Indian equities pare gains; trade continues in green

Indian equities trimmed its gains as investors started booking profit in frontline counters in the late afternoon session. The markets which have extended their recovery from yesterday tracking the recovery in equity markets across the Asian region are still hovering in green. The market participants also cheered on reports that India's annual monsoon rains have arrived at the southern Kerala coast, brightening the prospects of higher farm output. Traders were seen piling up position in Capital Goods, Bankex and Power sector while selling was witnessed in FMCG, Realty and Consumer Durables sector. Besides, a HSBC survey showed that service sector activity in India staged a strong performance in May as it expanded at the fastest clip in last three months largely because of significant increase in new work orders. Banking stocks were seen trading firm in green as the Reserve Bank of India on June 04, 2012 hinted of possibility in interest rate cut in its forthcoming mid-quarter monetary policy review which is scheduled on June 18, 2012. In the scrip specific development, manufacturer of LED video, graphics and text display, MIC Electronics was seen trading firm in green ahead of its board meeting for further issue of shares / warrants convertible into equity shares to promoters and non promoters on preferential basis.

On the global front, the Asian markets were trading in green while the European markets were too trading in green on optimistic note. Investors have turned hopeful ahead of the meetings of Euro-zone policymakers and the wider group of seven (G7) industrialized nations to discuss various measures to avert an onerous financial crisis in the European Union, including greater fiscal integration in the euro zone. On the home turf, the NSE Nifty and BSE Sensex were trading above their psychological 4,850 and 16,000 levels respectively. The market breadth on BSE was positive in the ratio of 1378:1117 while 117 scrips remained unchanged.

The BSE Sensex is currently trading at 16,054.12 up by 65.72 points or 0.41% after trading as high as 16,138.29 and as low as 16,023.44. There were 20 stocks advancing against 10 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap index climbed 0.56% while Small cap index advanced 0.37%.

On the BSE sectoral space, Capital Goods up 1.52%, Bankex up 1.12%, Power up 1.08%, Oil & Gas up by 0.67% and PSU up 0.62% were the major gainers, while FMCG down 0.76%, Realty down 0.56%, Consumer Durables down 0.08% and Auto down 0.07% were the only laggard in the space.

L&T up 2.28%, NTPC up 2.12%, SBI up 2.09%, Hindalco Industries up 2.04% and Maruti Suzuki up 1.59% were the major gainers on the Sensex, while Tata Motors down 2.49%, Bharti Airtel down 1.75%, ITC down 1.17%, DLF down 0.97% and HUL down 0.69% were the major losers in the index.

Meanwhile, in order to work-out a mechanism for fast clearances of the Foreign Direct Investment (FDI) proposals in the pharmaceutical sector, the Finance Ministry has convened a meeting with the pharma industry on June 7, 2012. On this matter, a finance ministry official said, ‘we will meet the pharma industry on June 7 to sort out issues delaying clearances to FDI proposals. We will give them a check-list of the essential information FIPB needs.’

Uncertainty of whether these projects be cleared by the Foreign Investment Promotion Board (FIPB) or the Competition Commission of India (CCI) has delayed a number of proposals. Normally, proposals require approval of the FIPB under the finance ministry, although 100% FDI is allowed in the sector.

There has been an increase in takeovers of the home-based pharmaceutical companies in the last 18-24 months, and eagerness of the multinational companies to increase their hold on the Indian pharma market along with big players dictating the market, made the government last year to keep the FIPB filter on the pharmaceutical FDI proposals and not through automatic route. The government’s decision was mainly on the back of concern expressed by a section of the government and the civil society that these takeovers and mergers would result in making the essential drugs unaffordable for majority of the people.

There have been a number of takeovers by overseas drug makers in the last couple of years, which include Abbott Laboratories' buyout of Piramal Healthcare's domestic formulations business, Daiichi Sankyo's acquisition of Ranbaxy Laboratories - India's largest drug company and Sanofi Aventis' takeover of Shanta Biotech.

The S&P CNX Nifty is currently trading at 4,872.25, higher by 24.10 points or 0.50% after trading as high as 4,898.95 and as low as 4,864.25. There were 32 stocks advancing against 17 declines while 1 stock remained unchanged on the index.

The top gainers on the Nifty were Reliance Infrastructure up 3.73%, Grasim India up 2.46%, L&T up 2.26%, SBI up 2.16% and NTPC up 2.05%.

Tata Motors down 2.64%, Siemens down 2.17%, Ambuja Cement down 1.83%, Bharti Airtel down 1.83% and ITC down 1.33% were the major losers on the index.

In the Asian space, Shanghai Composite inched up 0.15%, Hang Seng climbed 0.40%, Jakarta Composite jumped 1.77%, KLSE Composite advanced 0.49%, Nikkei 225 surged 1.04%, Straits Times Index ascended 0.71%, KOSPI Composite Index soared 1.05% and Taiwan Weighted garnered 1.53%.

The European markets were trading in green as France’s CAC 40 climbed 0.20% and Germany’s DAX advanced 0.08%. Stock markets in the United Kingdom remained closed on Tuesday for a national holiday.