Equity markets come off intra-day’s high; upbeat undertone prevails

Despite cooling off from intra-day high level, benchmark equity indices continue to trade buoyant on account of prevailing upbeat undertone of markets across the globe, which triggered broad-based buying at Dalal Street. Slew of positive news flow both from globe and domestic markets have  mainly encouraged investor’s to go long on risky equities even on the last trading session of the lackluster week. Domestically, Government’s H2FY13 borrowing calendar, which was in line with budget estimates combined with SC ruling on Presidential Reference, mainly provided the required fillip to local equity markets.

On the global front, besides sanguine trade of Asian pacific shares, European shares too started the session on cheerful note after Spain announced its budgetary measures for 2013 on Thursday which would see the government passing 43 new laws to reform the economy over the next six months and increase spending cuts rather than taxes. Closer home, release of Core Sector growth failed to emerge a positive trigger for equity markets as eight core industries grew at a slower pace of 2.1 per cent in August, as against 3.8 per cent in the same month last year due to negative growth in crude oil, natural gas, fertiliser and cement. However, much of the strength came in from the stocks belonging Auto, Metal and Power counters. The overall market breadth on BSE is in the favour of advances which outnumbered declines in the ratio of 1712:898, while 110 shares remained unchanged.

Sensex is currently trading at 18,848.57, up by 269.07 points or 1.45% after trading in a range of 18,869.94 and 18,698.51. There were 29 stocks advancing against 1 decline on the index.

The broader indices too added some ground; the BSE Mid cap and Small cap indices were trading higher by 1.36% and 1.05% respectively.

Gains were sputtered across the board, prominent gainers on the BSE sectoral space were, Auto up by 2.41%, Metal up by 2.23%, Power up by 1.78%, Oil & Gas up by 1.59% and Realty up by 1.57%.

The top gainers on the Sensex were Tata Motors up by 4.52%, Hindalco Industries up by 3.56%, Tata Steel up by 2.95%, Tata Power up by 2.73% and Jindal Steel up by 2.63%. On the other hand, HDFC Bank down by 0.15% was only the loser on the Sensex.

Meanwhile, responding to a presidential reference following the verdict on the 2G spectrum allocation, the Supreme Court (SC), in a big relief to the government, clarified that public auctions are not the only method for allocating natural resources. Besides this, the Apex court, also underscored that the allocation of such resources is a matter of policy, which courts cannot interfere with unless it is ‘arbitrary’ or ‘capricious’.

SC verdict on Presidential Reference comes as a big respite to Prime Minister Manmohan Singh's government, which off lately, has been flabbergasted by criticism of handing out telecom spectrum and coal fields at an alleged loss of Rs 3.6 lakh crore to private players instead of finding the highest bidders through an auction process, which the opposition termed as sheer corruption.

Meanwhile, a five-judge bench headed by Chief Justice S H Kapadia besides stating that the auction could be a better option where the aim is maximization of revenue also added that 'every method other than auction of natural resources cannot be shut down'.

Further proving its point, the court giving a hypothetical example of coal block allocation, said that natural resources could be allocated 'free of cost' if it sub serves the 'common good' like providing electricity at low tariff through use of coal. This example assumes significance in the backdrop of the controversy over the coal block allocation.

However, SC, while giving its verdict, cautioned that a legitimate policy too can become 'illegitimate' if pursued unfairly. Justifying this opinion, Justice J S Khehar in a separate but concurring judgment said that 'no part of the natural resource can be dissipated as a matter of largesse, charity, donation or endowment, for private exploitation'.

The S&P CNX Nifty is currently trading at 5,726.50, up by 77.00 points or 1.36% after trading in a range of 5,735.15 and 5,683.45. There were 46 stocks advancing against 4 declines on the index.

The top gainers of the Nifty were Tata Motors up by 4.39%, JP Associates up by 4.35%, Hindalco up by 3.48, Tata Steel up by 2.95% and Jindal Steel was up by 2.75%. While, BPCL down by 0.39%, HDFC Bank down by 0.37%, Ranbaxy down by 0.34% and HCL Tech down by 0.15% were the losers on the index.

Most of the Asian indices were trading in green, Shanghai Composite surged 1.30%, Kospi Composite Index added 0.38%, Taiwan Weighted ascended 0.41%, Hang Seng gained 0.40%, Jakarta Composite moved higher by 0.46%, Straits Times rose 0.19% and KLSE Composite was up 0.64% while Nikkei 225 down by 0.89% was the sole loser.

European markets got off to a sanguine start; with CAC 40 adding 0.48%, DAX rising by 0.19% and FTSE 100 gaining 0.20%.