Benchmarks continue firm trade; Realty, Oil & Gas lead

Indian equity markets continued their firm trade in the late afternoon session on account of buying in frontline blue chip counters. The sentiments were on optimistic note on report that the government can spend an additional Rs 37,200 crore more this fiscal year in infra investments or bank recapitalization and still not miss the 3.9% fiscal deficit target, attributing the surplus to the higher indirect tax collections, which till July rose a healthy 39% and a massive decline in crude prices. Traders were seen piling position in Realty, Oil & Gas and Infra stocks. In scrip specific development, Hathway Cable & Datacom was trading firm on the news that the Reserve Bank of India (RBI) has removed the company from its caution list. RBI stated that Foreign institutional investors (FIIs)/registered foreign portfolios investors (RFPIs) can now purchase shares of the company and the investments can go up to 74% -- revised from the earlier limit of 49% under foreign direct investment policy. The market may remain volatile today as traders may roll over positions in the Futures & Options (F&O) segment from the near month i.e. August 2015 series to next month i.e. September 2015 series. The near month August 2015 derivatives contracts will expire today i.e. August 27, 2015.

On the global front, the Asian markets traded in green, while the European markets were trading on optimistic note. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 7,900 and 26,100 levels respectively. The market breadth on BSE was positive in the ratio of 1869:643 while 74 scrips remained unchanged.

The BSE Sensex is currently trading at 26191.55, up by 476.89 points or 1.85% after trading in a range of 25943.75 and 26256.44. There were 24 stocks advancing against 5 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 2.33%, while Small cap index up by 2.43%.

The gaining sectoral indices on the BSE were Realty up by 3.40%, Oil & Gas up by 2.94%, INFRA up by 2.19%, Consumer Durables up by 1.92% and PSU up by 1.90%

The top gainers on the Sensex were HDFC up by 7.40%, Vedanta up by 5.84%, Cipla up by 4.00%, Lupin up by 3.01% and Reliance Industries up by 2.47%.

On the flip side, BHEL down by 3.93%, Hindalco down by 1.18%, Bajaj Auto down by 0.76%, NTPC down by 0.63% and Hero MotoCorp down by 0.26% were the top losers.

Meanwhile, the Cabinet Committee on Economic Affairs (CCEA), headed by Prime Minister Narendra Modi has given its approval for the payment of the differential royalty to Arunachal Pradesh, Assam and Gujarat in respect of 28 discovered fields, which were awarded by the government to different companies during the years 1994-95, 2001 and 2004. Differential royalty refers to the difference between the rates of royalty as per provisions contained in respective Production Sharing Contracts (PSCs) and the notified rate of royalty on crude oil production.

The expected expenditure for the year 2015-16 has been estimated at Rs 56 crore comprising of Rs 30 crore for Arunachal Pradesh and Rs 26 crore for Gujarat. Though, Assam has been included in the scheme, it would not get any benefit this fiscal as there is no producing oil field in the state. The calculation has been arrived by assuming average crude oil price of $50 per barrel and foreign exchange rate of Rs 60 to a dollar.

Presently, the differential in royalty is paid to the states by the Oil Industry Development Board (OIDB) based on the Oilfields (Regulation & Development) Act, 1948 and Petroleum & Natural Gas Rules, 1959. OIDB also needs funds because investments for the strategic crude oil reserves have depleted its cash to Rs.8, 000 crore. OIDB funds are supposed to be utilized for financing development activities of the sector. In order to ensure proper utilization of OIDB fund from the year 2015-16 onwards the payment shall be through budgetary allocation instead of through OIDB fund.

The CNX Nifty is currently trading at 7940.10, up by 148.25 points or 1.90% after trading in a range of 7862.30 and 7958.60. There were 43 stocks advancing against 7 stocks declining on the index.

The top gainers on Nifty were HDFC up by 7.46%, Cairn India up by 7.05%, Vedanta up by 5.96%, Ambuja Cement up by 4.62% and Bank of Baroda up by 4.40%.

On the flip side, BHEL down by 4.06%, Bajaj Auto down by 0.95%, NTPC down by 0.75%, Hindalco down by 0.56% and ACC down by 0.40% were the top losers.

The Asian markets were trading in green; KOSPI Index increased 13.91 points or 0.73% to 1,908.00, FTSE Bursa Malaysia KLCI increased 18.2 points or 1.15% to 1,598.57, Straits Times increased 71.59 points or 2.49% to 2,944.59, Taiwan Weighted increased 108.96 points or 1.41% to 7,824.55, Shanghai Composite increased 156.3 points or 5.34% to 3,083.59, Jakarta Composite increased 186.31 points or 4.4% to 4,424.04, Nikkei 225 increased 197.61 points or 1.08% to 18,574.44 and Hang Seng increased 758.15 points or 3.6% to 21,838.54.

The European markets were trading in green; France’s CAC increased 114.92 points or 2.55% to 4,615.97, Germany’s DAX increased 281.54 points or 2.82% to 10,278.97 and UK’s FTSE 100 increased 124.77 points or 2.09% to 6,103.97.