Benchmark indices clinch additional gains; RIL's spurt aids

Encouraged by firming trend in Asian markets, benchmark equity indices too have sipped on additional gains. Bounce back in Bankex, Health Care and Auto stocks has mainly equated the benchmark indices near about to their stiff support level of 17,700 mark (Sensex) and 5350 (Nifty). Asian shares have nudged up near their highest in more than five months on Wednesday as investors kept hopes alive for an agreement on details of a new Greek bailout package despite further delays. Meanwhile, the US futures indices too are showing an uptick in the screen trade, thereby indicating positive opening of Wall Street. Back home, benchmarks' spurt is mainly on the back of the up move of index heavy weights-Reliance Industries, Infosys, ITC and HDFC and HDFC Bank. Global investment banking and securities firm Goldman Sachs on Tuesday has upgraded Reliance Industries (RIL) to buy from neutral, citing a potential lift in margins on increased refining and recovering oil demand. Additionally, even cash-strapped Kingfisher Airlines is in talks with Reliance Industries to use the oil and gas major's infrastructure to transport ATF.

Meanwhile, prominent gains in stocks belonging from the Realty, Consumer Durable and Metal counters have contributed a lot towards positive milieu. However, the broader indices trouncing the frontliners have shown up gigantic gains of over 1% each. The overall market breadth on BSE is in the favour of advances which have piped declines in the ratio of 1578:670, while 77 shares remained unchanged.

The BSE Sensex is currently trading at 17,746.22, surged by 123.77 points or 0.70%. The index has touched a high and a low of 17,757.85 and 17,631.69 respectively.   There were 25 stocks advancing against 5 declining ones on the index.

The broader indices were outperforming benchmarks; the BSE Mid cap and Small cap indices surged 1.19% and 1.27% respectively.

Although buying was witnessed across the board, however, the top gaining sectoral indices on the BSE were Realty up by 2.80%, CD up by 1.77%, Metal up by 1.46%,  IT up by 1.45% and Power up by 1.34%.

The top gainers on the Sensex were DLF up by 3.30%, Gail India up by 2.15%, Maruti Suzuki up by 1.95%, Wipro up by 1.91% and Hindalo Industries up by 1.89%.

On the flip side, Bharti Airtel down by 5.01%, ICICI Bank was down by 1.22%, ONGC down by 1.17%, Tata Power down by 0.14% and M&M down by 0.09% and ONGC down by 0.77% were the only losers on the Sensex.

Meanwhile, the group of ministers (GoM), headed by the Finance minister, has cleared the proposal to allow Indian carriers to import fuel directly. The panel of ministers has also approved a debt restructuring plan for state-run carrier Air India. The panel was also apprised on the issue of FDI in domestic airlines by international carriers.

The airline industry, off late has been under severe financial stress and demanded that it be allowed to import aviation turbine fuel directly rather than buying it domestically.  Currently Indian carriers buy jet fuel from state run corporations and have to pay a hefty sales tax to state governments. Since jet fuel accounts 40 to 50% of an airline’s total operational cost, savings in this area can bring down costs substantially. Average tax on jet fuel in India is 24%, which is second highest in the world second only to Bangladesh at 27%.

The GoM has also approved a debt restructuring plan for state-run carrier Air India. It has recommended issuance of bonds with sovereign guarantee worth Rs 7,400 crore for Air India. The bond is likely to carry a coupon rate of 8.5-9% and financial institutions may subscribe to these bonds. A final decision is expected after the matter is approved by the Cabinet Committee on Economic Affairs.

The panel was also apprised about the issue of FDI in domestic airlines and the aviation ministry is likely to move a note to the cabinet to allow foreign airlines to buy stakes of up to 49% in Indian carriers. Currently 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.

The S&P CNX Nifty is currently trading at 5,374.15, higher by 39.00 points or 0.73%. The index has touched a high and a low of 5,376.95 and 5,335.75 respectively. There were 42 stocks advancing against 8 declines on the index.

The top gainers of the Nifty were RInfra up by 3.70%, DLF up by 3.17%, RPower up by 2.99%, Gail India up by 2.52% and JP Associates up by 2.35%.

Bharti Airtel down by 5.45%, ICICI Bank down by 1.23%, Dr Reddy down by 1.08%, ONGC down by 0.93% and Ranbaxy down by 0.59%, were the major losers on the index.

All the Asian equity indices continued to trade in green; Shanghai Composite was up by 0.34%, Hang Seng was up by 0.59%, Jakarta Composite was up by 0.24%, Nikkei 225 was up by 0.81%, Straits Times was up by 0.45%, Seoul Composite was up by 0.74% and Taiwan Weighted was up by 1.74%.