Jubilation prolongs on Dalal Street as momentum continues

The market extended gains in the late afternoon trade as optimism continues in the market with Indian equities extending gains to trade near the day’s high. The key benchmark indices BSE - Sensex and NSE - Nifty scaled to their highest level in more than 5-1/2 weeks as sentiments boosted and buying was witnesses across the sector. The optimism was mirrored following upside in Asian peers which reacted to China's strong Q4 GDP data. Traders were seen piling up the positions in Metal, Realty and Capital Goods sector. Interest rate sensitive Realty, auto and banking stocks were in action on expectations that the Reserve Bank of India will start cutting interest rates in the coming months to prop up slowing economy. Hindalco, Tata Steel, Sterlite, SAIL, Jindal Steel and Sesa Goa from Metal pack were seen trading firm in green pulling the markets higher. Industry heavyweights RIL is trading with gain of more than three and half percent giving the much needed support for the markets. Maruti from Auto space is trading with gain of more than nine percent driving the markets higher. Sugar stocks from North were seen under pressure after the Supreme Court directed the private sugar mill owners in Uttar Pradesh to clear the dues of sugarcane growers. On the global front, Asian markets traded in green while the European markets were too trading in green on optimistic note. A successful debt auction yesterday by France, which also served to ease worries about the euro-zone economic crisis has helped lift major European stock markets alleviating concerns over the S&P’s downgrade of European nations’ debt rating. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 4,950 and 16,400 levels, respectively. The market breadth on BSE was in favor of advances in the ratio of 1874:862 while 107 scrips remained unchanged.

The BSE Sensex is currently trading at 16,477.94 up by 288.58 points or 1.78% after trading as high as 16,484.66 and as low as 16,270.87. There were 28 stocks advancing against 2 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap index surged 1.50% while Small cap soared 1.33%.

On the BSE sectoral space, Metal up 4.27%, Realty up 3.89%, Capital Goods up 3.54%, Auto up 2.78% and Oil & Gas up 2.76% were the major gainers while there remained no losers in the space.

Maruti up 9.72%, Hindalco up 6.68%, Tata Steel up 5.15%, Sterlite up 4.90% and L&T up 4.64% were the major gainers on the Sensex, while ITC down 0.77% and TCS down 0.67% were the only losers in the index.

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 4,965.35, higher by 91.45 points or 1.88% after trading as high as 4,969.75 and as low as 4,904.00. There were 45 stocks advancing against 5 declines on the index.

The top gainers on the Nifty were Maruti up 9.34%, Hindalco up 6.53%, JP Associates up 5.82%, HCL Tech up 5.58% and Tata Steel up 5.20%.

TCS down 0.92%, Dr Reddy’s down 0.89%, Ranbaxy down 0.82%, ITC down 0.62% and Gail India down 0.04% were the only losers on the index.

Asian markets were trading on an optimistic note; Shanghai Composite rocketed 4.18%, Hang Seng spurted 3.24%, Jakarta Composite climbed 0.76%, Nikkei 225 surged 1.05%, Straits Times soared 2.11%, Seoul Composite jumped 1.80% and Taiwan Weighted amassed 1.65%.

The European markets were trading in green with, France’s CAC 40 ascended 1.00%, Germany’s DAX advanced 0.99% and Britain’s FTSE 100 jumped 0.75%.