Sensex trades with 0.5% gains; Power, IT shares support

Stock markets in India continue to trade with a positive bias in an extremely tight range in Wednesday afternoon trades as the frontline equity indices gyrated around the psychological 17,100 (Sensex) and 5,150 (Nifty) levels. The benchmark equity indices traded with gains of around half a percent on a day when the global markets showed strength with most Asian peers gaining around half to one percent as increasing hopes that government in China would further employ measures to support world’s second largest economy and encouraging housing market report from world’s largest US economy went on to temper concerns over deepening financial troubles in the Euro-zone. Besides, the European markets too got off to a flat to positive opening as investors remained on the sidelines after Germany reiterated its staunch opposition to common bonds to share the euro zone's debt burden ahead of a Euro-Zone Summit. Domestic sentiments were supported by SEBI’s recent decision to relax rules that govern Offer for Sale (OFS) and Institutional Placement Programme (IPP) mechanisms which will aid firms to smoothly conduct disinvestment process and also abide by the public shareholding regulations. Moreover, cues from the money market remained subdued as the Indian rupee, despite recent measures announced by RBI, extended its streak of depreciation against the dollar as it rose above 57.10 mark against the US dollar on sustained American greenback demand, undermining investor sentiments and raising concerns over slowing economic activity and drying inflows from foreign funds. On the BSE sectoral space, the Power pocket surged over a percent led by power generation and distribution company shares after three Delhi-based private distribution companies hiked the price of power for domestic use by a steep 24.15 percent after getting the go-ahead from the Delhi Electricity Regulatory Commission while the price of power for commercial use also was hiked by 19.5 percent. The beaten down IT counter too bounced back after getting pummeled in the last session and traded with gains of over a percent. However, investors were seen booking profits in the Oil & Gas and rate sensitive Auto counters which sank close to half a percent and capped the upside chances for the benchmarks.

Moreover, the broader markets too traded on a positive note with moderate gains, performing largely in tandem with their larger peers. The bourses advanced on good volumes while the market breadth on BSE was in favor of advances in the ratio of 1449:989 while 144 scrips remained unchanged.

The BSE Sensex is currently trading at 16,991.44 up by 84.86 points or 0.50% after trading as high as 17,029.27 and as low as 16,966.30. There were 22 stocks advancing against 8 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap index advanced 0.50% and Small cap index added 0.37%.

On the BSE sectoral space, Power up 1.13%, IT up 1.06%, Metal up 0.98%, Bankex up 0.88% and TECk up 0.82% were the major gainers, while Oil & Gas down 0.42%, Auto down 0.41% and Consumer Durables down 0.33% were the only laggards in the space.

Tata Power up 2.46%, TCS up 1.69%, Sun Pharma up 1.61%, Hindalco up 1.52% and Tata Steel up 1.50% were the major gainers on the Sensex, while Tata Motors down 1.26%, M&M down 0.81%, ONGC down 0.72%, RIL down 0.45% and Cipla down 0.44% were the major losers in the index.

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 5,150.60, higher by 29.80 points or 0.58% after trading as high as 5,159.10 and as low as 5,142.80. There were 37 stocks advancing against 13 declines on the index.

The top gainers on the Nifty were IDFC up 3.07%, R Infra up 2.32%, Tata Power up 2.25%, Hindalco up 1.74% and HDFC Bank up 1.67%.

Kotak Bank down 1.41%, Tata Motors down 1.28%, ACC down 1.03%, ONGC down 0.90% and M&M down 0.60% were the major losers on the index.

In the Asian space, Hang Seng climbed 0.78%, Jakarta Composite surged 1.02%, KLSE Composite advanced 0.25%, Nikkei 225 ascended 0.77%, Straits Times Index soared 1.18% and Taiwan Weighted garnered 0.40%.

On the other hand, Shanghai Composite declined 0.34% and KOSPI Composite Index eased 0.01%.

The European markets got off to a positive start as France’s CAC 40 rose 0.45%, Germany’s DAX added 0.32% and the United Kingdom’s FTSE 100 advanced 0.52%.