Bourses relinquish substantial portion of early gains; Pharma stocks hog limelight

After getting a sanguine start, Indian equity markets have now relinquished part of early gains, as losses from Information Technology and Fast Moving Consumer Goods counters, began to eat into the gains of the bourses. However, optimism across the board, have sustained the spirit of the bourses. Asian shares spurted on Tuesday as manufacturing data around the world underscored the drag on growth from the protracted euro zone debt crisis, raising expectations that major central banks will take further policy steps to support the fragile economy. Meanwhile, US future indices continued to show a sharp uptick in the screen trade.

Closer home, 30 scrip sensitive index, Sensex, sneaking past the 17500 psychological level, is currently  trading sub that level, with profit over a quarter of points. Similarly, the widely followed index, Nifty, facing stiff resistance 5300 psychological level, is trading sub that bastion. Broader indices too have sliced some portion of their gains.

Stocks from Consumer Durable, Realty, Bankex counters are the one’s that are sustaining the uptrend of the bourses. Additionally, shares of pharma companies like Cipla, Dr Reddy's Laboratories and Sun Pharma have also managed to hog limelight on the hopes that the new healthcare law in US could see a rise in the consumption of generic drugs in US. Meanwhile, Shares of Bharti Airtel, Idea Cellular were seen buzzing loud ahead of a cabinet meeting on the telecom ministry's proposal to charge existing 2G radio airwave holding by carriers at a price to be determined by an upcoming auction on Tuesday. A telecoms tribunal, which is hearing appeals by mobile carriers against a government order to ban 3G roaming pacts between them, is also scheduled to issue its verdict later in the day. The overall market breadth on BSE is in the favour of advances which have thrashed declines in the ratio of 1325:757, while 112 shares remained unchanged.

The BSE Sensex is currently trading at 17,454.30 up by 55.32 points or 0.32% after trading as high as 17,526.82 and as low as 17,454.30. There were 22 stocks advancing against 8 declines on the index.

The broader indices too trimmed gains; the BSE Mid cap index advanced 0.44% while Small cap index climbed 0.56%.

On the BSE sectoral space, Consumer Durables (CD) up 1.57%, Realty up 1.24%, Bankex up 0.73%, Health Care (HC) up 0.60% and PSU up 0.52% were the top gainers, while IT down 0.49%, FMCG down 0.35% were the only laggards in the space.

Bharti Airtel up 3.60%, Gail India up 1.96%, ICICI Bank up by 1.44%, Maruti Suzuki up by 1.39% and Dr Reddys Lab up 1.12%  were the major gainers on the Sensex, while BHEL down 1.21%, TCS down 1.06%, HUL down by 0.98%, Infosys down by 0.61% and ITC down 0.04% were the major losers in the index.

Meanwhile, in its bid to breathe new life into the weakening mutual fund industry, the government is engaging with the Mutual Fund (MF) industry and the capital market regulator Securities and Exchange Board of India (SEBI) in order to chart out measures to revive investors’ interest in this asset class. The government is contemplating the idea of making mutual fund products more competitive in order to attract greater retail participation through innovative financial literacy programmes.

R Gopalan, Secretary, Department of Economic Affairs, Ministry of Finance during his meeting with the representatives of the Mutual Fund Industry and Financial Advisors’ Association to evolve a common strategy to revitalize the mutual fund industry, opined that special emphasis would be given to improve penetration of MF products in Tier II and Tier III cities/towns and to redress the grievance of investors. The meeting was also attended by other senior officials of the ministry of finance and SEBI.

The mutual fund industry voiced its concerns on a host of issues during their meeting with the Finance Ministry officials. The industry’s demands ranged from passing on the burden of 12 percent service tax on purchase of schemes on customers to pitching for higher administrative expenses. While, the industry wants that service tax be borne by consumers and should be kept out of the total expense ratio, it has also demanded an increase in the expense ratio, which is mainly administrative expenditure, to 2.25 percent from 2.20 percent -- of which 2 percent is administrative expense and 0.20 percent exit load.

The government is also believed to have asked the SEBI to consider re-introduction of commission for brokers known as entry load, as its banning led to drying up of inflows into mutual funds. The entry load of 2.25 percent which was paid as commission to distributors of mutual funds, was banned in 2009 by the then SEBI chief C B Bhave, who felt that investors were being taken for a ride by distributors who encouraged investors to churn their portfolios.

The government and SEBI are chalking out plans to reverse the declining trend in gross asset mobilization by the MFs, which have been falling since 2009-10. The Mutual Fund Advisory Committee of SEBI has been meeting to consider the various steps that would need to be taken to give additional boost to the industry. The objective of the Government and SEBI is to specifically align the interests of all stakeholders and streamline the operational procedures and to achieve higher growth in the MF industry.

The S&P CNX Nifty is currently trading at 5,290.90, higher by 12.30 points or 0.23% after trading as high as 5,317.00 and as low as 5,286.90. There were 37 stocks advancing against 12 declines on the index, while 1 stock remained unchanged.

The top gainers on the Nifty were Bharti Airtel up 3.38%, DLF up 2.76%, Ranbaxy up 2.38%, GAIL up 1.90% and Punjab National Bank up 1.64%.

Cairn down 0.51%, Grasim Industries down 1.38%, BHEL down by 1.30%, ACC down by 1.09% and TCS down 0.99% were the major losers on the index.

Asian equity indices were trading in the green; Taiwan Weighted index jumped 0.88%, Jakarta Composite surged 0.98%, Strait Times soared 0.92%, KLSE composite advanced 0.84%, Nikkei 225 up 0.69%, Kospi composite up 0.63%, Hang Seng Index  up 1.51% and Shanghai composite up by 0.67%.