Indian equities continue firm trade; TECk, IT and CD lead the race

Indian equities continued its firm trade hovering near highest point of the day in the late afternoon session as investors hunted for fundamentally strong but undervalued bargains as sentiments remained optimistic ahead of the year end. High volatility is expected on the bourses this week as traders are expected to roll over positions in the futures & options (F&O) segment from the near-month December, 2011, series to January, 2012, series. Traders were seen piling up position in TECK, IT and Consumer Durables (CD) sector while selling was witnessed in HealthCare sector. Infosys, TCS, Wipro HCL Tech and Mphasis from IT sector were seen trading firm pulling the markets up. Industry heavyweight RIL is trading firm in green with a gain of around two percent giving the much needed support. Ranbaxy, Lupin, Orchid, Cipla and Dr Reddy’s Lab from HealthCare space was down exerting pressure on the market.

In the scrip specific development, tea companies Warren Tea, Assam Company, Jay Shree Tea & Industries, Harrisons Malayalam, Goodricke Group, Tata Global Beverages, Duncans Industries and Asian Tea & Exports rose on reports that tea prices in India rose more than 2% at the auction held during December 20-22, 2011, as the leaf offered was good quality, which helped demand. Shares of telecom firms Idea Cellular, Bharti Airtel, TTML and Reliance Communications gained on reports where telecoms tribunal on Saturday, December 24, 2011, asked the telecoms ministry not to take any coercive action over an order to ban 3G roaming until the next hearing. On the global front, all Asian markets traded largely on pessimistic mood while the European markets were trading in green on optimistic note. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 4,750 and 15,900 levels, respectively.

The BSE Sensex is currently trading at 15,949.87 up by 211.17 points or 1.34% after trading as high as 15,971.33 and as low as 15,761.18. There were 28 stocks advancing against 2 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap index surged 0.74% while Small cap soared 0.98%.

On the BSE sectoral space, TECK up 2.17%, IT up 2.01%, Consumer Durables up 1.38%, Capital Goods up 1.35% and Metal up 1.27% were the major gainers while HealthCare down 0.23% was the sole losers in the space.

Bharti Airtel up 3.62%, Hero MotoCorp up 3.22%, Tata Steel up 2.81%, JP Associates up 2.52% and Infosys up 2.35% were the major gainers on the Sensex, while Cipla down 0.65% and Hindalco down 0.49% were the only losers in the index.

Meanwhile, India’s foreign direct investment (FDI) declined by over 50% to $1.16 billion in October for the second month in a row, reflecting economic slowdown in the world's major economies. India received $2.33 billion overseas investment in the same month last year. In September, the inflows were at $1.76 billion, down by 16.5% year-on-year.

However, in April-October 2011, the FDI rose 50.3% to $20.8 billion, from $13.84 billion in the year-ago period as inflows were healthy in the initial months. Though in August FDI inflows had increased over two-fold to $2.83 billion, year-on-year, in July they declined after a significant jump for two consecutive months - May and June. 

Uncertain economic conditions in the US and Europe are one of the major reasons for the declining FDI in India. However, despite uncertainties in the global economy, FDI is likely to touch $35 billion in 2011-12, as against $19.4 billion in the last fiscal on account of major deals like RIL-BP and Posco.

Mauritius, Singapore, the US, the UK, the Netherlands, Japan, Germany and the UAE are major sources of FDI for India. In April-October 2011, the sectors that engrossed the maximum FDI include services, construction activities, power, computers and hardware, telecom and housing and real estate.

In order to attract more inflows by easing FDI procedures, the Reserve Bank of India said that transfer of shares between Indians and non-residents will not require its permission in several key areas like financial services.

During 2010-11, equity inflows through the FDI route had declined 25% to $19.43 billion, from $25.6 billion in 2009-10 compared to $27.3 billion in 2008-09.

The S&P CNX Nifty is currently trading at 4,772.25, higher by 58.25 points or 1.24% after trading as high as 4,778.95 and as low as 4,718.15. There were 38 stocks advancing against 12 declines on the index.

The top gainers on the Nifty were Reliance Communications up 3.72%, Bharti Airtel up 3.55%, Hero MotoCorp up 3.42%, Tata Steel up 2.88% and JP Associates up 2.70%.

Ranbaxy down 1.71%, BPCL down 1.09%, Siemens down 0.82%, Hindalco down 0.70% and Cipla down 0.54% were the major losers on the index.

Asian markets traded on a mixed note; Shanghai Composite down 0.67%, Seoul Composite down 0.56% and Taiwan Weighted down 0.26%. On the flip side Nikkei 225 was the lone gainer up 1.00%.

Meanwhile, stock markets in Hong Kong, Indonesia, Malaysia and Singapore remained closed on Monday in observance of the Christmas holiday.

The European markets were trading in green, France’s CAC 40 added 0.99%, Germany’s DAX jumped 0.46% and Britain’s FTSE 100 gained 1.02%.