Indian equities trim gain; Nifty above 5,500 mark

Indian equities trimmed gains but continued its firm trade over the neutral line in the late afternoon session. Traders were seen piling up positions in Realty, Auto and Capital Goods sector while selling was witnessed in Oil & Gas sector. Rate sensitive stocks were seen trading firm as the January inflation numbers will increase the pressure on RBI to employ monetary easing measures to prop up the country's economy growth momentum. Also, the encouraging WPI inflation numbers for January provided the much needed support to the local markets and prevented downside. DLF from Realty counters was seen trading firm with a gain of around more than five percent pulling the markets higher. Tata Motors, M&M, Maruti, Bajaj Auto and Hero MotoCorp from Auto pack were seen trading in green driving the markets higher. L&T and BHEL from Capital Goods space was trading firm pushing the market higher. Index heavyweight Reliance Industries failed to sway with the sanguine momentum amid expectations that gas output from its D6 block, which currently produces about 37 million standard cubic metres a day (mmscmd) of gas, is expected to fall by about 10% to 34 mmscmd by April. BHEL and ONGC were trading firm on reports of stake-sale in these state-run firms, the Empowered Group of Minister (EGoM) have okayed stake sale in ONGC. However, divestment in BHEL is expected in FY13. On the global front, Asian markets were trading in green barring Jakarta Composite while the European markets were trading in green on optimistic note. European Union finance ministers will hold a conference call later in the day to discuss whether Greece is eligible for a 130 billion euro bailout. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 5,500 and 18,100 levels respectively. The market breadth on BSE was in favor of advances in the ratio of 1794:1036 while 130 scrips remained unchanged.

The BSE Sensex is currently trading at 18,112.02 up by 263.45 points or 1.48% after trading as high as 18,186.19 and as low as 18,000.30. There were 25 stocks advancing against 5 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap index surged 1.55% while Small cap soared 1.12%.

On the BSE sectoral space, Realty up 4.18%, Auto up 3.71%, Capital Goods up 2.96%, Consumer Durables up 2.85% and Bankex up 2.43% were the major gainers while Oil & Gas down 0.14% was the only loser in the space.

Tata Motors up 8.34%, DLF up 4.67%, L&T up 3.96%, M&M up 3.32% and ICICI Bank up 3.06% were the major gainers on the Sensex, while HUL down 1.24%, RIL down 1.24%, NTPC down 0.41%, Cipla down 0.37% and Hindalco Industries down 0.28% were the only losers in the index.

Meanwhile, India’s telecom watchdog - Telecom Regulatory Authority of India (TRAI) has suggested that foreign holding in telecom tower companies be limited to 74%. If the proposal is accepted it could discourage buyouts by foreign companies. It could also impact Indian operations of NASDAQ-listed American Towers (ATC) and Reliance Communications, which is trying to sell its tower business unit to raise funds.

Currently, 100% foreign direct investment is allowed in tower companies but TRAI is keen to lower this and bring it on a par with other telecom services to bring all forms under a unified license regime. If implemented, existing infrastructure providers will be required to take new unified licenses whose conditions shall apply to tower companies as well.

ATC, the world's largest tower company, owns 100% of its Indian subsidiary and lowering the foreign investment cap will force it to change the shareholding structure of the Indian operations. Some telecom tower companies, including Reliance Infratel, are looking at stake sales and the 74% limit could impact their fund-raising plans.

TRAI wants the new cap to be part of the revised rules for the sector - the National Telecom Policy 2012 - which will replace the existing framework that has been in place for more than a decade. But any change in foreign investment norms will require Cabinet approval. The 74% foreign investment cap for tower companies is part of the draft rules, which were shared with both the industry and the telecom department over the weekend.

The regulator has asked the industry to specify the maximum time frame that should be given to comply with the new foreign investment cap. After discussion with the industry, the regulator will send its final proposals to the government, which has to approve them before they become effective. The proposals are not binding on the government.

The S&P CNX Nifty is currently trading at 5,502.40, higher by 86.35 points or 1.59% after trading as high as 5,522.85 and as low as 5,460.60. There were 42 stocks advancing against 8 declines on the index.

The top gainers on the Nifty were Tata Motors up 8.60%, JP Associates up 7.17%, Axis Bank up 6.66%, DLF up 5.03% and L&T up 4.17%.

HUL down 1.37%, Reliance down 1.31%, Cipla down 0.37%, Reliance Power down 0.37% and NTPC down 0.36% were the top losers on the index.

In the Asian space, Shanghai Composite climbed 0.94%, Hang Seng jumped 2.14%, Nikkei 225 soared 2.30%, Straits Times advanced 0.66%, Seoul Composite surged 1.13% and Taiwan Weighted garnered 1.54%. On the flip side, Jakarta Composite shed 0.20%.

The European markets were trading in green with, France’s CAC 40 ascended 0.62%, Germany’s DAX added 0.97% and Britain’s FTSE 100 jumped 0.05%.