Domestic bourses make positive start; Sensex reclaims 20,000 level

Indian benchmarks, after witnessing a cut of over half a percent, have made a positive start on Wednesday tracking firm cues from global indices. Overnight, the US markets made a good recovery in the last session supported by some good earnings numbers that led Dow near 14k mark and keeping the S&P above 1,500 level. Traders embraced the good numbers of Pfizer, Tupperware, Beazer Homes and Eli Lilly, shrugging off the report that US consumer confidence fell to a fourteen-month low in January. While, most of the Asian equity indices were trading in the green at this point of time, with continuing weakness in the yen further fuelling a rally in Japanese Nikkei.

Back home, domestic bourses re-conquered their crucial 6,050 (Nifty) and 20,000 (Sensex) levels in the initial trade as some support came in from finance minister P Chidambaram’s statement that the government will present a responsible budget next month. Finance Minister has also said that government will cut fiscal and current account deficits to help economy return to the 8 percent growth path. Sentiments also got some boost after foreign institutional investors (FIIs) bought shares worth a net Rs 899.83 crore on January 29, 2013.

On the sectoral front, oil and gas witnessed the maximum gain in trade followed by realty and consumer durables while, power and auto remained the only losers on the BSE sectoral space. The broader indices were going neck-to-neck with benchmarks while, the market breadth on the BSE was positive; there were 1,034 shares on the gaining side against 679 shares on the losing side while 94 shares remain unchanged.

The BSE Sensex opened at 20,014.80; about 24 points lower compared to its previous closing of 19,990.90, and has touched a high and a low of 20,073.46 and 20,000.32 respectively.

The index is currently trading at 20,036.13, up by 45.23 points or 0.23%. There were 18 stocks advancing against 12 declines on the index.

The overall market breadth has made a positive start with 57.22% stocks advancing against 37.58% declines. The BSE Mid cap and Small cap indices rose 0.38% and 0.48% respectively.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.19%, Realty up by 1.03%, Consumer Durables up by 0.74%, Metal up by 0.52% and Bankex up by 0.50%. While, Power down by 0.19% and Auto down by 0.08% were the top losers on the index.

The top gainers on the Sensex were Hindustan Unilever up by 2.06%, RIL up by 2.02%, ICICI Bank up by 1.52%, Cipla up by 1.25% and Maruti Suzuki up by 1.18%.

On the flip side, HDFC was down by 1.03%, ITC was down by 0.92%, HDFC Bank was down by 0.84%, Tata Motors was down by 0.74% and Bajaj Auto was down by 0.63% were the top losers on the Sensex.

Meanwhile, the government has agreed to make a significant concession in compensating state governments’ revenue loss on account of the reduction in the central sales tax (CST). The chairman of the Empowered Committee of State Finance Ministers, Sushil Kumar Modi, said that States have agreed to the compensation formula suggested by the Centre for their CST revenue loss for implementing the Goods and Services Tax (GST).

Sushil Kumar Modi said that Centre has agreed to full CST compensation for 2010-11, offset 75% of states’ CST losses in 2011-12 and 50% for 2012-13. The compensation formula has been prepared on the basis of the August 22, 2008, guidelines.

Contradictory to the move of containing fiscal deficit, now the centre will have to shell out about Rs 34,000 crore for compensating states for the three years. Significantly, the government has also dropped its earlier stand that it would deduct from the compensation amount any revenue gain states may have made by increasing state-level value-added tax or VAT from 4% to 5%.

Regarding the delay in introduction of GST, Modi said that States are not responsible for the delay in introduction of GST because they have lost heavily on account of gradual cut in the CST. The Empowered Committee has also asked the Centre to prepare a payment schedule. Some States are of the view that they should revert to the earlier 4% CST to make up for the huge losses in case there is a delay in introduction of GST beyond April 1, 2014.

Meanwhile, the states having manufacturing base and mineral export are the worst sufferers due to the gradual cut in CST. States that have lost more than Rs 1,000 crore include Gujarat, Andhra Pradesh, West Bengal, Tamil Nadu, Odisha and Haryana.

The S&P CNX Nifty opened at 6,065.00; about 15 points higher as compared to its previous closing of 6,049.90 and has touched a high and a low of 6,071.95 and 6,053.30 respectively. The index is currently trading at 6,062.95, down by 13.05 points or 0.22%. There were 29 stocks advancing against 21 declines on the index.

The top gainers of the Nifty were Hindustan Unilever up by 2.14%, Reliance Industries up by 1.97%, DLF up by 1.52%, ICICI Bank up by 1.47% and Axis Bank up by 1.35%.

On the flip side, HDFC down by 1.09%, Tata Motors down by 0.90%, Punjab National Bank down by 0.84%, ITC down by 0.80% and HDFC Bank down by 0.74%, were the major losers on the index.

Most of the Asian equity indices were trading in the green; Shanghai Composite rose 0.14 points or 0.01% to 2,359.11, Hang Seng increased 161.99 points or 0.68% to 23,817.16, Jakarta Composite surged 12.82 points or 0.29% to 4,451.85, Nikkei 225 soared 107.55 points or 0.99% to 10,974.27, Straits Times jumped 15.97 points or 0.49% to 3,275.72, KOSPI Composite added 0.42 points or 0.02% to 1,956.38 and Taiwan Weighted was up by 14.60 points or 0.19% to 7,816.60.

On the flip side, KLSE Composite was down by 13.34 points or 0.81% to 1,624.00.