Benchmarks manage to hold their head above water; Nifty hover past 5600 mark

Witnessing bout of volatility, benchmark equity indices are just managing to hold their head above the water as investors continue to adjust their position on the penultimate day of F&O expiry. Barometer gauges, Sensex and Nifty, both were trading flat with positive bias, gyrating above psychological 18,600 and 5,600 levels respectively. Meanwhile, broader indices failing to draw any sense of direction are trading on mixed note. On the global front, Asian shares turning around a four-day losing streak are trading in fine fettle after Chinese central bank assured it will offer funds to banks if needed, however, lingering fears of a credit crunch and slower loan growth continued to drive selling of Shanghai shares. Meanwhile, European shares have got off to a negative start as investors remain wary of any big bets after month-long market rout.

Closer home, prevailing caution ahead of the Jan-March Balance of Payments (BoP) data due Friday, is also keeping the price gains in check at D-street. The optimism sensed on account of gains of Information Technology, Power and Capital Goods counters is largely being counterbalanced by the disappointing trend in shares from Auto, Metal and HealthCare space. However, the markets is managing to hold the territory in green largely supported by the overhaul of rules for foreign investors, including easing registration procedures and simplifying categories, announced by the market regulator on Tuesday. The overall market breadth on BSE is in the favour of declines which have thumped advances in the ratio of 1066:949; while 145 shares remained unchanged.

The BSE Sensex is currently trading at 18631.29, up by 2.14 points or 0.01% after trading in a range of 18690.50 and 18584.30. There were 17 stocks advancing against 12 declines on the index, while a stock remained unchanged.

The broader indices were trading mixed; while, BSE Mid cap index was down by 0.19% the Small cap index was up by 0.19%.

The top gaining sectoral indices on the BSE were, IT up by 1.44%, Power up by 1.10%, Capital Goods up by 0.65%, Oil & Gas up by 0.51%, and PSU up by 0.48% while Auto down by 1.79% Metal down by 0.42% and Health Care down by 0.31% were the top losers on the BSE.

The top gainers on the Sensex were TCS up by 2.13%, Gail India up by 1.64%, Tata power up by 1.37%, NTPC up by 1.34% and Hero MotoCorp up by 1.31%.

On the flip side, Bharti Airtel down by 5.15%, Mahindra & Mahindra down by 3.73%, Tata Motors  down by 3.44%, Hindalco Industries down by 1.91% and Bajaj Auto down by 1.20% were the top losers on the Sensex.

Meanwhile, the Securities and Exchange Board of India (SEBI) has tightened share buyback norms to make the process more credible. SEBI has made it mandatory for companies to buy back at least 50 per cent of the proposed offer size; up from 25 percent required currently and to complete the process within six months. The capital market regulator has also said that the company will have to keep 25 percent of the identified funds in an escrow account and that there will be a one-year cooling-off period between two buybacks and companies will not be allowed to raise funds during that period.

The regulator’s decision to revise the buyback guidelines comes on the heels of need to regulate the quantity, pricing and the periodicity aspects of the buyback offers in the past. Share buyback process involves a company repurchasing its own outstanding shares in a bid to reduce the total shares in the market, which usually boosts the share price as the earnings per share go up. However, SEBI noticed that firms used the tool to artificially raise the stock price and mostly dishonored the offer. The new SEBI’s norms are expected to keep buyback offers at bay.

SEBI has also simplified the foreign investment rules to revive capital inflows into the country. It approved the creation of single category of overseas investors called the Foreign Portfolio Investor (FPI), which would include foreign institutional investors as well as qualified foreign investors. As per the new norms, FPIs’ stake in the company should not be more than 10 percent and purchase above this limit will be regulated under the foreign direct investment rules. Recently, the foreign institutional investors (FIIs) have pulled out Rs 10,000 crore only in the last 11 trading sessions on worries that the US Fed will stop its quantitative easing programme.

The CNX Nifty is currently trading at 5,612.95, up by 3.85 points or 0.07% after trading in a range of 5,635.25 and 5,600.35. There were 29 stocks advancing against 19 declines on the index, while 2 stocks remained unchanged.

The top gainers of the Nifty were PowerGrid up by 2.81%, TCS up by 2.59%, Axis Bank up by 2.07%, GAIL India up by 1.96% and DLF up by 1.77%.

On the flip side, Bharti Airtel down by 5.16%, M&M down by 4.03%, Ranbaxy down by 3.86%, Tata Motors down by 3.64% and IndusInd Bank down by 2.85% were the major losers on the index.

Most of the Asian equity indices were trading in green; Hang Seng surged 1.78%, Jakarta Composite soared 3.66%, KLSE Composite rose 0.51%, Straits Times increased 0.24%, KOSPI Composite was up by 0.16% and Taiwan Weighted rallied 1.59%.  On the flip side, Shanghai Composite declined by 0.84% and Nikkei 225 slipped 1.04%.

European markets have got off to a negative start; with CAC 40 declining 0.13%, DAX sliding by 0.04% and FTSE 100 dropping 0.14%.