Benchmarks extend gains; trade near intra-day high levels

Indian equity benchmarks extended early gains to continue firm trade in late morning session, hovering near intra-day high levels, on fresh buying by investors as the November derivatives series began on a positive note. However, caution prevailed ahead of the announcement of earnings numbers by some blue-chip companies including ICICI Bank and L&T. Sentiments got a boost after the World Bank retaining its India's growth forecast at 7.5 percent in 2015-16, followed by a further acceleration to 7.8 percent in 2016-17 and 7.9 percent in 2017-18, saying it will continue to grow. Some support also came with report that the government has extended duty incentives to a large number of products, including textiles and electronics, to increase competitiveness of Indian exports and boost shipments. At present, Sensex and Nifty were trading above the crucial 26,900 and 8,100 levels respectively, with gains of over 0.30%.  Apart from blue chips, broader indices too equally participated in the rally with both mid cap and small cap indices trading up by over 0.20% each. Investors remained optimistic with the private report that indicate that India's economic landscape is expected to undergo a major transformation over the next decade and is likely to achieve an average growth rate of around 8.8 per cent.

On the global front, Japan’s stocks jumped, leading Asia shares higher, as the Bank of Japan refrained from expanding its record stimulus program. However, investors around the world remained cautious on renewed expectations for a Fed rate hike this year. Further, US markets ended lower in last session after the pending home sales unexpectedly decreased for the second consecutive month in September.

Back on street, stocks from Power, PSU and Banking counters were supporting the markets’ uptrend, while those from FMCG, Consumer Durables and Auto counters were adding to the underlying cautious undertone. In scrip specific development, shares of Dr Reddy’s Laboratories have surged after the company reported a better-than expected 46% year on year (YoY) growth in net profit at Rs 721 crore for the second quarter ended September 30, 2015. On the other hand, shares of Nestle have declined after the company has reported 60.10% fall its net profit at Rs 124.20 crore for the quarter ended September 30, 2015 as compared to Rs 311.29 crore for the same quarter in the previous year.

The market breadth on BSE was positive, out of 2228 stocks traded, 1215 stocks advanced, while 879 stocks declined on the BSE. 

The BSE Sensex is currently trading at 26929.10, up by 90.96 points or 0.34% after trading in a range of 26773.04 and 26942.29. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.69%, while Small cap index up by 0.23%.

The top gaining sectoral indices on the BSE were Power up by 1.82%, PSU up by 1.09%, Bankex up by 0.95%, Realty up by 0.89% and Oil & Gas up by 0.78%, while FMCG down by 0.81%, Consumer Durables down by 0.39%, Auto down by 0.20% and IT down by 0.12% were the top losing indices on BSE.

The top gainers on the Sensex were NTPC up by 5.52%, Dr. Reddys Lab up by 2.05%, Cipla up by 1.47%, ICICI Bank up by 1.38% and Bharti Airtel up by 1.34%. On the flip side, Vedanta down by 2.76%, ITC down by 1.59%, Tata Motors down by 1.37%, Mahindra & Mahindra down by 0.60% and Infosys down by 0.59% were the top losers.

Meanwhile, in order to reduce financial burden on the industry, All India Organisation of Employers (AIOE), an allied body of business chamber Ficci, has urged the government to defer the implementation of amendments in the Payment of Bonus Act to next fiscal. Keeping in view both the financial and operational hardships facing the industry, it has said the government to apply the amended legislation prospectively from financial year 2016-17.

President of AIOE Sanjay Bhatia in the letter to Labour Secretary has stated that apart from the burden of financial implications on the Medium, Small and Micro Enterprises (MSME)sector, industries will face serious functional problems as the enhanced amount of bonus has not been provided for in the balance-sheet/accounts statement of the previous year 2014-15, which ended on March 31, 2015. It stated that since the allocable surplus for payment of bonus is calculated during the preceding accounting year, out of which bonus is paid in the succeeding financial year, the payable bonus already stands allocated for the present accounting year ending March 31, 2015.

He further stated that as most of the industries have already paid bonus to their employees, at the existing rate, before the start of the festival session. Hence the implementation of this proposal effective April 1, 2015 will therefore cause great inconvenience to industries in reallocating the bonus amount retrospectively causing financial and operational hardships.

The amendment bill seeks to enhancing limit of coverage for payment of bonus from the existing wage limit of Rs 10,000 to Rs 21,000 per month as well as the calculation limit for payment of bonus from Rs 3,500 to Rs 7,000 per month.

The CNX Nifty is currently trading at 8143.80, up by 32.05 points or 0.40% after trading in a range of 8092.40 and 8146.10. There were 34 stocks advancing against 16 stocks declining on the index.

The top gainers on Nifty were NTPC up by 5.28%, Dr. Reddys Lab up by 1.99%, Power Grid up by 1.99%, Yes Bank up by 1.94% and Cairn India up by 1.85%. On the flip side, Vedanta down by 3.17%, ITC down by 1.64%, Tata Motors down by 1.37%, Infosys down by 0.83% and Mahindra & Mahindra down by 0.78% were the top losers.

Asian markets were trading mostly in green; KOSPI Index was up by 0.07%, FTSE Bursa Malaysia KLCI up by 0.09%, Shanghai Composite up by 0.24%, Hang Seng up by 0.05% and Nikkei 225 up by 1.08%. On the flip side, Jakarta Composite was down by 0.17% and Taiwan Weighted was down by 0.01%.