Markets trade higher in early deals on Thursday

After witnessing drubbing in previous session, Indian equity benchmarks have made a decent start and are trading in fine fettle in early deals on Thursday as investors opted to buy fundamentally strong but oversold stocks. However, gains remained capped on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 313.40 crore on June 11, 2014, as per provisional data from the stock exchanges. Meanwhile, traders keeping a watch on major economic data of industrial production (IIP) and consumer inflation (CPI) to be announced after the market hours. While, the IIP probably rose in April to around 2 per cent from 0.5 per cent recorded in the month of March, the Consumer inflation has been averaging nearly 10 percent for the past two years and the street is expecting a marginal ease in May from 8.59 per cent recorded in April.

On the global front, the US markets ended lower in last session on renewed concerns about the outlook for the global economy after World Bank said that it now expects the global economy to grow by 2.8 percent in 2014 compared to its previous forecast for 3.2 percent growth. Most of the Asian markets are trading lower at this point of time, led by the Japanese market after yen gained a third day amid speculation the Bank of Japan will refrain from expanding stimulus.

Back home, on the sectoral front, oil and gas, software and public sector undertaking witnessed the maximum gains in trade, while banking, auto and fast moving consumer goods remained the top losers on the BSE sectoral space. The broader indices too were trading in the green in early deals, while the market breadth on the BSE was positive; there were 1105 shares on the gaining side against 915 shares on the losing side while 59 shares remain unchanged.

The BSE Sensex opened at 25597.21; around 124 points compared to its previous closing of 25473.89, and has touched a high and a low of 25611.32and 25409.69 respectively. The index is currently trading at 25473.89, up by 93.95 points or 0.37%. There were 17 stocks advancing against 13 declines on the index.

The overall market breadth has made a strong start with 53.15% stocks advancing against 44.01% declines. The broader indices too were trading in the green; the BSE Mid cap and Small cap indices up by 0.32% and 0.08% respectively. 

The top gaining sectoral indices on the BSE were, Oil and Gas up by 1.31%, IT up by 0.66%, PSU up by 0.66%, Healthcare up by 0.57% and Consumer Durables up by 0.50% while Bankex down by 0.30%, Auto down by 0.14% and FMCG down by 0.03% was the few losers on the sectoral index.

The top gainers on the Sensex were ONGC up by 2.38%, Hindalco up by 1.63%, Tata Power up by 1.31%, Infosys up by 1.26% and HDFC up by 1.19%. On the flip side, Bharti Airtel was down by 2.70%, Axis Bank was down by 1.30%, ICICI Bank was down by 0.74%, Maruti Suzuki was down by 0.68% and BHEL was down by 0.67% were the top losers on the Sensex.

Meanwhile, in a move to enhance the investment in domestic equity benchmarks, the Securities & Exchange Board of India (SEBI) has urged the Finance Ministry to reduce securities transaction tax (STT) for investors.

At present, buyer and seller pay STT on any deal in the spot or cash market. The STT, which was introduced in the 2004-05 Union Budget constitutes 50% of the total transaction cost in the cash segment and also covers mutual fund units traded on exchanges. In exchange traded derivative contracts include futures and options, only the seller pays STT. Besides STT, there are other charges such as transaction charges, stump duty, service tax and brokerage fee which are discouraging investors particularly retail investors.

The market regulator is of the view that high STT tax is one of the reasons why India is losing out to overseas markets like Singapore where the transaction cost is much lower. Therefore, STT rates for different kinds of transactions on stock exchanges should be reduced.

Currently, the STT rate is 0.10% on the value of the transaction where a buyer takes delivery of shares in the spot market. Most of the stock market intermediaries are expecting a cut in STT in the coming union budget 2014-15. If the government removes one-way STT, it will reduce the transaction cost which in turn will enhance volume in domestic equity markets.

The CNX Nifty opened at 7,641.30; about 15 points higher as compared to its previous closing of 7,626.85, and has touched a high and a low of 7,652.10 and 7,593.80 respectively. The index is currently trading at 7,634.10, up by 7.25 points or 0.10%. There were 24 stocks advancing against 26 declines on the index.

The top gainers of the Nifty were ONGC up by 2.18%, Hindalco up by 1.63%, BPCL up by 1.56%, Tata Power up by 1.03% and Sun Pharma up by 0.99%. On the flip side, Bharti Airtel down by 3.25%, Axis Bank down by 1.35%, Indusind Bank down by 1.27%, Bank of Baroda down by 1.23% and Lupin down by 1.03% were the major losers on the index.

Asian equity indices were trading mostly in the red; Nikkei 225 declined 89.40 points or 0.59% to 14,980.08, Hang Seng decreased by 31.08 points or 0.13% to 23,226.21, KOSPI Index dipped 5.65 points or 0.28% to 2,009.02, Jakarta Composite slipped by 24.78 points or 0.50% to 4,947.17, Shanghai Composite tumbled 4.68 points or 0.23% to 2,050.26 and FTSE Bursa Malaysia KLCI was down by 2.77 points or 0.15% to 1,875.61.

On the flip side, Straits Times was up by 1.90 points or 0.06% to 3,291.94.