Benchmark indices sustain gains; broader indices outperform

After recuperating from day’s low, benchmark indices currently holding on their earned gains, are gyrating in a tight band. Benchmark indices showcasing great amount of resilience are currently trading above the 17,700 mark (Sensex) and 5,350 mark (Nifty) respectively. Frontline indices also borrowing some support from positive closing of most of the Asian markets. However, the mixed trend of European market may weigh upon Indian equity markets going further. Back home, on the BSE sectoral front, stocks from Realty, Capital Goods and Metal counters are supporting the positive milieu of Dalal Street, while stocks from Oil & Gas counter is seen as the only week spell of the trade. The broader indices too doing well for themselves are currently outperforming their frontline indices. The market breadth on BSE is majorly in favour of advances which have thrashed declines in the ratio of 1940:874, while 96 shares remained unchanged.

The BSE Sensex is currently trading at 17,719.96, up by 115.00 points or 0.65% after trading as high as 17,829.72 and as low as 17,666.74. There were 24 stocks advancing against 6 declines on the index.

The broader indices continued to trade in fine contour; the BSE Mid cap index surged 1.64% and Small cap soared 2.00%.

On the BSE sectoral space, Realty up 4.38%, Capital Goods up 2.04%, Metal up 2.02%, PSU up 1.56 % and Bankex up 1.55% were the major gainers while there were no losers in the space.

BHEL up 3.15%, DLF up 2.95%, SBI up by 2.85%, Sterlite Industries up by 2.57% and Jindal Steel up 2.18% were the major gainers on the Sensex, while Tata Power down 5.65%, GAIL India down 1.04%, RIL down 0.93%, Infosys down by 0.37% and Wipro down 0.22% were the major losers in the index.

Meanwhile, to help the ailing airline industry, a Group of Ministers (GoM) is likely to meet later this week to discuss the issues concerning the aviation sector. The GoM is likely to take a decision on investments limits in Indian carriers by foreign airlines, direct import of jet fuel by Indian carriers and Air India's financial restructuring plan. There is a common consensus on the fact that the ailing Indian aviation industry needs assistance to come out of its financial debt. It had been suggested that the government should allow foreign investments by international carriers in the Indian airline industry to help the industry to survive the current financial crisis.

Earlier, foreign airlines were not allowed to invest in Indian airlines though foreign direct investment (FDI) of up to 49% was allowed. A Committee of Secretaries has proposed a 49% cap on FDI by foreign airlines. But earlier, the Civil Aviation Ministry had suggested 24%, while the Department of Industrial Policy and Promotion (DIPP) had recommended 26%. At present, foreign investment of up to 49% is permitted in the aviation sector, apart from 100% in MRO (maintenance, repair and overhaul), airports, helicopter and sea-plane operations, but foreign carriers are not allowed to invest.

Another topic of discussion would be the direct import of jet fuel by Indian carriers. The expenditure on jet fuel accounts 40-50% of an airline’s total operational cost and the airlines have demanded that they be allowed to import fuel to escape the heavy sales tax levied by states. The petroleum ministry is understood to have raised objections to the proposal but the Committee of Secretaries is said to have recommended the direct import.

The GoM shall also be discussing, the cash-strapped, Air India’s financial restructuring plan (FRP) and turnaround plan (TAP). A decision on injecting additional equity into the national carrier is also likely to be taken up. The debt-ridden carrier has outstanding loans and dues worth Rs 67,520 crore, of which Rs 21,200 crore is working capital loan, Rs 22,000 crore is long-term loan on fleet acquisition, Rs 4,600 crore is vendor dues besides an accumulated loss of Rs 20,320 crore, according to official figures.

A panel of secretaries has recommended that Rs 23,000 crore be infused into the cash-strapped national carrier over the next 10 years, of which Rs 6,600 crore could be injected in the current fiscal ending March 31. As per its aircraft acquisition plans, Air India has already placed orders for 27 Boeing 787 Dreamliners and decided to take them on sale and leaseback mode. Under the leaseback mode, an airline purchases aircraft from the manufacturer and sells them to a leasing company and then gets the planes back on lease. This erases the aircraft purchase debt from the airline’s books. The first of these planes are expected to be delivered by March.

The S&P CNX Nifty is currently trading at 5,352.55, higher by 26.70 points or 0.50% after trading as high as 5,390.05 and as low as 5,344.35. There were 36 stocks advancing against 13 declines, while 1 stock remained unchanged on the index.

The top gainers on the Nifty were Siemens up 3.73%, ACC up by 3.70%, Ambuja Cement up by 3.62%, Cairn India up by 3.54% and HCL Technologies up by 2.93%.

Tata Power down 5.94%, GAIL India down by 1.29%, Dr Reddy’s down 1.19%, Reliance Industries down by 1.17% and Ranbaxy down 1.10% were the major losers on the index.

In the Asian space, Shanghai Composite gained 0.03%, Nikkei 225 surged 1.10%, Straits Times ascended 0.76% and Seoul Composite rose 0.04%. On the flipside, Hang Seng declined 0.23%, Jakarta Composite slipped by 1.02% and Taiwan Weighted lost 0.69%.

European indices were trading on a mixed note, DAX lost 0.69%, CAC 40 lost 1.19% and FTSE 100 surrendered 0.59%.