Benchmarks recover after sharp setback

After recovering from the low point of the day the markets are now trading steady in the late morning session. Equities moved higher in early trades buoyed by recent strong economic data and the positive trend in global markets but markets erased more than half of the gains after Supreme Court cancelled all 122 2G licenses issued on or after January 2008. However, India's manufacturing sector activity jumped to an eight-month high in January as factories stepped up production on increased demand according to HSBC Holdings Plc and Markit Economics. Meanwhile, SC has cancelled 122 2G licenses but there was a relief for PC Chidambram as Supreme Court dismissed petition to probe his role. The biggest beneficiary of the verdict is country's largest telecom player Bharti Airtel, which up 4% on buzz that the company may get more spectrums. On sectoral front, capital goods, metal, power and IT stocks were mostly trading firm. While realty, banks, and healthcare sectors have given their gains due to profit taking.  On the global front, Asian markets were trading in green. Back home, the market breadth favoring the positive trend; there were 1,241 shares on the gaining side against 1,185 shares on the losing side while 121 shares remained unchanged.

The BSE Sensex is currently trading at 17,382.74, up by 82.16 points or 0.47%. The index has touched a high and a low of 17,504.25 and 17,308.28 respectively. There were 22 stocks advancing against 8 declining ones on the index.

Broader indices were trading mixed; the BSE Mid cap index down by 0.16% and Small cap indices up by 0.16%.

The top gaining sectoral indices on the BSE were, TECk up by 1.28%, CG up by 1.26%, IT up by 1.15%, Power up by 0.97% and Metal up by 0.71%. While, Realty down by 1.01%, Bankex down by 0.80%, CD down by 0.45%, Health Care down by 0.11% and FMCG down by 0.09% were the top losers on the index.

The top gainers on the Sensex were Bharti Airtel up by 4.29%, Sterlite Industries up by 4.15%, BHEL up by 3.53%, Tata Power up by 2.54% and Wipro up by 1.72%.

On the flip side, SBI down by 2.80%, Cipla down by 1.16%, Tata Motors down by 0.72%, ITC down by 0.55% and Jindal Steel down by 0.42% were the top losers on the index.

Meanwhile, India’s prominent economists have urged the Union Finance Minister Pranab Mukherjee to expedite reform measures, control fiscal deficit and employ policies to restore a sense of confidence among both domestic and international investors in India’s sustainable growth story. Mukherjee, who addressed the leading economists who attended the pre-Budget meeting convened by the Finance Minister to solicit their suggestions on various vital economic issues, said that by the end of March, the head on inflation would be between 6-7% while the growth rate may be around 7% plus.

At a time when sentiments towards India, domestically as well as globally, has not been very optimistic owing to a series of unwarranted developments while the economic indicators too for a large part of this fiscal indicated that the growth momentum is fizzling out, the leading economists who participated in the discussion urged government to use this year’s Budget as an instrument for restoring the confidence by making it a Policy Budget rather than only a statement of account.

The economists suggested that government must show its intent to reduce the fiscal deficit and the message of fiscal consolidation should also be sent through the Budget. In the last Budget, the government had projected the fiscal deficit to fall to 4.6% of the GDP in 2011-12 as against 4.7% in the earlier fiscal. They suggested that expenditure on populist measures be reduced and the leakages of funds in implementing them be curbed. In this regard they suggested decontrol of diesel, higher excise duty on diesel cars and use of cash transfer system to distribute subsidies directly to the beneficiaries among others.

In order to revive the slowing economic activities in the country, certain participants suggested that mega projects, which are held up for long may be cleared especially relating to power, mining and steel etc. to send a positive signal to the corporate world. APMC Act may be amended and perishable commodities such as fruits and vegetables be taken out of its purview. While many experts advocated high expenditure on health and education sector, some suggested for organized retail which would help in containing the prices of food items especially and also giving infrastructure status to aviation sector and township housing among others.

The government is slated to implement ambitious reforms on both direct and indirect taxes fronts. Bills on Direct Taxes Code (DTC) and Goods and Services Tax (GST) are currently with Parliamentary Standing Committee. Economist also asked Mukherjee to speed up policy reform process and implement its decision to allow foreign investors in the multi-brand retail sector.

Some members suggested extension of section 80(i) of Income Tax Act for at least another three years for attracting investment in infrastructure sector while they were also  in favor of abolishing Security Transaction Tax, reforms in tax administration system, better Tax-GDP ratio, budgetary incentives to tackle environmental problems, ensuring availability of updated information and data for better policy decisions and focus on core development issues for people of north-east regions among others.

The S&P CNX Nifty is currently trading at 5,252.65, up by 16.95 points or 0.32%. The index has touched a high and a low of 5,289.95 and 5,225.75 respectively. There were 29 stocks advancing against 21 declining ones on the index.

The top gainers of the Nifty were Bharti Airtel up by 5.44%, Sterlite Inds up by 4.18%, Ambuja Cements up by 4.17%, BHEL up by 3.29% and Tata Power up by 2.77%.

RCom down by 5.08%, IDFC down by 3.91%, SBI down by 2.88%, Cairn India down by 2.85%, and RPower down by 2.12% were the major losers on the index.

All the Asian equity indices were trading in green; Shanghai Composite was up by 1.49%, Hang Seng surged by 1.70%, Jakarta Composite added 0.57%, Nikkei 225 gained 0.62%, Seoul Composite was up by 1.36%, Straits Times was up by 0.49% and Taiwan Weighted gained 1.37%.