Benchmarks make gap-up opening; IIP, CPI data eyed

Extending their last session’s jubilation, Indian equity benchmarks have made a gap-up opening and are trading with traction in early deals on Tuesday ahead of index of industrial production (IIP) data for June 2014 and combined consumer price index (CPI) data for rural and urban India for July 2014. IIP data for June is expected to be strong in the final month of the quarter, as indicated by good core sector data. Sentiments also remained up-beat after Paris-based think tank Organisation for Economic Cooperation and Development (OECD) said that India’s economic growth is gaining momentum and the country is poised for better growth. Meanwhile, Finance Minister Arun Jaitley has said that Rs 6.23 lakh crore indirect taxes collection target for the current fiscal is a challenging one but efforts are on to achieve the same by taking steps to boost growth.

On the global front, the US markets strengthened a bit more on Monday, making a good start of the week. Though, there was no major economic announcements but sentiments bolstered on the hopes that geopolitical tensions are easing and some dovish comments from a Fed official. Asian markets were exhibiting mixed trend at this point of time as investors remained worried over geopolitical concerns.

Back home, on the sectoral front, auto, public sector undertaking and capital goods witnessed the maximum gain in trade, while software, technology and fast moving consumer goods remained the few losers on the BSE sectoral space. The broader indices too were trading in-line with benchmarks, while the market breadth on the BSE was positive; there were 1169 shares on the gaining side against 630 shares on the losing side while 64 shares remain unchanged.

The BSE Sensex opened at 25703.78; around 184 point higher compared to its previous closing of 25519.24, and has touched a high and a low of 25744.51 and 25657.85 respectively. The index is currently trading at 25698.04, up by 178.80 points or 0.70%. There were 20 stocks advancing against 10 declines on the index.

The overall market breadth has made a positive start with 62.75% stocks advancing against 33.82% declines. The broader indices too were trading in the green; the BSE Mid cap index was up 0.40%, while Small cap index was up by 0.64%. 

The top gaining sectoral indices on the BSE were Auto up by 1.84%, PSU up by 1.20%, Capital Goods up by 1.06%, Consumer Durables up by 1.01% and Infrastructure up by 0.95%, while IT was down by 0.40%, TECk was down by 0.35% and FMCG was down by 0.05% were the few losers on the sectoral index.

The top gainers on the Sensex were Tata Motors up by 6.57%, ONGC up by 2.53%, Gail India up by 2.18%, HDFC up by 2.16% and Coal India up by 2.10%. On the flip side, Bharti Airtel was down by 1.38%, TCS was down by 0.60%, SSLT was down by 0.58%, M&M was down by 0.58% and BHEL was down by 0.54% were the top losers on the Sensex.

Meanwhile, in order to enhance fresh investments in real estate and infrastructure sectors, the Securities and Exchange Board of India (SEBI) has cleared the new norms for setting up and listing of Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs).

REITs are listed entities that mainly invest in income-producing real estate assets, the earnings of which are mostly distributed to their shareholders. The SEBI has stated that REITs will be allowed to invest only in commercial properties such as shopping malls, office buildings, apartments, warehouses and hotels, which provide regular income to investors from rentals received from such properties. The move is likely benefit investors who wish to invest in property for the lucrative gains it offers, but do not have sufficient capital to acquire physical real estate assets such as land or buildings. According to the SEBI guidelines, investors will have to put in a minimum of Rs 2 lakh to buy trust units, which can be traded on stock exchanges and investors can earn both dividends (from rental income of the property), as well as capital appreciation.

In a bid to make REITs attractive, the capital market regular has halved the minimum asset size to Rs 500 crores from Rs 1,000 crore proposed earlier. SEBI noted that smaller players who don’t have enough rental assets to launch even Rs 500 crore REIT can float a combined REIT with multiple sponsors subject to maximum of three. Each sponsor should hold at least 5 percent of the units and overall at least 25 percent of the units.

SEBI also cleared norms for Infrastructure Investment Trusts (InvITs), which are similar to REITs, but focus on investments in infrastructure. The InvITs will invest in infrastructure projects, either directly or through a special purpose vehicle and approved minimum net worth of an InvIT sponsor is Rs100 crore. According to SEBI guidelines, a publicly offered InvIT will need to distribute at least 90 per cent of its net distributable cash flows to investors. Further, associates of the trustee have been restrained from investing in the InvITs units to avoid a conflict of interest.

It also notified that for any REITs or InvITs, the size of initial offering should be atleast Rs 250 crore and free float of atleast 25 percent is mandatory in the initial offering. Trading lot will be Rs 1 lakh with minimum subscription size of Rs 2 lakh for  REITs, whereas this will be Rs 5 lakh and Rs 10 lakh for  InvIT.

The CNX Nifty opened at 7,688.80; about 63 point higher as compared to its previous closing of 7,625.95, and has touched a high and a low of 7,691.45 and 7,658.50 respectively. The index is currently trading at 7,674.00, up by 48.05 points or 0.63%. There were 35 stocks advancing against 15 declines on the index.

The top gainers of the Nifty were Tata Motors up by 6.36%, ONGC up by 2.51%, Coal India up by 2.28%, Ultratech Cement up by 2.24% and Gail India up by 2.10%. On the flip side, Bharti Airtel down by 1.29%, M&M down by 0.68%, ITC down by 0.62%, TCS down by 0.58% and Hero MotoCorp down by 0.47% were the major losers on the index.

Asian markets were trading mixed; Nikkei 225 spurted by 31.95 points or 0.21% to 15,162.47, KOSPI Index gained 1.23 points or 0.06% to 2,040.60, Straits Times added 10.84 points or 0.33% to 3,317.29 and Jakarta Composite was up by 26.71 points or 0.52% to 5,139.94.

On the flip side, Hang Seng slipped by 30.96 points or 0.13% to 24,615.06, Shanghai Composite tumbled by 4.67 points or 0.21% to 2,219.99, FTSE Bursa Malaysia KLCI dropped 0.98 points or 0.05% to 1,848.34 and Taiwan Weighted was down by 4.12 points or 0.04% to 9,168.79.