Domestic bourses trade range-bound with half a percent gains

Indian frontline indices are trading in tight-band in afternoon trade with gain of about half a percent led by consistent buying demand among rate-sensitive sectors like Auto and Realty stocks on hopes of policy easing by the Reserve Bank of India in January monetary policy after positive undertone in Tuesday’s review. The sentiments were also supported by rise in banking stocks which edged higher after government cleared the banking bill paving way for foreign investments in the sector and establishment of new private banks. Some relief also came in from currency markets after Indian rupee recovered against US currency on the back of selling of American currency by exporters and banks.

Global cues are still supporting domestic markets as most of the Asian equity indices were trading in the green terrain as optimism grew that a deal would be made to avert the fiscal cliff amid hopes of economic stimulus from the Bank of Japan this week. Moreover, overnight, the US markets extended their gains on hopes that a deal would be struck to avoid painful spending cuts and tax hikes that could hurt the economy.

Back home, traders also remained optimistic after Planning Commission Deputy Chairman Montek Singh Ahluwalia emphasized on lowering of interest rates to boost economic growth which is beginning to look up after moderating to 5.4 per cent in the first half of the current fiscal. On the sectoral front, auto witnessed the maximum gain in trade followed by metal and realty while capital goods and FMCG remained the only losers on the BSE sectoral space. The broader indices too were performing in-line with benchmarks with gain of over half a percent. The market breadth on the BSE was positive; there were 1587 shares on the gaining side against 1112 shares on the losing side while 125 shares remain unchanged.

The BSE Sensex is currently trading at 19461.92 up by 97.17 points or 0.50% after trading in a range of 19516.02 and 19429.08. There were 24 stocks advancing against 6 declines on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.79% and Small cap index was up by 0.64%.

The top gaining sectoral indices on the BSE were, Auto up by 1.74%, Metal up by 1.50%, Realty up by 1.32%, Health Care up by 1.22%, and Oil & Gas up by 1.21%. While, Capital Goods down by 0.35% and FMCG down by 0.21% were only losers on the index.

The top gainers on the Sensex were Tata Motors up by 3.24%, ONGC up by 2.93%, Maruti Suzuki up by 2.35%, Bajaj Auto up by 2.34% and Tata Steel up by 2.33%.

On the flip side, HDFC was down by 1.63%, L&T was down by 0.98%, ITC was down by 0.70%, ICICI Bank was down by 0.64% and Hindustan Unilever was down by 0.42% were the top losers on the Sensex.

Meanwhile, the Coal Ministry’s target to auction 54 coal mines only after taking clearances from the environment and forest department is expected to delay the bidding process further. Last week, the Coal Ministry discussed the issue with the power and steel ministries and other stakeholders.

Both the Ministries, along with private power producers and the Sponge Iron Manufacturers Association, felt that the coal blocks for auction should come up with all approvals in place at least with regard to the in-principle forest clearance. Further, the need of to set up a specialized department that will be aimed to take the approvals for all coal blocks, was also highlighted.

Learning from the flop-show of the 2G telecom spectrum licence auction, the government has firmed up that the coal blocks loaded with ‘in-principle’ clearances would fetch a better floor price, since receiving the green nod was proving to be a major roadblock.

Normally, key stages in the development of a mine include submission of the mine plan and its approval, along with forest and environment clearance and land acquisition. Of these, getting forest and environment clearances and land acquisition have been the toughest for both public and private companies.

However, the government can place the blocks on auction without forest and environment clearances, but the process would be dampener. Since the bidder would be asked to pay 25% of the bid amount upfront and another 25% after the mine plan approval, which would mean by the time the bidding company puts up an application for required clearances, it would have to pay 50% of the bid amount.

On the other hand, if the company does not get the environment or forest clearance, the money paid by the bidder will need to be returned and if the area of the block is reduced due to forest clearance, the bid amount needs to be re-negotiated.

The S&P CNX Nifty is currently trading at 5,925.25 up by 28.45 points or 0.48% after trading in a range of 5,939.40 and 5,917.00. There were 41 stocks advancing against 9 declines on the index.

The top gainers of the Nifty were Tata Motors up by 3.13%, ONGC up by 2.95%, IDFC up by 2.38%, Bajaj-Auto up by 2.31% and Tata Steel up by 2.28%. On the flip side, HDFC down by 1.81%, L&T down by 1.10%, Axis Bank down by 0.91%, Cairn down by 0.89% and ICICI Bank down by 0.64%, were the major losers on the index.

Most of the Asian equity indices were trading in green; Shanghai Composite gained 0.19%, Hang Seng rose 0.68%, KLSE Composite added 0.29%, Straits Times was up by 0.18%, Nikkei 225 surged 2.39% and Taiwan Weighted was up by 0.44%.

On the flip side Jakarta Composite slipped 0.78% remained the lone loser.

KOSPI Composite remained shut for the trade today.