Indian equities extend gains to hover around day's high

Indian equities extended gains to trade firm hovering towards the day’s high in the late afternoon session. Key benchmarks gained momentum as risk-averse investors were back in the market with buying activity picking across the broad. Traders were seen piling up the positions in IT, TECK and FMCG sector while selling was witnessed in Oil & Gas, Bankex and Realty sector. The investors’ sentiments remained buoyant after the government data showed that India’s headline inflation plummeted below the uncomfortable 9% for the first time since December 2010 to the lowest levels in around two years to 7.47%. With the inflation at two-year low, market men believe that a cut in reserve ratios look a certainty in the Reserve Bank's meet on January 24. Also, RIL will announce its Q3 December 2011 results on Friday, January 20, 2012 which will further give direction to domestic bourses. The gain in the late afternoon session was largely led by buying in front line beaten down IT counters where investors were busy hunting cheap stocks. Index heavyweight Reliance industries plunged around two percent in the session, weighing heavily on the bourses. On the global front, Asian markets traded in red while the European markets were trading on a mix note. The rating agency S&P downgraded some countries including France from European Union in last weekend whereas Germany held its AAA rating. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 4,850 and 16,100 levels, respectively. The market breadth on BSE was in favor of declines in the ratio of 1280:1301 while 104 scrips remained unchanged.

The BSE Sensex is currently trading at 16,154.62 up by 12.71 points or 0.08% after trading as high as 16,174.24 and as low as 16,037.60. There were 14 stocks advancing against 16 declines on the index.

The broader indices were trading on a mixed note; the BSE Mid cap index shed 0.21% while Small cap was up 0.25%.

On the BSE sectoral space, IT up 1.72%, TECk up 1.55%, FMCG up 0.67%, Metal up 0.39% and Capital Goods up 0.33% were the top gainers while Oil & Gas down 1.26%, Bankex down 0.73%, Realty down 0.58%, PSU down 0.55% and Health Care down 0.50% were the major losers in the space.

BHEL up 2.70%, Sterlite up 2.37%, Tata Steel up 2.02%, Maruti up 2.01% and Infosys up 1.97% were the major gainers on the Sensex, while NTPC down 2.08%, RIL down 1.82%, HUL down 1.58%, HDFC Bank down 1.39% and Sun Pharma down 1.36% were the major losers in the index.

Meanwhile, a decision which could help the government in getting closer to its ambitious disinvestment target of Rs 40,000 crore for the current financial year, market regulator Securities and Exchange Board of India (SEBI) has reduced the timeline for completion of buyback of shares by companies to 34-44 days. The buyback process earlier could take somewhere between 63 to 114 days.

While announcing the changes, SEBI said ‘the timeline for various activities involved in the buyback process have been revised which shall result in substantial reduction of time taken for completion of buyback.’ These alterations form a part of amendments made by the regulator in the SEBI - Buyback of Securities Regulations, 1998, have come into effect from January 3.

For the current fiscal year, the government has fixed Rs 40,000 crore disinvestment target, but till date it has only managed to raise Rs 1,145 crore by selling its stake in the Power Finance Corporation (PFC). Further, on the back of volatile stock markets, state-owned companies had to put on hold their public issues. But with time running out to meet the target, the government has been looking at other means, including the buyback mode, to raise funds via disinvestment.

Under the buyback method, the government can raise money by selling its equity in the company to the PSU itself. The Department of Disinvestment (DoD) has also sought Cabinet approval to use the buyback mode for disinvestment. The government, however, could not take any decision due to inter-ministerial differences and the reluctance of PSUs to part with cash.

The DoD had also pointed out to the SEBI that the present buyback norms are not in rank with the principle of equitable treatment to shareholders in the acceptance of shares through tender offer. The regulator has also effected changes in buyback through tender offer. As per the previous norms, in case of buyback it was necessary for the company to accept the shares tendered by the shareholders in proportion to the shares tendered by the shareholder and not in proportion to the shares held. However, this has been customized. Further, SEBI has also made changes in the 'record date' and requirement of public notice and public announcement norms in the buyback regulations.

The S&P CNX Nifty is currently trading at 4,856.20, lower by 9.80 points or 0.20% after trading as high as 4,867.35 and as low as 4,827.05. There were 16 stocks advancing against 34 declines on the index.

The top gainers on the Nifty were BHEL up 2.81%, Sterlite up 2.22%, Tata Steel up 2.04%, IDFC up 2.03% and Tata Power up 1.92%.

Kotak Bank down 2.55%, NTPC down 2.53%, Reliance Power down 2.18%, RIL down 2.00% and PNB down 1.99% were the major losers on the index.

Asian markets were trading on a negative note; Shanghai Composite plunged 1.34%, Hang Seng sank 1.00%, Jakarta Composite declined 0.89%, Nikkei 225 plummeted 1.43%, Straits Times dived 1.34%, Seoul Composite shed 0.87% and Taiwan Weighted slipped 1.09%.

The European markets were trading on a mix note with, France’s CAC 40 descended 0.25%, Germany’s DAX advanced 0.12% and Britain’s FTSE 100 jumped 0.21%.