Benchmarks trade with strong gains; Sensex up above 200 points

Strength continues in the Indian equity markets with some hectic buying across blue chip counters, following a strong lead from Asian markets where stocks moved higher amid easing worries about eurozone debt crisis on the back of a successful debt auction by France. Sensex was holding its 200 points gains since early trade, while Nifty trading near high point of the day. On sectoral front, amid widespread buying, all the sectoral indices were up in positive territory. However, investors were making some position in the markets as falling inflation; possibility of rate cuts and some stabilization in global markets have narrowed the risk of economic slowdown. On the global front, Asian markets were trading in green. Back home, the market breadth favoring the positive trend.

The BSE Sensex is currently trading at 16,436.24, up by 246.88 points or 1.52%. The index has touched a high and a low of 16,441.78 and 16,270.87 respectively. There were 29 stocks advancing against just one decline on the index.

The broader indices were trading in tandem with the benchmarks; the BSE Mid cap index was up by 1.41% while the small cap index was trading up by 1.33%.

All the sectoral indices on the BSE were in green, the top performers were Realty up by 3.46%, Metal up by 3.11%, Capital Goods up by 2.56%, Auto up by 2.20% and Power sector up by 1.87%.

The top gainers of the Sensex were Maruti up by 5.76%, Hindalco up by 4.95%, Sterlite Industries up by 4.29%, L&T up by 2.78% and DLF up by 2.76%.

On the other hand ITC marginally down by 0.02% was the lone loser.

Meanwhile, a Group of Ministers (GoM) is likely to meet today to consider the proposal of foreign direct investment (FDI) in aviation sector. The group, chaired by Finance Minister Pranab Mukherjee, will include the newly appointed Civil Aviation Minister Ajit Singh, Oil Minister S Jaipal Reddy, and Commerce Minister Anand Sharma. The GoM is likely to take a final call on how much equity a foreign airline would be allowed to invest in Indian carriers.

Civil aviation minister, Ajit Singh, is said to be in favour of allowing international carriers to hold a more than 26% stake. While a Committee of Secretaries has proposed a 49% cap on FDI by foreign airlines, the Civil Aviation Ministry has asked the government to allow 24% and the Department of Industrial Policy and Promotion (DIPP) has recommended 26%.

However, India at present bars foreign carriers from owning stakes in Indian airlines, though foreign investors are allowed to invest up to 49%. The higher permissible investment would come as a lifeline to India's struggling carriers, notably the heavily in debt, Kingfisher Airlines and Air India, which alone accounts for Rs 43,000 crore of the total aviation debt of Rs 70,000 crore.

The ministers will also discuss the group of secretaries' recommendation to allow domestic carriers to import fuel directly rather than buying it from oil marketing companies. This will help airlines to save at least a fourth of their expenses of Rs 10,000 crore on aviation turbine fuel. Airlines are currently paying high sales tax ranging between 4% and 28% in different states on ATF, which can be avoided by importing fuel directly.

Also with a significant rise in passenger traffic there is an urgent need to construct new airports and improve and modernize the existing ones. Opening up FDI will help bring in capital and technological expertise. It will also allow Indian carriers easier access to international routes. If these changes are allowed the ailing aviation industry can hope to see a brighter future.

The S&P CNX Nifty is currently trading at 4,953.50, up by 79.60 points or 1.63%. The index has touched a high and a low of 4,955.25 and 4,904.00 respectively. There were 48 stocks advancing against only 2 declines on the index.

The top gainers of the Nifty were Maruti Suzuki up by 6.32%, HCL Technology up by 5.78%, Hindalco Inds up by 5.43%, Sterlite Inds up by 4.98% and JP Associates up by 4.82%.

On the other hand, Ranbaxy down by 0.98% and TCS down by 0.11% were the only losers on the index.

All the Asian markets were trading in green; Shanghai Composite surged by 3.54%, Hang Seng was up by 2.35%, Jakarta Composite was up by 0.48%, Nikkei 225 gained 1.05%, Straits Times was up 1.32% and Seoul Composite was up by 1.80% and Taiwan Weighted gained 1.65%.