Markets extend early gains; trade near intra-day high level

Indian equity benchmarks extended early gains to continue firm trade in afternoon session, hovering near the intra-day high level of the day on account of buying witnessed in frontline blue chip stocks including Infosys, TCS and Dr Reddy’s Lab among others. Strong economic and industry related announcements buoyed the investors’ sentiments and most of the sectoral indices were trading in green. Besides, covering-up of pending short positions ahead of expiry of October derivatives contracts also supported the markets. Sharp buying witnessed in realty and IT stocks encouraged the domestic benchmarks to extend gains. Realty index was top BSE gaining index trading up by over 3.70% as the government has relaxed the foreign direct investments (FDI) norms for construction and real estate sector. Sentiments also got boost as Finance Minister Arun Jaitley has stated that India has potential to grow at 8-9 percent annual rate. Apart from blue chips, broader indices too equally participated in the rally with both mid and small cap indices trading up by over 0.25%. However, power and auto stocks were trading marginally in red.

Emami was trading higher by 3% at Rs 785 after reporting better than expected 16% y-o-y jump in net profit at Rs 92.76 crore for Q2FY15 on back of higher sales. Gati has surged around 3.7% to Rs 206.70 after reporting a 117% increase in its net profit to Rs 12.49 crore for Q2FY15 as compared with a profit of Rs 5.76 crore in the corresponding quarter previous year.

On global front, Asian markets were trading mixed with Nikkei 225 up by 0.84% and Hang Seng down 0.56%. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 8,100 and 27,000 levels respectively. The market breadth on BSE was positive, out of 2,515 stocks traded, 1,352 stocks advanced, while 1,061 stocks declined on the BSE.

The BSE Sensex is currently trading at 27249.14, up by 150.97 points or 0.56% after trading in a range of 27088.65 and 27258.22. There were 20 stocks advancing against 10 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.28%, while Small cap index up by 0.39%.

The gaining sectoral indices on the BSE were Realty up by 3.76%, IT up by 2.11%, TECK up by 1.62%, Consumer Durables up by 1.24% and Oil & Gas up by 0.65%. On the other hand, Power down by 0.32%, Auto down by 0.02% and Metal down by 0.01% were the losing indices on BSE.

The top gainers on the Sensex were Infosys up by 2.06%, TCS up by 1.82%, Dr. Reddys Lab up by 1.28%, GAIL India up by 1.27% and ONGC up by 0.89%. On the flip side, Mahindra & Mahindra down by 0.84%, Hindalco down by 0.73%, Sesa Sterlite down by 0.68%, Tata Power down by 0.66% and BHEL down by 0.61% were the top losers.

Meanwhile, in order to attract more foreign investments in cash-starved construction sector and to serve its objectives of faster job creation and housing for all people, the government has relaxed, the foreign direct investments (FDI) norms for construction and real estate sector.

The government decided to reduce the minimum built-up area requirement for FDI in construction projects to 20,000 sq metres from 50,000 sq metres and lowering the need for minimum capital requirement to $5 million from $10 million. Further government’s notification highlighted that subsequent tranches of FDI can be brought till the period of ten years from the commencement of the project or before its completion, whichever expires earlier. In case of development of serviced plots, the condition of minimum land of 10 hectares has been completely removed. Though the Cabinet has not reduced the 3-year lock-in period,  it has permitted the investor will be permitted to exit on completion of the project or after three years from the date of final investment, subject to development of trunk infrastructure.

Besides enhancing the inflows into the construction development sector, the move is also expected to result in creation of much needed low cost affordable housing in the country and development of smart cities. Meanwhile, the government has allowed 100% foreign direct investment in townships, housing and built-up infrastructure and construction developments since 2005. Over the period FY07- FY10, Indian construction sector witnessed high FDI inflow. After that, foreign investment started declining as the government had imposed certain conditions. During April 2000 and August 2014, the construction sector received FDI worth $23.75 billion or 10 percent of the total FDI attracted by India during the period.

The CNX Nifty is currently trading at 8139.35, up by 48.90 points or 0.60% after trading in a range of 8085.20 and 8141.60. There were 34 stocks advancing against 16 stocks declining on the index.

The top gainers on Nifty were DLF up by 6.47%, Tech Mahindra up by 4.26%,  HCL Tech up by 3.69%, Infosys up by 2.04% and NMDC up by 1.91%. On the flip side, Cairn India down by 1.63%, Mahindra & Mahindra down by 1.02%, Hindalco down by 0.83%, BHEL down by 0.71% and BPCL down by 0.66% were the top losers.

Asian markets were trading mixed, FTSE Bursa Malaysia KLCI up by 3.77 points or 0.2% to 1,843.32, Shanghai Composite up by 22.21 points or 0.94% to 2,395.24 and Nikkei 225 up by 130.48 points or 0.84% to 15,684.39. While, Hang Seng down 132.22 points or 0.56% to 23,687.65, Jakarta Composite down 33.31 points or 0.66% to 5,040.75, Taiwan Weighted down 15.61 points or 0.18% to 8,888.07, KOSPI Index down 2.24 points or 0.11% to 1,958.93 and Straits Times down 1.17 points or 0.04% to 3,222.86