Markets continue firm trade amid increased inflows

Following a positive opening, Indian equity markets continued trading firm on Tuesday amid record buying from foreign institutional investors (FIIs). The Sensex up by 86 points, while Nifty was up by 29 points. FIIs bought shares worth $196 million on May 3, taking their net investment in 2013 to $11.8 billion, a record for the period. Meanwhile, investors are waiting for the inflows related to some recent corporate deals, particularly Qatar's $1.26 billion investment in Indian telecommunication company Bharti Airtel, which is likely to provide some support to market. In currency market, rupee depreciated against dollar on Tuesday on the back of increasing demand for American currency by oil importers amid rise in crude oil prices. On the sectoral front, realty and capital goods stocks were trading firm. FMCG stocks, which got off to a slightly weak start, have edged higher on renewed buying support. Select healthcare, bank, power and oil stocks were up with strong gains, while consumer durables and metal stocks were trading mixed.

On the global front, most Asian markets were trading higher with recent US economic data aiding sentiment to a notable extent. However, with investors turning cautious and taking some profits, most of the markets in the region retreated after a firm start and are currently trading just marginally higher. Back home, the market breadth was favoring positive trend; there were 1,093 shares on the gaining side against 860 shares on the losing side, while 132 shares remain unchanged.

The BSE Sensex is currently trading at 19,760.07, up by 86.43 points or 0.44% after trading in a range of 19,806.06 and 19,697.33. 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 0.50% and Small cap index was up by 0.47%.

The top gaining sectoral indices on the BSE were, FMCG up by 1.13%, Health Care up by 1.03%, Realty up by 1.01%, Bankex up by 0.83% and Power up by 0.60% while, Metal up by 0.46% and Consumer Durables down by 0.19% were the top losers on the BSE.

The top gainers on the Sensex were NTPC up by 1.88%, Hero MotoCorp up by 1.75%, Tata Motors up by 1.68%, ITC up by 1.61% and ICICI Bank up by 1.33%.

On the flip side, Coal India was down by 1.95%, Mahindra & Mahindra was down by 1.44%, Wipro was down by 1.23%, Dr Reddy’s was down by 0.68% and Tata Steel was down by 0.64% were the top losers on the Sensex.

Meanwhile, in a move, which would simplify the rules governing foreign portfolio investors in India, the government is planning to unveil a new category for overseas investors called foreign portfolio investors (FPI) that do not come under the foreign direct investment (FDI) route. The FPI category is expected to include all classes of foreign investors such as NRIs, FIIs and qualified institutional investors whose investments are distinct from FDI inflows.

As per the existing framework, portfolio investment in any company through various routes such as FIIs (24%), NRIs (10%) and QFIs (10%) is allowed up to 44%. With the proposed changes, all these categories will be clubbed together as FPI therefore foreign funds up to 44% can be invested in a firm without being classified as FDI. The idea is to minimize the number of caps, and clearly define FDI and FII, which is in line finance minister’s Budget statement. 

Finance Minister P Chidamabaram in his Budget speech, had proposed to follow the international practice with regard to defining FDI and FII, which says that foreign investment of 10 percent or less in a company is treated as FII and if more than 10 percent, the investment is treated as FDI.  

In order to implement the FM's vision, a committee was constituted with top officers including chief economic advisor Raghuram Rajan and representatives from the departments of revenue, industrial policy, Reserve Bank and SEBI. Further, the committee will discuss the key issues regarding the foreign investments into the Indian companies.

The CNX Nifty is currently trading at 6,000.00 up by 28.95 points or 0.48% after trading in a range of 6,011.10 and 5,982.95. There were 32 stocks advancing against 17 declines while 1 stock remains unchanged on the index.

The top gainers of the Nifty were DLF up by 2.47%, IndusInd Bank up by 2.34%, Lupin up by 1.79%, NTPC up by 1.72% and ITC up by 1.67%.

On the flip side, Coal India down by 2.26%, M&M down by 1.57%, Sesa Goa down by 1.19%, BPCL down by 0.95% and Tata Steel down by 0.73% were the major losers on the index.

Most of the Asian equity indices were trading in green; Hang Seng increased 0.22%, Jakarta Composite jumped 0.78%, KLSE Composite surged 0.87%, Nikkei 225 soared 3.55% and Straits Times was up by 0.33%.

On the flip side, Shanghai Composite declined by 0.02%, KOSPI Composite declined 0.36% and Taiwan Weighted was down by 0.07%.