Benchmarks witness strong pull back on firm global cues

The Indian equity markets witnessed a strong pull back after making a gap up start tracking positive cues from global equity indices. Sentiments remained strong as the US markets moved in positive territory for the third straight day on Thursday as the European Central Bank agreed to provide unlimited one-year loans to the region's banks through 2013 while, all the Asian equity indices were trading in the positive terrain at this point of time, indicating strong investors’ sentiment. Back home, sustained buying in mostly all the key heavyweights along with broader indices supported BSE’s -- Sensex -- to trade comfortably over their crucial 17,100 mark while NSE’s -- Nifty -- was trading tad below its crucial 4,900 mark. On the sectoral front, metal witnessed the maximum gain in trade followed by banking and software, while there were no losers on the BSE sectoral space. However, the PSU oil marketing companies like BPCL, HPCL and IOC were edged lower in the trade as not only the international crude prices have surged but also on reports that government is scrutinizing low refining margins of its state-run oil firms and may go tighten its spending on subsidies. The broader indices too were trading with decent gains. The market breadth on the BSE was positive; there were 1,586 shares on the gaining side against 317 shares on the losing side while 35 shares remained unchanged.

The BSE Sensex opened at 16,222.49; about 430 points higher compared to its previous closing of 15,792.41, and has touched a high of 16,326.97 while low remained its opening.

The index is currently trading at 16,272.89, up by 480.48 points or 3.04%. There were 29 stocks advancing against only 1 decline on the index.

The overall market breadth has made a strong start with 81.84% stocks advancing against 16.36% declines. The broader indices too were trading with a decent gain; the BSE Mid cap and Small cap indices surged 2.25% and 1.99% respectively.

The top gaining sectoral indices on the BSE were, Metal up by 4.32%, Bankex up by 4.25%, IT up by 3.80%, Realty up by 3.61% and TECk was up by 2.95%. While, there were no losers on the index.

The top gainers on the Sensex were Sterlite Industries up by 6.94%, Jindal Steel up by 6.62%, ICICI Bank up by 6.04%, DLF up by 5.50% and Tata Motors was up by 5.39%.

On the flip side, Bharti Airtel was down by 0.03% was the top lone loser on the Sensex.

Meanwhile, Stating the uncertainty in global economy as the right time to acquire small firms in the US and Europe, the Micro, Small and Medium Enterprises (MSME) Secretary Uday Kumar Varma on October 5, said the uncertainty in major world economies presents a 'good opportunity' and it is the 'right time' for Indian SMEs to acquire small firms in the US and Europe.

The US and European economies are suffering from sovereign debt problem, which presents a 'good opportunity' for advanced SMEs to establish an international presence through acquisitions. 'Yes, this is the right time,’ Varma said. For the MSME sector, the ministry is planning to introduce a special package in the next five year plan period, for units which are looking to acquire overseas firms. 'Uncertainty (global situation) has to be replaced by certainty and confidence,' the secretary added.

This can be accomplished by offering information to units through fortnightly discussions with a panel of experts that will advise them on the ways and benefits of the incentive mechanism that is proposed to be rolled out by the government, Varma said. By adding further he said, incentives could be more substantial.

Giving example of the Italy, whose credit rating has been downgraded by rating agency Standard & Poor's, he said Italian firms are willing to set up joint ventures in India, but they are conscious of their Intellectual Property Rights. An Italian delegation is coming to India in October-end and the government has decided to sign a formal Memorandum of Understanding (MoU) with the Italian government for business to business.

Internationally, the Small and medium enterprises (SMEs) have been recognized as a priority sector for growth and development. The SMEs, in India account for 45% of the industrial production and around 40% of the total exports. Varma said, the major challenges faced by the sector are access to easy credit, infrastructure, and technology and skill development of the 60 million workers employed by 26 million small and medium enterprises.

The S&P CNX Nifty opened at 4,883.65; about 132 points higher compared to its previous closing of 4,751.30, and has touched a high and a low of 4,915.75 and 4,879.25 respectively.

The index is currently trading at 4,899.90, higher by 148.60 points or 3.13%. There were 49 stocks advancing against 1 decline on the index.

The top gainers of the Nifty were Sterlite Industries up by 7.13%, Jindal Steel up by 6.74%, Axis Bank up by 6.33%, ICICI Bank up by 5.98% and DLF up by 5.74%.

On the flip side, BPCL down by 0.42% remained the lone loser on the index.

All the Asian equity markets were trading in the green; Hang Seng was up 606.06 points or 3.53% to 17,778.34, Jakarta Composite was up 65.68 points or 1.91% to 3,508.79, KLSE Composite was up 6.87 points or 0.49% to 1,400.56, Nikkei 225 was up 119.68 points or 1.40% to 8,641.70, Straits Times was up 52.15 points or 2.00% to 2,655.27, Seoul Composite was up 47.71 points or 2.79% to 1,758.03 and Taiwan Weighted was up by 82.18 points or 1.15% to 7,214.18.