Positive rally continues in market; Sensex up 150 points

The Indian equity markets are trading with broad gains and moving from strength to strength on consistent buying in several blue chip counters. Investor’s sentiments were boosted on hopes that the US Federal Reserve will come out with some positive announcements to boost the economy. On sectoral front, all the indices were trading in green. Besides a host of IT stocks, several blue chips from Teck, realty, consumer durables, metal and auto sectors were trading notably higher at present. Pharmaceuticals, banking, FMCG and power stocks are also finding fairly good support. Capital goods and oil stocks, which opened on a subdued note, were edging higher now. A fair amount of buying is taking place in midcap and smallcap sections as well. On the global front, Asian markets were trading mixed. Back home, the market breadth favoring the positive trend; there were 1,550 shares on the gaining side against 795 shares on the losing side while 104 shares remained unchanged.

The BSE Sensex is currently trading at 16,907.48, up by 162.13 points or 0.97%. The index has touched a high and low of 16,959.31 and 16,758.69 respectively.  There were 25 stocks advancing against just 5 declines on the index.

The broader indices too were treading in the green; the BSE Mid cap and Small cap indices surged 0.52% and 0.76% respectively.

The top gaining sectoral indices on the BSE were IT up by 2.10%, TECk up by 1.74%, CD up by 1.61%, Realty up by 1.09% and FMCG up by 1.01%, while there was no loser on the index.

The top gainers on the Sensex were Tata Motors up by 2.94%, TCS up by 2.43%, Jaiprakash Associate up by 2.27%, Infosys up by 2.18% and DLF up by 2.05%.

On the flip side, ONGC was down by 1.60%, BHEL down by 1.17%, Maruti Suzuki was down by 0.99%, Coal India down by 0.05% and Tata Power down by 0.03% were the top losers on the Sensex.

Meanwhile, in a move, which will benefit the retail companies with foreign joint ventures, the Department of Industrial Policy & Promotion (DIPP) has decided to relax a key condition imposed on wholesale cash-and-carry companies. Foremost retail companies such as Bharti WalMart and Tata-Tesco, which have a cash-and-carry backend in their joint venture with an Indian partner and also want to sell their products to the front-end retail chain run by their Indian partner only (as multi-brand retailing is not allowed), will benefit from this move.

Under the former guidelines, cash-and-carry companies could sell only up to 25 percent of their turnover to group companies. DIPP intends to change the definition of ‘group’ in line with Accounting Standard 23 (AS-23), which does not prescribe any equity limit for defining a ‘group company’, in a policy circular, which is expected to be issued by the end of this month. Under the AS-23 definition, a group means a parent company and its various subsidiaries.

The control can be worked out either through more than 50 percent of the voting rights or control of the composition of the board or the control of the governing body, so as to obtain economic benefits from the activities. DIPP has termed restrictive guidelines under the Companies Act and Foreign Trade Policy, which specifies a company with more than 26 percent investment in another company, will be considered a group company.

Retail experts said, in the new definition, the restriction of 25 percent will not be applicable. For example, Bharti Enterprises, which has a 50-50 joint venture with Walmart, controls 100 percent in Bharti Retail. On the other hand, as per the existing definition, Bharti Retail and Bharti Walmart are clearly group companies of Bharti Enterprises. Therefore, the wholesale venture would be able to sell only 25 percent of its turnover to Bharti Retail, the front-end retail chain. Under the new definition of ‘group’, they would no longer remain as group companies anymore.

The S&P CNX Nifty is currently trading at 5,083.30, higher by 51.35 points or 1.02%. The index has touched a high and low of 5,095.65 and 5,035.25 respectively.  There were 45 stocks advancing against 5 declines on the index.

The top gainers of the Nifty were JP Associate up by 2.90%, Tata Motors up by 2.88%, RCom up by 2.66%, TCS up by 2.62% and Infosys up by 2.34%.

On the flip side, ONGC down by 1.69%, BHEL down by 1.12%, Maruti Suzuki down by 0.85%, BPCL down by 0.10% and Tata Power down by 0.01% were the top losers on the index.

Asian equity indices were trading mixed; Shanghai Composite up by 0.74%, Straits Times was up by 0.20% Seoul Composite up by 0.76% and Taiwan Weighted up by 0.16%.

On the flip side, Hang Seng down by 0.37%, Jakarta Composite down by 1.81%, KLSE Composite down by 0.22% and Nikkei 225 down by 1.63%.