Indian equities add strength; Sensex above 17,500 level

Indian equities gain strength hovering around the neutral line in the late afternoon session. Market participants however lacked the conviction to open fresh bets and chose to keep taking profits off the table, lacking any significant triggers to take the markets higher. Traders were seen piling up position in FMCG, Bankex and Auto sector while selling was witnessed in Metal, IT and Consumer Durables sector. Hindustan Unilever and ITC from FMCG sector was seen trading firm in green with gain of around more than one percent pulling the markets higher. ICICI Bank, Kotak Bank, HDFC Bank and Axis Bank from Banking counter were seen trading in green giving the much needed support. M&M and Tata Motors from Auto pack was seen trading in green driving the markets higher. Shares from the IT counter remained dull amid fears that after the US proposed two deals with a mandatory 'no-offshore' clause, many similar deals could be on the anvil which could adversely impact Indian 100 billion dollar IT industry that thrives on offshore revenues.

On the global front, the Asian markets were trading on a mix note while the European markets were trading in red on pessimistic note. Investors fretted over the fact that the policy makers too are concerned about the gloomier economic prospects after the ECB and People’s Bank of China cut their benchmark borrowing costs, while the Bank of England raised the size of its asset-purchase program. On the home turf, the NSE Nifty and BSE Sensex were trading above their psychological 5,300 and 17,500 levels respectively. The market breadth on BSE was negative in the ratio of 1316:1415 while 130 scrips remained unchanged.

The BSE Sensex is currently trading at 17,544.43 up by 5.76 points or 0.03% after trading as high as 17,550.64 and as low as 17,425.47. There were 10 stocks advancing against 20 declines on the index.

The broader indices were trading on a mixed note; the BSE Mid cap index dropped 0.18% while Small cap index was up 0.08%.

On the BSE sectoral space, FMCG up 0.94%, Bankex up 0.36% and Auto up 0.10% were the only gainers, while Metal down 0.88%, IT down 0.84%, Consumer Durables down 0.75%, TECk down 0.72% and Realty down 0.69% were the major laggards in the space.

HUL up 1.36%, HDFC up 1.33%, M&M up 1.15%, ITC up 1.14% and ICICI Bank up 1.10% were the major gainers on the Sensex, while Jindal Steel down 2.68%, Sterlite Industries down 1.87%, Wipro down 1.54%, Maruti Suzuki down 1.37% and Infosys down 1.11% were the major losers in the index.

Meanwhile, the Economic Affairs Secretary of India R Gopalan said on Friday that the Government will take a decision on allowing Foreign Direct Investment in the multi-brand retail sector at the right time as it is seized of the issue while he didn’t specify any timeline when it will come into effect.

After a meeting with the Reserve bank of India’s governor D Subbarao he said there is always a right time to take these kinds of decisions and Government is seized of this issue and therefore it is too early for him to say when the decision will be announced.

In terms of FDI investment in Indian retail the UPA government is facing stiff resistance from one of its strongest ally Trinamool Congress as a result there has been a wide consultation by  The Department of Industrial Policy and Promotion  with the stakeholders, including farmers, consumers and the food processing industry. Last month then Finance Minister Pranab Mukherjee said that the government is committed to reforms for consolidating economic strengths. He also mentioned that India has further liberalized FDI in single-brand retail, and a consensus for operationalising the decision taken to open FDI in multi-brand retail trading is being pursued.

In order for the FDI to invest in Indian retail Chief Economic Adviser Kaushik Basu recently pitched saying it would be highly beneficiary for the farmers and give a major thrust to Indian exports.

The S&P CNX Nifty is currently trading at 5,324.90, lower by 2.40 points or 0.05% after trading as high as 5,326.95 and as low as 5,287.75. There were 15 stocks advancing against 34 declines while 1 stock remained unchanged on the index.

The top gainers on the Nifty were HUL up 1.29%, M&M up 1.24%, Cipla up 1.23%, ICICI Bank up 1.18% and ITC up 1.12%.

Jindal Steel down 2.76%, Sesa Goa down 1.58%, Sterlite Industries down 1.55%, Asian Paints down 1.54% and GAIL India down 1.52% were the major losers on the index.

In the Asian space, Hang Seng dropped 0.21%, Jakarta Composite declined 0.50%, Nikkei 225 sank 0.65%, KOSPI Composite Index plunged 0.92% and Taiwan Weighted slipped 0.26%.

On the other hand, Shanghai Composite surged 1.01%, Straits Times Index added 0.23% and KLSE Composite ascended up 0.29%.

The European markets were trading in red with, France’s CAC 40 shed 0.18%, Germany’s DAX dropped 0.09% and the United Kingdom’s FTSE 100 fell 0.04%.