Markets edge higher after a setback; Nifty inching towards 5,600 level

Indian equity markets, after paring some early gains, edged higher again and trading near high point of the day in the late morning session on Tuesday. Investors were not making any strong positions ahead of industrial output and consumer inflation data due on April 12 amid worries that high inflation will prevent the Reserve Bank of India (RBI) from cutting interest rates aggressively despite weakening growth. The Nifty inching towards 5,600 level while, the Sensex was up by over 100 points. In currency markets, rupee continued northward journey against dollar, amid sustained selling of the US currency by exporters. On the sectoral front, realty stocks have given up some early gains due to stiff resistance at higher levels. Select bank, power and FMCG stocks were up with smart gains. Information technology stocks continue to trade weak.

On the global front, most Asian markets rallied amid a positive China inflation data and taking cues from a solid start of the US earnings season, while the Japanese stocks extended gains on a fifth straight day on yen’s weakness. Back home, the market breadth was favoring positive trend; there were 1,147 shares on the gaining side against 721 shares on the losing side while 95 shares remain unchanged.

The BSE Sensex is currently trading at 18,543.55, up by 105.77 points or 0.57 after trading in a range of 18,547.07 and 18,436.61. There were 19 stocks advancing against 11 declines on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.71% and Small cap index was up by 0.55%.

The top gaining sectoral indices on the BSE were Capital Goods up by 1.91%, Metal up by 1.55%, Bankex up by 1.53%, Realty up by 1.29% and Auto up by 1.22%, while IT down by 0.66% and TECk down by 0.58% were the top losers on the BSE.

The top gainers on the Sensex were Jindal Steel up by 3.10%, ICICI Bank up by 2.77%, Tata Motors up by 2.39%, L&T up by 2.19% and HDFC up by 1.92%.

On the flip side, Wipro was down by 11.10%, Bharti Airtel was down by 1.24%, Dr Reddys Lab was down by 1.07%, Infosys was down by 0.71% and Bajaj Auto was down by 0.42% were the top losers on the Sensex.

Meanwhile, in order to minimize the post divestment volatility in the shares of state-owned companies, the cabinet will probably clear the proposal of setting up a PSU Exchange Traded Fund (ETF) brought forward by the Department of Disinvestment (DoD). This proposal is likely to be taken up in the next meeting of the CCEA scheduled to be held later in the week. The proposed ETF comprising shares of listed CPSEs would also serve as an additional mechanism for the government to monetize its shareholdings in those companies.

The Empowered Group of Ministers (EGoM) on disinvestment will discuss on the structure of the ETF and the methodology for inclusion and exclusion of scrips from the fund. Further, it is expected that the proposed ETF will comprise 2-3 per cent of shares of listed public sector undertakings (PSUs) and the returns of PSU ETF would be benchmarked against CPSE Index Fund. The Fund will be listed on the stock exchanges and will have shares of all PSUs barring PSU banks. The DoD has already appointed legal advisers for the PSU ETF and is in the process of appointing asset management companies for managing the fund.  

For the current fiscal, the government is planning to raise Rs 40,000 crore by way of PSU stake sale in various companies including Indian Oil, Engineers India, Coal India and Hindustan Aeronautics for divesting minority stake. During the last fiscal (FY13), the government raised around Rs 23,920 crore through disinvestment.

In India, ETFs were introduced in 2001 and currently, there are 33 ETFs with close to Rs 11,500 crore assets under management held by 6.2 lakh investors. Gold ETFs dominate the domestic ETF market. Globally, ETFs have been growing at a rapid pace with an annual growth rate of over 34 per cent in the last decade, with Assets under Management of $ 1.5 trillion.

The CNX Nifty is currently trading at 5,595.25 up by 52.30 points or 0.94% after trading in a range of 5,596.25 and 5,558.45. There were 41 stocks advancing against 9 declines on the index.

The top gainers of the Nifty were Cairn up by 3.57%, Ambuja Cements up by 3.03%, Jindal Steel up by 3.02%, IDFC up by 2.91% and ICICI Bank up by 2.87%.

On the flip side, Bharti Airtel down by 1.09%, Dr Reddys Lab down by 0.93%, Asian Paint down by 0.77%, Infosys down by 0.56% and Bajaj Auto down by 0.38% were the major losers on the index.

Most of the Asian equity indices were trading in green; Shanghai Composite rose 0.69%, Hang Seng surged 1.02%, Jakarta Composite increased 0.29%, KLSE Composite added 0.08%, KOSPI Composite gained 0.11% and Straits Times was up by 0.59%.

On the flip side, Nikkei 225 declined by 0.24 points and Taiwan Weighted was down by 0.31%.