Steel Authority of India (SAIL) was trading firm after reporting 14% growth in sales in month of April 2014. Moreover, shares of Suzlon Energy were trading higher after it announced a restructuring of its foreign currency convertible bonds worth $485 million on Saturday. It also expects to conclude a sale of non-core assets worth Rs1000 crore in the current fiscal year to repay debt.

On the global front, most of Asian markets were trading in red amid low trading volumes as HSBC Holdings Plc/Markit Economics gauge of Chinese manufacturing dropped to 48.1 from a preliminary reading of 48.3, signaling a contraction. Moreover, US stocks had ended lower over the weekend despite encouraging jobs data as the rising geopolitical tensions in Ukraine weighed on investor sentiment. Back home, Canara Bank, Pantaloons Fashion and Retail, Piramal Enterprises and United Bank of India will be in focus on account of March quarter earnings announcement.

The market breadth on BSE was positive, out of 1961 stocks traded, 978 stocks advanced, while 876 stocks declined on the BSE. The BSE Sensex is currently trading at 22479.71 up by 75.82 points or 0.34% after trading in a range of 22545.18 and 22354.45. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.19%, while Small cap index gained 0.07%.

The top gaining sectoral indices on the BSE were, Oil & Gas up by 1.65%, PSU up by 0.65%, FMCG up by 0.58%, Healthcare up by 0.26% and Metal up by 0.17%, while Realty down by 1.12%, Consumer Durables down by 0.44%, Power down by 0.29% and Teck down by 0.10% were the losers on the sectoral index.

The top gainers on the Sensex were ONGC up by 2.13%, RIL up by 1.83%, Gail India up by 1.54%, ITC up by 1.16% and Coal India up by 0.88%. On the flip side, BHEL down by 0.91%, Tata Motors down by 0.80%,  Bharti Airtel down by 0.69%, Hindustan Unilever down by 0.67% and Tata Power down by 0.63%.

Meanwhile, Foreign Direct Investment (FDI) in India’s services sector has declined by 54 percent to 2.18 billion during April-February FY14 as compared to $4.74 billion in the same period of previous fiscal. Foreign investments declined during FY14 as global investors remained worries over the prevailing political uncertainty in the country like formation of new government as sectors such as banking need necessary reforms.

Indian services sector, which includes banking, insurance, outsourcing, R&D, courier and technology testing, represent around 60% share in the country’s GDP. Overall foreign inflows into the country declined to $20.76 billion during the first 11 months of FY14 from $20.89 billion recorded in the corresponding period of FY13. Other sectors that received highest inflows during the first eleven months of FY14 include automobiles ($1.28 billion), pharmaceuticals ($1.27 billion) and construction development ($1.05 million). Country wise, maximum FDI during the reported period was received form Mauritius with $4.48 billion followed by Singapore ($3.91 billion), UK ($3.21 billion) and Netherlands ($2.20 billion).

FDI is considered crucial for India, which requires around $1 trillion in the 12th five year plan (2012-2017) to overhaul its infrastructure sector such as ports, airports and highways to boost growth. Meanwhile, in order to attract maximum FDI into the country, the government has been liberalizing the foreign investment policy. The government has relaxed FDI norms in around 12 sectors which include telecom, tea, pension and petroleum and natural gas among others. Despite the government various efforts to increase FDI, foreign investment during April-February FY14 has declined, reflecting the need to take more measures to improve the business environment in the country.

The CNX Nifty is currently trading at 6,710.95 up by 16.15 points or 0.24% after trading in a range of 6,732.05 and 6,680.45. There were 27 stocks advancing against 23 declining on the index.

The top gainers of the Nifty were Jindal Steel up by 2.01%, Reliance Industries up by 2%, ONGC up by 1.96%, BPCL up by 1.81% and GAIL up by 1.31%. On the flip side, ACC down by 1.46%, NMDC down by 1.41%, UltraTech Cement down by 1.37%, DLF down by 1.18% and Bank of Baroda down by 0.94% were the major losers on the index.

Most of the Asian equity indices were trading in red; Shanghai Composite decreased by 0.34%, Hang Seng was down by 1.37%, KLSE Composite decreased by 0.37%, Nikkei 225 was down by 0.19%, Straits Times was down by 0.08% and KOSPI slipped by 0.12%. On the flip side, Taiwan Weighted was up by 0.04% and Jakarta Composite was up by 0.01%.