Benchmarks continue strong trade; Sensex above 16,500 mark

Indian equity indices are trading firm at the highest point of the day with buying witness across the sectors. Market participants were seen piling up the positions in IT, Realty and TECk sector. Stocks like Tilak Finance, Residency Projects, Banas Finance, Surana Industries, Esaar India, Rushil Décor and Aroma Enterprises hit new high while stocks like Tanla Solutions, DB Corp, Timbor Home, Nitesh Estates, Welspun Global and Brooks Laboratories hit new low. Bhoruka Aluminium surged after the company fixed October 14, 2011 as the record date for a liberal 1:1 bonus issue. Symphony spurted after a buzz that influential investor Rakesh Jhunjhunwala may pick up 5% stake in the company. Pipavav Defence and Offshore Engineering Company is trading in red on reports that the Defence Ministry has decided to put on hold a joint venture between the company and Mazagon Dock to build warships and submarines. JSW Steel was trading weak, the company which has scaled down steel production at its key plant in southern India after abrupt disruption of iron ore supplies from state-run miner NMDC, may have to shut the plant completely if the situation does not improve. Shares of drug firm Ind Swift Laboratories shot up after the company’s shareholders approved raising up to Rs 500 crore through the issue of securities.

In other scrip specific development, Reliance Capital is firm on reports that the company is in advanced talks to sell stake in its asset management company to Japan's Nippon Life. Mercator Lines is firm as the company has completed acquisition of 50% stake in Indonesia based coal mine Company. Hectic activity was noticed along with heavy volumes in counters of Hexaware Technologies and Excel Infoways due to fund based activity as of yesterday. Elder Hides and Leather sold 5,300,000 shares of Hexaware Technologies while Elder Venture LLP bought 5,300,000 shares. Paritrasha Financials and Investments bought 500,000 shares of Excel Infoways while Satyaprabhu Infrastructure sold 500,000 shares. Shares of companies engaged in broadcasting and cable services providers such as Den Networks and Hathway Cable and Datacom have rallied on reports that the government is working on an ordinance to speed up digitization of the cable and satellite television industry, which accelerating pay-TV revenues for broadcasters and curtailing their carriage costs. On the global front, Asian markets were trading in green while the European markets were too trading in green on an optimistic note.  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. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 4,950 and 16,500 levels, respectively. The market breadth on the BSE was positive in the ratio of 1866:811 while, 103 scrips remained unchanged.

The BSE Sensex is currently trading at 16,536.99 up by 485.89 points or 3.03% after trading as high as 16,536.99 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 1.73% while Small cap climbed 1.57%.

On the BSE sectoral space, IT up 3.94%, Realty up 3.81%, TECk up 3.32%, Consumer Durables up 3.27% and Oil & Gas up 3.03% were the major gainers while there were no losers in the space.

DLF up 6.19%, Tata Motors up 5.78%, Jaiprakash Associates up 5.64%, Infosys up 4.51% and Hindalco up 4.38% were the major gainers on the Sensex, there were no losers on the index.

Meanwhile, in order to lift the market sentiments, government is considering a cut in the Securities Transaction Tax (STT), along with this, the Ministry of Finance is also mulling a rationalized and uniform stamp duty on securities transactions. This move of the government has been welcomed by the market, which has been under pressure because of the global uncertainties. However, the recommendation is still under consideration. The Bombay Stock Exchange (BSE) benchmark index Sensex recovered around 250 points from the day lowest and closed to 16,051.10, although, Sensex was below 110.96 points compare to last Friday. 

A senior finance ministry official said, ‘we are seriously looking into the proposal (reducing STT). This can be done outside the Budget.’ The decision of cutting the STT is backed by the rationale that the tax has not generated much revenue. In first five months of current financial year, the government generated around Rs 2,223 crore from STT, which is almost 10% less than the last financial year.

The STT was introduced in 2004-05, when P Chidambaram was Finance Minister, the STT is charged on sales/purchase of share, equity-oriented mutual funds and futures and options in securities. The recommendation of cutting or removing the STT came up in the meeting between the finance ministry and Stock Exchanges. It was said that this tax constituted a major component of the transaction cost. Due to the high cost and to make trading more attractive, there was need to reduce or remove the tax, the exchanges are believed to have said in the meeting.

In the same time, the ministry of finance is making the draft to present a proposal before cabinet for rationalizing stamp duty. This also involves removing the rates in some states. Finance Ministry official said, ‘two departments of the Ministry, Economic Affairs (responsible for development of capital market) and Revenue (responsible for taxation) have finalized various provisions. Now, Finance Minister, Pranab Mukherjee, will take a final call and then the proposal will be taken to the Cabinet.’

As stamp duty is the state matter, the discussions are also going on with the states. The stamp duties vary from state to state, the effort is to define a uniform rate and persuade the states to fix it accordingly. Maharashtra has the highest stamp duty collection with 42% of total inflows. It charges at the rate of 0.002% on the non-delivery-based and 0.01% on delivery-based. 

The S&P CNX Nifty is currently trading at 4,977.40, higher by 142.00 points or 2.94% after trading as high as 4,980.90 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 5.89%, DLF up 5.88%, JP Associates up 5.56%, BHEL up 4.71% and Infosys up 4.66%. On the flip side, Cipla down 0.07% was the lone loser on the index.

Asian markets traded on a optimistic note, Shanghai Composite surged 0.91%, Hang Seng zoomed 4.15%, Jakarta Composite rocketed by 4.89%, KLSE Composite soared 2.43%, Nikkei 225 jumped by 2.82%, Straits Times amassed 2.71%, Seoul Composite spurted 5.02% and Taiwan Weighted accumulated 3.09%.

The European markets were trading in green with France’s CAC 40 jumped 2.84%, Germany's DAX zoomed 3.17% and Britain’s FTSE 100 ascended 2.14%.