Benchmarks showcase slender recovery; Nifty nears 5900 mark

After inching lower in early deals, benchmark equity indices have bounced back in green, albeit with slender gains on account of lower level buying in select blue chip stocks such as Infosys, ICICI Bank, Tata Motors, HUL, etc. However, in absence of any major cues, the trade at D-street continues to remain range-bound for the second consecutive session as investors await ‘2013/14 budget’-a critical test of whether the government will announce a plan to contain the fiscal and current account deficits. Thus, gyrating  in a range bound territory with slender gains, 30 share index, Sensex is trading above 19500 level, while 50 share index Nifty too has moved closer to 5900 level. Broader indices, showcasing outperformance for the third consecutive session, were trading with over half a percent gain. 

On the global front, Asian pacific shares barely moved on Tuesday as a holiday in the US and a lack of catalysts kept many investors on the sidelines. Additionally, concerns about the euro zone economy, U.S. fiscal talks and Chinese appetite too have limited gains.

Closer home, Health Care, Consumer Durable and Information Technology counters have emerged as major pillar of strength. Further, gains of likely candidates for banking licences, IFCI, Mahindra and Mahindra Financial Services and Shriram transport Finance Company, mainly are aiding the sentiment to some extent at D-street. These shares are in upbeat mood since morning after the reports suggested central bank will issue final guidelines on new bank licences before the end of March. The market breadth on the BSE is positive; advances and declining stocks were in a ratio of 1197: 970 while 118 scrips remained unchanged.

The BSE Sensex is currently trading at 19504.60, up by 3.52 points or 0.02% after trading in a range of 19531.51 and 19471.19. There were 15 stocks advancing against 15 declines on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.49% and Small cap index was up by 0.50%.

The top gaining sectoral indices on the BSE were, Health Care up by 0.69%, Consumer Durables up by 0.42%, Power up by 0.42%, IT up by 0.41% and Auto up by 0.37%. While, Capital Goods down by 0.15%, Metal down by 0.15% and Oil & Gas down by 0.13% were the top losers on the index.

The top gainers on the Sensex were Cipla up by 1.71%, ONGC up by 1.64%, Sterlite Industries up by 0.99%, Hindustan Unilever up by 0.97%, and BHEL up by 0.89%.

On the flip side, Bharti Airtel was down by 1.67%, Gail India was down by 1.53%,  Coal India was down by 1.19%, RIL down by 0.69%  and  Jindal Steel was down by 0.58% were the top losers on the Sensex.

Meanwhile, as per the Organisation for Economic Cooperation and Development (OECD), a Paris based think tank, bringing down FDI barriers and reducing regulatory uncertainty to attract more private investments will help boost India's economic growth. Recommending various measures to boost India's growth, OECD said the government should further format reforms in the financial sector such as promoting entry of new private banks and establishing a plan to phase out priority lending.

On financial sector reforms, OECD said that reforms to further promote the development of a dynamic and efficient financial sector are needed to support investment and growth. Bank portfolio restrictions should be relaxed, including a gradual reduction in share of government bonds held by banks and establishing a plan to phase out priority lending. Beside this, the government has to allow greater participation by foreign investors in the financial services sector and promote the entry of new private banks, it added.

The OECD, a grouping of mostly rich countries, said in its report 'trade and Foreign Direct Investment (FDI) barriers remain high in some key sectors, impairing productivity improvements'. It added that regulatory uncertainty should be reduced to promote more private sector investment and stressed on the need for reducing such barriers.

As per the OECD report on economic policy reforms and growth, the government has eased some FDI barriers, allowing minority foreign ownership in the aviation sector and up to 51 percent foreign ownership in multi-brand retail, but the country should further ease FDI restrictions in aviation, multi-brand retail and other sectors.

Further, OECD also expressed the need of trade and investment liberalization to strengthen competition and encourage the diffusion of more advanced technology and management practices. OECD said that effective infrastructure-related regulations should be promoted to solve several infrastructure bottlenecks particularly in the energy and transport sectors. The government should also 'streamline land acquisition processes, including through improved land registration, to reduce costs and delays,' it added.

The S&P CNX Nifty is currently trading at 5,897.10 down by 1.10 points or 0.02% after trading in a range of 5,904.15 and 5,889.35. There were 30 stocks advancing against 19 declines and one stock remains unchanged on the index.

The top gainers of the Nifty were ACC up by 2.17%, Ranbaxy up by 1.86%, CIPLA up by 1.65%, ONGC up by 1.56% and Ambuja Cements up by 0.97%.

On the flip side, GAIL down by 1.84%, Bharti Aritel down by 1.64%, Coal India down by 1.19%, BPCL down by 1.13%, and JP Associate down by 0.94%, were the major losers on the index.

Most of the Asian equity indices were trading in the red; Shanghai Composite declined 26.61 points or 1.10% to 2,394.95, Hang Seng dipped 37.34 points or 0.16% to 23,344.60, Jakarta Composite decreased 10.04 points or 0.22% to 4,602.01, KLSE Composite slipped 4.21 points or 0.22% to 1,616.72 and Nikkei 225 was down by 28.66 points or 0.25% to 11,380.68.

On the flip side, Straits Times rose 8.49 points or 0.22% to 3,295.32, KOSPI Composite added 2.38 points or 0.12% to 1,984.29 and Taiwan Weighted was up by 17.35 points or 0.22% to 7,960.88.