Sensex, Nifty pares early gain amid volatile trade

Indian equity markets pared some early gains and currently trading near low point of the day in positive territory. Sensex was up 0.4%, while the Nifty rose by 0.3%. Investors were not making any strong position and waiting for some major trigger. On sectoral front banks, technology, capital goods, power and metals and mining stocks were witnessing strong buying, while auto, oil and consumer durables stocks were lagging behind. In currency markets, Indian rupee depreciated against American Currency on the back of increased demand for dollar from importers to settled month end payments. On the global front, Asian markets too stayed higher. Back home, the market breadth favoring positive trend; there were 1,437 shares on the gaining side against 865 shares on the losing side while 126 shares remained unchanged.

The BSE Sensex is currently trading at 16,970.85, up by 64.27 points or 0.38%. The index has touched a high and low of 17,029.27 and 16,966.30 respectively. There were 21 stocks advancing against 9 declines on the index.

The broader indices continued to deliver performance at par with the frontline indices; the BSE Mid cap and Small cap indices surged by 0.47% and 0.38% respectively.

The top gaining sectoral indices on the BSE were, Power up by 1.08%, IT up by 0.98%, TECk up by 0.79%, Metal up by 0.79% and Bankex up by 0.64%. On the flip side, Auto down by 0.55%, Consumer Durable down by 0.38% and Oil & Gas down by 0.36% were the laggards of the BSE sectoral chart.

Tata Power up by 2.41%, TCS up by 1.39%, Tata Steel up by 1.38%, Hindalco Industries up by 1.30% and Sun Pharma up by 1.17% were the top gainers on the index. On the flip side, Tata Motors down by 1.52%, ONGC down by 0.85%, Mahindra & Mahindra down by 0.55%, HUL down by 0.42% and Bharti Airtel down by 0.34% were top losers on Sensex.

Meanwhile, India’s capital market regulator - Securities and Exchange Board of India (SEBI) has simplified norms, which will aid firms to smoothly conduct disinvestment process and also abide by the public shareholding regulations. At a time when tapping investors has become difficult due to tumbling stock markets and flagging economy, the SEBI’s recent decision to relax some rules that govern Offer for Sale (OFS) and Institutional Placement Programme (IPP) mechanisms may offer companies some degree of relief.

The capital market regulator had in 2012 launched OFS and IPP, the two new share sale tools, to help corporates increase their public float. Under the IPP route, promoters can make fresh issue of shares or dilute their existing stake by offering up to 10% stake in a company to institutional investors while the auction route or offer for sale (OFS) through stock exchanges, is a market friendly mechanism which is more transparent, with much wider investor participation and not much restriction. Companies like ONGC, Wipro, Godrej Properties and DB Corp have conducted share sales through these two new routes.

SEBI has made up its mind to do away with the mandatory 12-week time gap requirement between two consecutive OFS or IPP and instead decided to reduce the time gap to 2-weeks. This time reduction is likely to encourage promoters to offload shares in more than one tranches depending on market conditions. The regulator opined that this would also be applicable on promoters who have already offloaded their shares through OFS or IPP.

The regulator has also advocated the idea of displaying indicative price during the last 60 minutes of the close of bidding session irrespective of the book being built, which could also lead to bidding happening at the last one hour of trade. As per the existing provision, bids were invited without disclosing indicative price during the trading hour. The board also decided that modification or cancellation of bids can be done in the last 60 minutes instead of last 30 minutes of the trade. The regulator also said that the institutional investors shall have the option of applying with 100 percent upfront margin in cash or with an adhoc margin of certain lower percentage to be determined by the exchanges.

In order to help the companies achieve the minimum 25 percent public holding guideline by June 2013, SEBI has mandated that the minimum size of the offer should be Rs 25 crore. However, the size of offer can be less than Rs 25 crore so as to achieve minimum public shareholding in a single tranche. All listed companies are required to have at least 25 percent public holding by June 2013 while in case of state-owned company the limit is 10 percent to be met by August 2013. There are 12-13 PSU companies which have to meet the public holding guidelines, can benefit from the changes in norms.

The S&P CNX Nifty is currently trading at 5,144.50, higher by 23.70 points or 0.46%. The index has touched a high and low of 5,159.10 and 5,142.80 respectively. There were 37 stocks advancing against 13 declines on the index.

The top gainers of the Nifty were IDFC up by 2.72%, Tata Power up by 2.25%, Reliance Infra up by 2.22%, Hindalco Industries up by 1.52% and Bank of Baroda up by 1.43%.

On the flip side, Tata Motors down by 1.64%, Kotak Bank down by 1.29%, ONGC down by 0.97%, BPCL down by 0.57% and ACC down by 0.48% remained the top losers on the index.

All the Asian equity indices were trading in the green; Shanghai Composite gained 0.12%, Hang Seng Index soared 1.06%, Jakarta Composite surged 0.93%, KLSE Composite added 0.27%, Nikkei 225 accumulated 0.46%, Straits Times Index advanced 1.03%, Taiwan Weighted climbed 0.63% and KOSPI Composite Index rose by 0.04%.