Indian equities bounce back in noon trades; trade around day’s high

Indian frontline equity indices have managed to spring back into the green territory in the afternoon trades of September series F&O expiry session and are trading around the high point of the day. Domestic sentiments improved ahead of a crucial vote in Germany where leaders are expected to overwhelmingly approve a proposal to increase the scope and size of the European Financial Stability Facility (EFSF). Some tentative recovery was also evident in European markets which turned flat after a somber opening while most indices in Asia too traded on a positive note after a weak start. Back home, the upside for the benchmarks was capped by a discouraging weekly inflation reading which showed that food and fuel inflation jumped to 9.13% and 14.69% for the week ended September 17 from 8.84% and 13.69% in the previous week, respectively. The acceleration in inflation shows persistently high inflationary pressures on the economy which may prompt the RBI to extend its aggressive monetary tightening measures. On the BSE sectoral space, the information technology counters witnessed hefty buying interests as the rupee depreciated by around 8% in the last quarter which helped boost the companies’ margins. Shares of IT bellwethers like Infosys and TCS extended their winning run. Shares from the defensive FMCG and rate sensitive Bankex and Auto counters too were traded in the green territory with considerable gains. On the flipside, Consumer Durable stocks remained top laggards in the space with over one and half a percent cuts while sectors like capital goods and metal too witnessed some selling pressure.

Moreover, the broader markets failed to claw back into the green terrain in afternoon trades and underperformed against their larger peers by quite a margin. The bourses rose on large volumes of over Rs 1 lakh core while the market breadth on BSE was in favor of declines in the ratio of 1451:982 while 87 scrips remained unchanged.

The BSE Sensex is currently trading at 16,552.13 up by 106.11 points or 0.65% after trading as high as 16,555.35 and as low as 16,316.66. There were 17 stocks advancing against 13 declines on the index.

The broader indices were trading on a weak note; the BSE Mid cap index eased 0.51% and Small cap shed 0.29%.

On the BSE sectoral space, IT up 1.50%, TECk up 1.09%, Bankex up 1.03%, FMCG up 0.92% and Auto up by 0.41% were the major gainers while Consumer Durables down 1.67%, Capital Goods down 1.60%, Metal down 0.62%, Healthcare down 0.34% and Realty down 0.27% were the major losers in the space.

JP Associates up 4%, HDFC Bank up 2.31%, Infosys up 1.99%, M&M up 1.84% and ONGC up 1.77% were the major gainers on the Sensex, while L&T down 3.51%, Sterlite Industries down 1.87%, SBI down 1.77%, Coal India down 1.63% and Tata Motors down 1.57% were the major losers on the index.

Meanwhile, the Union Food and Consumer Affairs Minister K V Thomas indicated that the policy which seeks to allow 51% of Foreign Direct Investment (FDI) in multi-brand retail will take some more time, because of the inter-ministerial differences.

K V Thomas said that there were some inter-ministerial differences. It might take some time for it to get approved. Earlier, the Prime Minister Manmohan Singh also indicated that the policy may be delayed, on September 28, and the sector would be open only after the political harmony, indicating his concern for the small traders and kirana stores.

K V Thomas said the food ministry was formulating the conditions needed for allowing FDI in multi-brand retail. ‘The concern is not only about the percentage of FDI being approved in India but also to protect the interests of the small trading community and shopkeepers in remote villages,' he added.

With the reference to the discussions with the certain consumer organizations and traders in Mumbai, to state that the some international companies were stocking food material, which may lead to further increase in prices. Thomas said, ‘this is a big concern for us.'

The global retail giant Walmart India president Raj Jain, said that the US retail major would step up its investments significantly once multi-brand retail was opened. The global retail giant has been waiting for entering the India’s retail market; presently it is in 50:50 joint venture with the Bharti group for a wholesale business. 

India already had allowed 100% FDI in cash and carry segment and 51% FDI in single brand business. However, government has protected the multi-brand retail as this segment is political sensitive. Recently, government’s committee of secretaries recommended 51% FDI in multi-brand retail, with many conditions.

The S&P CNX Nifty is currently trading at 4,977.50, higher by 31.60 points or 0.64% after trading as high as 4,980.45 and as low as 4,906.00. There were 29 stocks advancing against 21 decline on the index.

The top gainers on the Nifty were JP Associates up 4.57%, Grasim up 3.22%, HDFC Bank up 3.18%, Infosys up 2.46% and Ranbaxy up 2.15%.

L&T down 3.02%, Seas Goa down 2.22%, Sterlite down 2.04%, R Capital down 1.97% and SBI down 1.60% were the major losers on the index.

Asian markets traded on a mixed note, Jakarta Composite climbed 055%, KLSE Composite added 0.78%, Nikkei 225 surged 0.99%, Seoul Composite rallied 2.68% and Taiwan Weighted garnered  0.50%.

On the contrary, Shanghai Composite plunged 1.20% and Straits Times eased 0.17%.

The European markets traded on a bleak note as France’s CAC 40 declined 0.69%, Germany's DAX shed 0.79% and Britain’s FTSE 100 descended 0.75%.