Market strengthens with surge in realty and CD stocks

Indian markets have strengthened further going into last leg of trade, the positive start of the European markets has supported the markets, while some domestic development too soothed the sentiments of the markets. The trade that remained range bound in last session came into jubilant mood on hopes that the government will be able to pass the reform bills and the logjam in the parliament will be resolved. The much needed respite to the government came from its ally DMK, who was initially demanding vote on the FDI issue, said that it will vote in favour of the government. The sentiments on the street were also boosted by the global ratings agency Moody's retaining India’s sovereign Baa3 ratings stable in its annual credit analysis. On the street there is jubilation across the board with realty and consumer durables taking the lead, surging by over 3% each, rate sensitive banking too has surged, while the beaten down sector of last session, PSU has gained momentum and was up by about half a percent.

The BSE Sensex is currently trading at 18,789.45 up by 252.44 points or 1.36% after trading in a range of 18,805.77 and 18,616.55. There were 28 stocks advancing against just 2 declines on the index.

The broader indices continued to trade in green; the BSE Mid Cap index was up by 1.27% and Small Cap index was up by 0.84%.

The top gaining sectoral indices on the BSE were, Realty up by 3.25%, CD up by 3.01%, Bankex up by 1.58%, FMCG up by 1.54% and Metal was up by 1.50%.

The top gainers on the Sensex were Sterlite Inds up by 3.56%, Bharti Airtel up by 3.24%, Hindalco up by 2.69%, HDFC Bank up by 2.51% and HDFC up by 2.48%. On the flip side, NTPC down by 0.41% and ONGC down by 0.18% were the only losers on the Sensex.

Meanwhile, giving some sigh of relief to the government and the telcos, the Reserve Bank of India (RBI) has relaxed overseas borrowing rules for successful bidders in the recently concluded airwaves auction, making it easier for them to raise money to pay the government.

RBI in its notification said that “The successful bidders making the upfront payment for the award of 2G spectrum initially out of rupee loans availed of from the domestic lenders would be eligible to refinance such rupee loans with a long-term ECB, under the automatic route,” also without seeking regulatory approval.

The telecom companies can further replace these short-term borrowings with long-term external (or overseas) commercial borrowings (ECB), provided the ECB is raised within a period of 18 months from the drawdown of the bridge finance.

RBI has also allowed the mobile operators to borrow from their parent companies without any limit, provided the parent owns a minimum 25 percent equity in the local company.

In the recently concluded auction the government got a lukewarm response from the operators for 1800 MHz band and received total bids worth Rs 9,407.64 crore, just one-third of the minimum Rs 28,000 crore that the government had expected. Five companies, Telenor, Vodafone, Idea Cellular, Videocon Telecommunications and Bharti Airtel bought airwaves in the recent auction. These companies are required to pay by December 1 or in installments. The RBI’s move seems to have been taken after most of the bidders opted to pay the money in installments despite having to pay a higher interest rate compared to the ECB route.

The S&P CNX Nifty is currently trading at 5,710.20, up by 74.30 points or 1.32% after trading in a range of 5,713.30 and 5,658.00. There were 47 stocks advancing against just 3 declines on the index.

The top gainers of the Nifty were BPCL up by 4.26%, JP Associates up by 4.21%, Bharti Airtel up by 3.34%, Reliance Infra up by 3% and DLF was up by 2.90%. On the flip side, Power Grid down by 1.08%, NTPC down by 0.53% and ONGC down by 0.24% were the losers on the index.

The Asian equity made a mixed closing of the day; Shanghai Composite was down by 1.30%, Hang Seng declined by 0.08%, Jakarta Composite was down by 0.86% and KLSE Composite was down by 0.60%.

On the other hand, Nikkei 225 was up by 0.37%, Straits Times gained 0.22%, Seoul Composite was up by 0.87% and Taiwan Weighted was up by 0.31%.

The European markets have made a good start with all the indices trading with significant gains, France’s CAC 40 gained 0.60%, Germany’s DAX  was up by 0.66% and the United Kingdom’s FTSE 100  was higher by 0.56%.