Post session - Quick review

The Indian equity markets showed a very volatile trend on Wednesday; they started on a positive note similar to the previous session and after surging in the early session succumbed to profit booking in the noon trade, slipping into the red terrain. Though it followed many recovery bouts that helped the benchmarks close in green, recovering some of the previous session losses. The global movements continued on the forefront of the market sentiments and the indices followed the mixed global cues after the European leaders failed to come to any decisive conclusion to euro zones debt crisis, the leaders of France and Germany rejected the notion of selling common European bonds and suggested a financial-transaction tax. Back home some short covering and selective buying led the markets higher in early trade, the heavyweights remained in demand and risk averse investors opted to go for the fundamentally strong stocks. There were some political jitters that too made the investors cautious.

Back on street, the domestic markets made a cautious start after the US markets closed in red overnight on getting mixed economic reports and on the lingering worries about the European debt crisis after the inclusive meeting of the leaders of Germany and France. However, the benchmarks slowly started gaining pace and by mid morning session surged to the high points of the day with BSE benchmark index, Sensex regaining 17000 mark and S&P CNX Nifty crossing 5100 mark. Though after wards profit booking started and markets started paring gains and once the European markets made a soft start the benchmarks completely lost their way, plunging into red. That gave an opportunity for some short covering at lower levels and the markets again started crawling back, though the move never looked confident and there were lots of ups and downs till the end. IT performed extraordinarily well today and garnered gains of over 2 percent on the BSE, closely followed by the technology and FMCG gauges. However the rate sensitive sectors viz; realty, banking and auto remained the laggard of the day, losing over a percent each, while the realty stood as the worst performer for the second day in row, mainly due to catastrophic fall in DLF which lost another 6 percent after the Competition Commission of India (CCI) imposed a fine of Rs 630 crore on the biggest real estate developer in the country, for misusing its dominant market position in connivance with Haryana government agencies.

The highlights of today’s trade was Coal India overtaking Mukesh Ambani-led Reliance Industries as the country’s most valued company in terms of market capitalisation, with gaining slightly higher market valuation around mid-day. Way back in 2006, RIL had toppled ONGC to emerge as the country’s most valued firm and has managed to stay on the top since then. Coal India gained around 3 percent and on closing was holding market cap of Rs 2,51,296 crore on BSE, on the other hand Reliance Industries lost about a percent on closing and was having market cap of Rs 2,47,129 crore on BSE.

The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 887:1961 while 88 scrips remained unchanged.

The BSE Sensex gained 118.88 points or 0.71% and settled at 16,849.82. The index touched a high and a low of 17,000.38 and 16,708.98 respectively. 21 stocks advanced against 9 declining ones on the index (Provisional)

The BSE Mid-cap index lost 0.84% while Small-cap index was down by 1.61%. (Provisional)

On the BSE Sectoral front, IT up 2.48%, TECk up 1.78%, FMCG up 1.61%, Capital Goods up 0.88% and Consumer Durables up 0.84% were the top gainers.

On the flip side, Realty down 2.78%, Auto down 1.13%, Bankex down 1.08%, PSU down 0.38% and Oil & Gas down 0.14% were the top losers.

The gainer on the Sensex were TCS up 3.24%, Hero MotoCorp up 2.70%, Coal India up 2.63%, Infosys up 2.53% and HUL up 2.46%. (Provisional)

On the flip side, DLF down 6.01%, Maruti Suzuki down 3.07%, Tata Motors down 2.94%, ICICI Bank down 2.69% and M&M down 1.57% were the top loser on the index. (Provisional)

Meanwhile, the Commerce Ministry is not in favor of capping foreign investment in pharmaceutical sector, however to address the concerns over the Multinational Corporation (MNC) takeover of Indian firms and in order to protect the public health concerns of the country, it will look for alternative route.  In the last few years many profit making drug companies have been buyout by the multinationals. Presently, 100% Foreign Direct Investment (FDI) via automatic route is allowed in the Pharmaceutical sector. And currently Indian Pharmaceutical industry is estimated to be around $20 billion. 

To study the impact of the multinational takeovers of the local drug firms, commerce department has commissioned a study to consultancy firm Ernst & Young (E&Y), recommended by pharmaceutical department. Currently the commerce ministry is examining the E&Y report and then it will send its recommendations to the Department of Industrial Policy and Promotion (DIPP) a nodal agency responsible for FDI-related matters.

Whereas the E&Y report has favored the continuation of 100% FDI in the sector, however, it has recommended that certain vulnerable segments can be taken away from the automatic route.  It has also recommended taking case by case clearance of takeovers by putting such deals under the Foreign Investment Promotion Board (FIPB) route.

Various segments of government including DIPP and the drug industry have raised their concerns over the issue of local drug company’s takeover. Last week, Chemicals and Fertilizers Minister Srikant Kumar Jena has expressed his concerns over the issue, he said that recent takeovers of Indian companies by MNCs could increase the possibility of other takeovers of domestic firms.

India VIX, a gauge for market’s short term expectation of volatility lost 3.70% at 25.48 from its previous close of 26.46 on Tuesday. (Provisional)

The S&P CNX Nifty gained 27.30 points or 0.54% to settle at 5,063.10. The index touched high and low of 5,112.15 and 5,017.25 respectively. 30 stocks advanced against 20 declining ones on the index. (Provisional)

The top gainers on the Nifty were HCL Tech up 3.27%, HDFC Bank up 2.97%, TCS up 2.71%, HDFC up 2.56% and Hero MotoCorp up 2.43% (Provisional)

On the other hand, DLF down 6.27%, Axis Bank down 3.61%, Maruti Suzuki down 3.27%, Tata Motors down 2.69% and ICICI Bank down 2.47% were the top losers. (Provisional)

The European markets are trading mixed, with the France's CAC 40 up 0.09%, Germany's DAX down 1.23% and FTSE 100 down 0.79%.

Asian equity indices finished the day’s trade on the mixed note on Wednesday as investors remained worried over slower global economic growth. China’s benchmark index ended down by about 0.30 percent, dragged down by materials and energy firms, as marketmen are concerned about further tightening after the central bank’s one-year bill yield rose unexpectedly at auction on Tuesday. However, Hong Kong’s Hang Seng gained about 0.40 percent, buoyed by a visit by Chinese vice Premier Li Keqiang, including a pledge to expand the role of Hong Kong as an offshore trading center for China’s yuan currency. Moreover, stock markets in Indonesia remained closed for the trade on account of Independence Day holiday.