Benchmarks make gap-up start on positive global cues

Buoyed by firm global cues, Indian equity benchmarks have made a gap-up start and are trading jubilantly in early deals on Tuesday. Overnight, the US markets bounced back and ended higher, taking the Dow Jones back above 17,000. Upbeat earnings numbers and some news on the merger-and-acquisition front lifted the markets higher for the day. The Asian markets were rallying at this point of time, led by the Japanese market which is up over half a percent ahead of the Bank of Japan’s monetary policy announcement.

Back home, there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too equally participated in the rally. Sentiments remained up-beat after Consumer Price Index (CPI) has eased more than expected at 7.31% in June as compared to 8.28% in May. Earlier Wholesale Price based Inflation (WPI) too fell to a five-month low of 5.53% in June following export curbs by the government on certain commodities. Meanwhile, rating agency Moody's has said  that the Budget 2014-15 has outlined steps to support faster economic growth, but absence of detailed implementation plan makes it modestly credit positive for India.

Meanwhile, none of the sectoral indices were trading in the red, while realty and capital goods witnessed the maximum gain in trade. PSU, infrastructure, banking, power, oil and gas, consumer durables and metal too were trading significantly. The broader indices too were trading in-line with benchmarks, while the market breadth on the BSE was positive; there were 1273 shares on the gaining side against 469 shares on the losing side while 51 shares remain unchanged.

The BSE Sensex opened at 25100.90; around 94 point higher compared to its previous closing of 25006.98, and has touched a high and a low of 25235.84 and 25100.14 respectively. The index is currently trading at 25224.01, up by 217.03 points or 0.87%. There were 25 stocks advancing against 5 declines on the index.

The overall market breadth has made a strong start with 71.00% stocks advancing against 26.16% declines. The broader indices were trading in the green; the BSE Mid cap and Small cap indices down by 1.55% and 1.69% respectively. 

The top gaining sectoral indices on the BSE were, Capital Goods up by 2.09%, Realty up by 2.01%, Infrastructure up by 1.77%, PSU up by 1.72% and Bankex up by 1.67%, while there were no losers on the sectoral index.

The top gainers on the Sensex were ICICI Bank up by 2.66%, L&T up by 2.34%, BHEL up by 2.28%, Axis Bank up by 1.75% and SBI up by 1.74%. On the flip side, Dr Reddys was down by 0.76%, SSLT was down by 0.67%, Cipla was down by 0.38%, TCS was down by 0.35% and ITC was down by 0.20% were the top losers on the Sensex.

Meanwhile, In order to attract major investments in the country’s special economic zones (SEZs), the government may announce sops in Foreign Trade Policy (FTP), expected in the next few weeks.  The FTP governs all exports and imports related activities in India and primarily aims at enhancing the country's exports. The five-year FTP (2009-14) ended on March 31 and the new government will introduce new FTP for the period 2014-19.

Commerce Ministry stated that though the government has not announced any sops for SEZs in budget 2014-15, the ministry will try to convince government to restore tax benefits for the zones in the Foreign Trade Policy. Commerce Ministry has planned to make a fresh pitch for excluding the developers from paying the Minimum Alternate Tax (MAT) and Dividend Distribution Tax (DDT) in new FTP. MAT, which was imposed in budget 2011-12 on SEZs despite making no change in the SEZ Act, has remained the major factor responsible for dwindling investors’ confidence. Under this section, every company (SEZs) is liable to pay a MAT at the rate of 18.5 percent, plus applicable surcharge and cess on book profits. 

Commerce Ministry argued that with the prevailing unfavorable tax regime like MAT, DDT in the country, no investor would like to set up a unit in the SEZ which in turn will impair capital formation in the domestic economy. SEZs contribute about 30 per cent to India’s exports, employ an estimated 13 lakh workers across the country and have attracted investments worth Rs 3 lakh crore. As on December 2013, India has sanctioned 175 SEZs, largest in the world.

The CNX Nifty opened at 7,491.30; about 37 points higher as compared to its previous closing of 7,454.15, and has touched a high and a low of 7,524.20 and 7,490.55 respectively. The index is currently trading at 7,520.50, up by 66.35 points or 0.89%. There were 45 stocks advancing against 5 declines on the index.

The top gainers of the Nifty were ICICI Bank up by 2.79%, DLF up by 2.54%, IDFC up by 2.48%, NMDC up by 2.40% and L&T up by 2.39%. On the flip side, Dr Reddy down by 0.78%, Asian Paints down by 0.64%, SSLT down by 0.52%, TCS down by 0.41% and Cipla down by 0.30% were the major losers on the index.

Asian markets were trading in the green; Nikkei 225 spurted by 92.21 points or 0.60% to 15,389.03, Hang Seng increased 113.84 points or 0.49% to 23,460.51, KOSPI Index soared 17.20 points or 0.86% to 2,011.08, Straits Times gained 1.62 points or 0.05% to 3,292.60, Jakarta Composite strengthened by 28.93 points or 0.58% to 5,050.00, Shanghai Composite added 0.62 points or 0.03% to 2,067.27, FTSE Bursa Malaysia KLCI jumped by 1.72 points or 0.09% to 1,884.87 and Taiwan Weighted was up by 33.14 points or 0.35% to 9,553.44.