Bourses gain slender traction after turning flat; broader indices too add up gains

After turning flat within few minutes of trade, local equity markets have again gained slender traction as covering up of short positions by market participants ahead of the expiry of monthly contracts next week have yanked the barometer gauges higher above their respective psychological level of 15800 (Sensex ) and 4700 (Nifty) respectively.
Cut in the forecast for Indian GDP growth to 6.7% for the current fiscal year ending March from its earlier projection of 7.3 percent by the brokerage firm CLSA has fogged the picture of Dalal Street to some extent. Citing cyclical deceleration caused by high interest rates, policy inertia and the adverse impact of global headwinds, brokerage CLSA pruned its forecast for Indian GDP growth.

On the global front, Asian stocks edged higher on Friday as signs that the U.S. economic recovery is gathering pace lifted investor sentiment following better-than-expected economic data on Thursday. Wall Street stocks had risen for a third straight day on Thursday, leaving the S&P 500 index virtually flat for the year, after data showed new claims for unemployment benefit dropped to their lowest in 3-1/2 years. The US future indices were showing an uptick in the screen trade.

Back on the home turf, anticipation of foreign funds chasing bargains after the fall of the Indian equity markets by nearly 11 percent since the start of November, has also spurred investors to enlarge their position. On the BSE Sectoral front, stocks from Capital Goods, Realty and Metal counters are topping the list of gainers, while stocks from Technology, Information Technology and Bankex counters are limiting the upside of the bourses. Meanwhile, broader indices too have multiplied their gains and are currently trading over 0.90% each. The overall market breadth on BSE is in the favour of advances which have thrashed declines in the ratio of 1428:670, while 89 shares remained unchanged.

The BSE Sensex is currently trading at 15,861.73, up by 48.37 points or 0.31%. The index has touched a high and a low of 15,911.23 and 15,788.99 respectively. There were 17 stocks advancing against 13 declines on the index.

The broader indices were outperforming benchmarks; the BSE Mid cap and Small cap indices rose 0.94% and 1.39% respectively.

The top gaining sectoral indices on the BSE were, CG up by 2.50%, Realty up by 1.86%, Metal up by 1.05%, Power up by 1.05% and Auto up by 0.43%. While, TECk down by 0.29%, IT down by 0.20% and Bankex down by 0.10% were the only losers on the index.

The top gainers on the Sensex were %, L&T up by 2.74%, BHEL up by 2.50%, Maruti Suzuki up by 1.98%,  DLF up by 1.75% and Sterlite Industries up by 1.58%.

On the flip side, Bharti Airtel down by 1.33%, Bajaj Auto down by 1.10%, Jindal Steel down by 0.83%, Hero MotoCorp down by 0.81% and ONGC down by 0.72% were the top losers on the Sensex.

Meanwhile, the government in an attempt to meet the fiscal deficit target of Rs 40,000 crore is looking to pledge Specified Undertaking of the Unit Trust of India’s (SUUTI) portfolio to set up a new company that will buy government's stake in public sector units (PSUs).

The proposal, which is being considered by the finance ministry, involves transfer of assets of SUUTI to a holding company. Subsequently the new entity will pledge the assets of the SUUTI, currently estimated at around Rs 50,000 crore, and utilize the proceeds to buy government equity in state-run companies.

According to the Financial Stability Report, fiscal situation remains challenging as the revenue collections were lower than expected in the first half of the current year. The stress is likely to worsen as the risks of fiscal slippage have increased during the current year. Slowdown in revenue collections and the potential rise in food, fertilizer and fuel subsidies may make attaining the budgetary target of fiscal deficit of 4.6% of GDP for 2011-12 challenging.

The government’s move is expected to bring enough money for meeting its disinvestment target of Rs 40,000 crore in FY12. The government had in its budget announced plans to sell its stakes in various public sector units to raise Rs 40,000 crore. The plans, however, were hit by a weak capital market, and the government has only managed to raise Rs 1,165 crore, or 2.9%, of the targeted amount from the sale of its equity in Power Finance Corporation (PFC).

‘We will dissolve SUUTI soon and form another company. SUUTI's assets, which are worth around Rs 50,000 crore, will be transferred to that government-owned company. It will pledge SUUTI's assets to raise loans and buy shares of existing PSUs. A cabinet note will have to be moved for the purpose,’ said a senior finance ministry official. Thereafter the new company will be allowed to sell PSU shares once the capital market regains its lost strength.

SUUTI was formed from the restructuring of the former Unit Trust of India (UTI) after the collapse of its assured return schemes. At present, SUUTI is governed by the UTI (Repeal) Act. Its assets include stakes in Axis Bank (23.58%), ITC (11.54%) and Larsen & Toubro (8.27%), totaling Rs 31,916 crore in value.

The S&P CNX Nifty is currently trading at 4,749.80, down by 15.95 points or 0.34%. The index has touched a high and a low of 4,763.45 and 4,724.05 respectively.  There were 29 stocks advancing against 21 declines on the index.

The top gainers of the Nifty were L&T up by 3.52%, BHEL up by 2.93%, SAIL up by 2.63%, Sterlite Industries up by 2.39% and Maruti Suzuki up by 2.22%.

On the flip side, BPCL down by 2.44%, Ranbaxy down by 1.48%, Bharti Airtel down by 1.07%, Reliance Power down by 1.02% and Bajaj Auto down by 1.01% were the major losers on the index.

Most of the Asian equity indices were trading in the green; Shanghai Composite was gained 1.39%, Hang Seng added 1.08%, Straits Times up by 0.39%, Seoul Composite up by 1.61% and Taiwan Weighted up by 2.17%.

On the flip side, Jakarta Composite down by 0.15% remained the lone loser amongst the Asian pack.