Benchmark equity indices gather steam on hopes of proposal for ‘FDI in Retail’ sailing through

Benchmark equity indices gathering some more steam are trading near intra-day high level on hopes of government being able to push through FDI in Retail, albeit with riders. Both Samajwadi Party and Bahujan Samajwadi Party apparently look in the favor of casting their vote in the favour of government provided the latter allows states to decide whether or not to permit FDI entry. Meanwhile, stocks from Oil & Gas, Realty and Healthcare counters, are buttressing the sentiment at D-street, with stocks from Consumer Durable, Fast Moving Consumer Goods and Information Technology counters moving contrary to the trend. Thus in cautious trade, amidst bleak global cues, 30 share index --Sensex --is trading above 19350 level and widely followed index -- Nifty is trading above 5850 bastion. Additionally, broader indices too are doing well for themselves.

Shares of domestic pharmaceutical companies are on buyer’s radar after the government on Monday said all foreign investments in existing pharmaceutical companies would be cleared by the Foreign Investment Promotion Board (FIPB) in a bid to ensure availability of medicines at affordable prices. Additionally, banking stocks are showcasing great resilience even after Moody’s negative outlook for India's banking system. Moody's said its outlook on the Indian banking system over the next 12 months to 18 months remains negative due to a challenging operating environment which is likely to pressure banks’ profits.

On the global front, Asian pacific shares slipped on Tuesday after a plunge in US manufacturing activity hit American stocks. The losses in Asian stock markets were suggestive of some caution after gains in the past few weeks, with some of the negative bias seeping over from weakness in the US economy and continued stalemate in the U.S. Congress over proposals to avert a fiscal cliff - $600 billion worth of tax increases and spending cuts that will be automatically triggered in early 2013. Meanwhile, European stock futures rose as a measure of Chinese manufacturing increased and Greece prepared to open bids to repurchase bonds issued earlier this year. U.S index futures and Asian shares were little changed

The BSE Sensex is currently trading at 19353.21, up by 47.89 points or 0.25% after trading in a range of 19,359.49 and 19274.03. There were 16 stocks advancing against 14 declines on the index. The overall market breadth on BSE is in the favour of advances which thumped declines in the ratio of 1529:1072, while 131 shares remained unchanged.

The broader indices too have lured additional traction; the BSE Mid cap and Small cap indices were trading higher by 0.48% and 0.69% respectively.

The top gaining sectoral indices on the BSE were, Oil& Gas up by 1.23%, Realty up by 1.18%, Healthcare up by 0.65%, Power up by 0.63% and PSU up by 0.58%, while Consumer Durables (CD) down by 0.29%, FMCG down by 0.25%, IT down by 0.21% and TECk down by 0.09% were top losers on the BSE.

The top gainers on the Sensex were Bajaj Auto up by 2.11%, BHEL up by 2.05%, Jindal Steel up by 1.86%, RIL up by 1.81% and SBI up by 1.75%. On the flip side, M&M down 1.27%, Bharti Airtel down by 1.03%, TCS down by 0.88%, Wipro down by 0.66% and Hero MotoCorp down by 0.64% were the top losers on the Sensex.

Meanwhile, the government is struggling to keep the pace of reforms going, global ratings agency Fitch has cautioned that a loosening in fiscal policy ahead of the 2014 elections could further weaken India's public finances and fiscal slippages in the run-up to 2014 general elections along with declining growth could result in India's rating downgraded to below the investment level.

The rating agency though pegged the GDP growth for the current financial year to 6 percent from its earlier estimates of 6.5 percent and said that that an improved investment climate which supports greater infrastructure investment, and a sharp sustained decline in inflation, would support the current 'BBB -' rating, which is a notch above the investment grade. But it also said that 'Policy slippage and/or mounting evidence of a structural decline in the trend growth rate, such as protracted relatively weak economic data, could cause the ratings to be downgraded”.

Fitch has lowered India's credit rating outlook to negative from stable in June, and had later said the possibility of downgrading the country's sovereign rating is more than 50 percent in the next 12-24 months. The latest caution from Fitch comes as a fresh challenge for the government, which is fighting to avert a downgrade from global ratings agencies.

The S&P CNX Nifty is currently trading at 5,885.95, up by 15.00 points or 0.26% after trading in a range of 5,886.95 and 5,862.25. There were 29 stocks advancing against 20 declines on the index, while 1 stock remained unchanged.

The top gainers of the Nifty were JP Associates up by 2.31%, BPCL up by 2.21%, Ranbaxy up by 2.14%, Bajaj Auto up by 2.13% and Jindal Steel up by 2.08%.

On the flip side, Ambuja Cement down by 1.58%, M&M down by 1.47%, Ultratech Cement down by 1.15%, TCS down by 1.05% and ACC down by 1.02% were the top losers on the Nifty.

Asian markets were trading mixed; Shanghai Composite advanced 0.65%, Hang Seng added 0.31% and Taiwan Weighted edged higher by 0.01%. On the flip side, Jakarta Composite plunged 1.03%, KLSE Composite slid 0.04%, Nikkei 225 lost 0.27%, Seoul Composite shed 0.25% and Straits Times trimmed 0.12%.