Indian benchmarks tread northwards in noon trades

Indian frontline equity indices continue to trade on an optimistic note in Tuesday afternoon trades and have even gone on to re-conquer the psychological 16,400 (Sensex) and 4,950 (Nifty) levels. The risk appetite of investors globally improved across the risky asset classes as they resorted to hefty bottom fishing after the recent brutal risk aversion. Marketmen turned sanguine on expectations that the European leaders and policy makers would get their act together to tackle Greece’s debt woes and prevent another full-blown banking crisis. Reports indicated that EU policy makers had plans to use the EU rescue fund to recapitalize vulnerable euro-zone banks. On the global front, the European counterparts got off to a flying start and the benchmarks there are trading with strong gains in the range of 2%-3.50% while the Asian markets too whole-heartedly participated in the rally and the major gainers from the region were Seoul Composite and Jakarta Composite which jumped 5.02% and 4.46% respectively.  Back home, investors resorted to hefty across the board short covering on the second session of September series F&O expiry week. On the BSE sectoral space, the high beta Realty pocket was topping the gainers chart with handsome gains of over three percent as major developers like DLF, HDIL and Unitech garnered a lot of traction. The other rate sensitive Banking counter too witnessed huge buying interests and surged by around two and half a percent. There appeared absolutely no laggards either in the BSE sectoral table or in the 30 share sensitive index.

Moreover, the broader markets too traded with strong gains in afternoon trades but lacked the fervor with which their larger peers rallied. The bourses soared on large volumes of over Rs 1 lakh core while the market breadth on BSE was dominantly in favor of advances in the ratio of 1807:700 while 77 scrips remained unchanged.

The BSE Sensex is currently trading at 16,400.02 up by 348.92 points or 2.17% after trading as high as 16,424.80 and as low as 16,282.74. There were 30 stocks advancing against no declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap index surged 1.55% and Small cap climbed 1.47%.

On the BSE sectoral space, Realty up 3.26%, CD up 2.86%, Bankex up 2.49%, IT up 2.34% and Oil & Gas up 2.24% were the major gainers while there were no losers in the space.

Tata Motors up 5.24%, Jaiprakash Associates up 5.21%, DLF up 4.69%, Hindalco up 3.64% and ICICI Bank up 3.64% were the major gainers on the Sensex, there were no losers on the index.

Meanwhile, in order to attract more foreign fund at the time of global slowdown, the Reserve Bank of India (RBI) relaxed the norms for the infrastructure companies with direct foreign equity up to 25% to raise funds in aboard without government’s permission. In a statement the RBI said, on a review, it has been decided, to further liberalize the External Commercial Borrowings (ECBs) policy in respect of the infrastructure sector.

The RBI allowed direct foreign equity holder which is holding at least 25% of the paid-up capital and indirect foreign equity holder holding minimum of 51% of the paid-up capital, to provide credit enhancement for the domestic debt raise by the Indian firms engaged exclusively in the development of infrastructure via issue of capital market instruments.

It includes Infrastructure Finance Companies (IFCs) and no prior approval will be required from the RBI for providing such credit enhancements, RBI said. The company meeting foreign equity criteria will not require permission for raising ECB up to $5 million.

Now onwards the term debt in the debt-equity ratio will be replaced with ECB liability and the ratio will be known as ECB liability-equity ratio to make the term signify true position as other borrowings or debt are not considered in working out this ratio, RBI noted. Service sector units, in addition to those in hotels, hospitals and software, could also be considered as eligible borrowers if the loan is obtained from foreign equity holders, RBI’s notification said. By adding further it says this would facilitate borrowing by training institutions, R&D, miscellaneous service companies, etc. ECB from a group company may also be permitted provided both the borrower and the foreign lender are subsidiaries of the same parent, it added.

The S&P CNX Nifty is currently trading at 4,940.70, higher by 105.30 points or 2.18% after trading as high as 4,946.20 and as low as 4,905.15. There were 49 stocks advancing against 1 decline on the index.

The top gainers on the Nifty were Tata Motors up 5.45%, JP Associates up 5.20%, DLF up 4.42%, Hindalco up 3.96% and ICICI Bank up 3.68%.

Cipla down 0.02% was the only loser on the index.

Asian markets traded on a optimistic note, Shanghai Composite surged 1.74%, Hang Seng zoomed 3.20%, Jakarta Composite rocketed by 4.46%, KLSE Composite soared 1.93%, Nikkei 225 jumped by 2.80%, Straits Times amassed 2.32%, Seoul Composite spurted 5.02% and Taiwan Weighted accumulated 3.09%.

The European markets traded on a cheerful note as France’s CAC 40 jumped 2.53%, Germany's DAX zoomed 3.11% and Britain’s FTSE 100 ascended 2.08%.