Barometer gauges recoup further ground; Sensex nears 19200 level

Recouping further ground, Indian equity markets have minimized losses and appear on the path of breaking out in green as market-participants increasingly lapping up select blue chip stocks available at attractive valuations. After early set-back, benchmarks have made considerable recovery tracing rupee recovery against US dollar. On the currency front, Indian rupee, after nearing the record low level in early deals, scaled back to trade strong, mainly on increased selling of the US currency by exporters. Back on street, though with a little loss of over 0.10%, Sensex and Nifty, are comfortably cruising past the crucial 19150 and 5800 levels respectively. Meanwhile, broader indices also continue to trade comfortably in green.

On the global front, besides subdued Asian counterparts, European markets too have got off to a negative start. Asian markets continue to trade mostly lower as investors continue to remain cautious ahead of the conclusion of a Federal Reserve policy meeting for clues on bond purchases. However, Japanese stocks outperformed other Asian stocks as exporters rallied after the nation's shipments increased and the yen weakened ahead of the conclusion of the US Federal Reserve meeting.

Closer home, aggressive buying in Metal, Consumer Durables and Realty counters are limiting the downtrend of the bourses. Further, Aviation and Telecom stocks too continue to trade with traction. SpiceJet, Kingfisher Airlines and Jet Airways are rallying in the range of 0.75-4.50%, Telecom stocks, viz, Bharti Airtel, Idea Cellular and Reliance Communication are trading up by 1.65-5.30%. A key panel led by economic affairs secretary Arvind Mayaram has reportedly called for hiking the foreign investment caps in nearly all sectors, including defence and telecom, and permitting automatic approval to proposals entailing 49% foreign equity infusion. Telecom stocks are also ringing loud after TRAI had allowed telecom service providers the option of either charging a flat upfront fee or rates set by TRAI, for roaming services. The overall market breadth on BSe is in the favour of  advances thumped declines in the ratio of 1072: 984; while 142 shares remained unchanged

The BSE Sensex is currently trading at 19196.76, down by 26.52 points or 0.14% after trading in a range of 19234.48 and 19100.13. There were 14 stocks advancing against 16 declines on the index.

The broader indices continued to trade in fine contour; the BSE Mid cap and Small cap indexes were trading up by 0.58% and 0.41% respectively.

The gaining sectoral indices on the BSE were, Metal up by 1.62%, Consumer Durables up 1.36% Realty up by 0.60%, Oil & Gas and Health Care were up by 0.11%, while IT down by 0.48%, PSU down by 0.47%, Auto down by 0.46%, Power down by 0.26% and FMCG down by 0.09% were the top losers on the BSE.

The top gainers on the Sensex were Jindal Steel up by 7.19%, Sterlite Industries up by 1.87%, Bharti Airtel up by 1.34%, Tata Steel up by 1.30% and Hindalco Industries up by 1.13%. On the flip side, NTPC down by 1.46%, Coal India down by 1.40%, Dr Reddys Lab down by 1.39%, Infosys down by 1.07% and Tata Motors down by 1.04% were the top losers on the Sensex.

Meanwhile, considering an easier access to credit is paramount to growth of any small business, the Micro, Small and Medium Enterprises (MSME) Ministry is in the process of holding consultations with various banks, both in private and public sector to persuade them for improving flow of credit to MSME sector. Minister of State for MSME sector K H Muniyappa said that the major factors affecting growth of the sector include marketing problems, shortage of raw-material, working capital, lack of demand, power crunch and labour issues. Therefore, there is a need to make these units more competitive by enhancing the availability of institutional credit, providing adequate infrastructure, meeting demands for skill development and strengthening marketing support. 

The sector contributes around 8% of the country's GDP, 45% of the manufactured output and provides employment to over 8 crore people engaged in over 3.6 crore units, producing more than 6,000 products. 

Meanwhile, in a move to attract more capital flows and tide over the Current Account Deficit (CAD) woes along with bolstering the rupee, a government panel, headed by economic affairs Secretary Arvind Mayaram, has proposed raising FDI cap in a number of sectors, including non-scheduled air transport, ground handling at airports, satellites, private security agencies and Internet Service Providers (ISPs).

The panel has suggested that the Foreign Direct Investment (FDI) ceiling in the defence sector be raised to 49% under the government approval route from 26% at present, while for the pharmaceuticals sector; the committee recommended 49% under automatic route as against 100% under the government approval route. The panel has also suggested raising the foreign direct investment (FDI) limit to 74% in multi-brand retail and allowing complete foreign ownership of telecom and aviation companies.

The panel has submitted the report to the Finance Ministry and now, the Department of Industrial Policy & Promotion (DIPP), the administrative ministry in charge of FDI policy, will consider the Mayaram Committee report to finalise the plan.

Foreign investment is considered crucial for economic development of a country and India has allowed FDI in most of the sectors through automatic route, but for certain sensitive sectors, FIPB clearance is required. For the fiscal 2012-13, FDI inflows recorded a decline of 38% to $22.42 billion compared to the $35.12 billion inflow in the previous year. Meanwhile, the government has been liberalizing the foreign investment policy to attract maximum foreign investment into the country.

The CNX Nifty is currently trading at 5,806.30, down by 7.30 points or 0.13% after trading in a range of 5,809.25 and 5,777.90. There were 26 stocks advancing against 24 declines on the index.

The top gainers of the Nifty were Jindal Steel up by 7.25%, Sesa Goa up by 2.54%, IDFC up by 1.79%, Lupin up by 1.60% and Ambuja Cement up by 1.54%. On the flip side, UltraTech Cement down by 1.89%, Coal India up by 1.42%, NTPC down by 1.36%, Dr Reddys’ Lab down by 1.34% and Tata Motors down by 1.21% were the major losers on the index.

Most of the Asian equity indices were trading in red; Shanghai Composite declined 0.84%, Hang Seng dropped 0.48%, Jakarta Composite slipped 0.30%, Straits Times contracted 0.27%, KOSPI Composite was down by 0.65% and Taiwan Weighted down by 0.05%.  On the flip side, KLSE Composite was trading flat and Nikkei 225 surged 1.83%. 

European markets have got off to a negative start; with CAC 40 declining 0.58%, FTSE 100 sliding by 0.23% and DAX losing 0.02%.