Benchmarks continue to trade in green; Nifty holds 5,600 mark

Indian equity markets added gains to continue their firm trade in the late afternoon session on account of buying in frontline blue chip counters and taking cues from European counterparts. The sentiments remain subdued ahead of the Jan-March Balance of Payments (BoP) data due on Friday. Traders were seen piling positions in Power, IT and FMCG stocks while selling was witnessed in Auto, Consumer Durables and Health Care sector stocks. In scrip specific development, Videocon Industries’ was trading in green on reports that the company is planning to consider special dividend and bonus. It has also applied for banking license yesterday by partnering with Citystate Holdings. Reliance Capital was trading in green as the company will be applying to RBI for banking license. Elder Pharmaceuticals was locked at upper circuit limit on reports that global pharma majors like Sanofi Aventis, Novartis and GlaxoSmithKline were in the race to buy-out the debt ridden company’s domestic formulations business. The market may remain volatile today as traders may roll over positions in the Futures & Options (F&O) segment from the near month i.e. June 2013 series to next month i.e. July 2013 series. The June 2013 F&O contracts expires tomorrow i.e. June 27, 2013.

On the global front, most of the Asian markets were trading in green barring Shanghai Composite and Nikkei 225 while the European markets were trading on optimistic note. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 5,600 and 18,600 levels respectively. The market breadth on BSE was negative in the ratio of 983:1141, while 150 scrips remain unchanged. 

The BSE Sensex is currently trading at 18660.58, up by 31.43 points or 0.17% after trading in a range of 18690.50 and 18584.30. There were 18 stocks advancing against 12 declines on the index.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.14% while the Small cap index was up by 0.18%.

The top gaining sectoral indices on the BSE were, Power up by 1.43%, IT up by 1.00%, FMCG up by 0.97%, PSU up by 0.66%, and Realty up by 0.65% while Auto down by 1.59%, Consumer Durables down by 0.91%, Health Care down by 0.50% and Metal down by 0.34% were the top losers on the BSE.

The top gainers on the Sensex were Gail India up by 2.65%, Hero MotoCorp up by 2.61%, NTPC up by 2.35%, TCS up 2.24% and ITC up by 1.45%. On the flip side, Bharti Airtel down by 4.82%, Mahindra & Mahindra down by 3.88%, Tata Motors down by 3.09%, Hindalco Industries down by 2.01% and Bajaj Auto down by 0.64% 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 5,623.75, up by 14.65 points or 0.26% after trading in a range of 5,635.25 and 5,600.35. There were 30 stocks advancing against 20 declines on the index.

The top gainers of the Nifty were GAIL India up by 3.11%, Asian Paints up by 3.06%, Hero MotoCorp up by 2.96%, TCS up by 2.67% and PowerGrid up by 2.52%. On the flip side, Bharti Airtel down by 4.96%, M&M down by 4.06%, Ranbaxy Laboratories down by 3.46%, Tata Motors down by 3.34% and Kotak Bank down by 3.01% were the major losers on the index.

Most of the Asian equity indices were trading in green; Hang Seng surged 2.43%, Jakarta Composite soared 4.26%, KLSE Composite rose 0.82%, Straits Times increased 0.41%, KOSPI Composite was up by 0.16% and Taiwan Weighted rallied 1.59%. On the flip side, Shanghai Composite declined by 0.41% and Nikkei 225 slipped 1.04%.

The European markets were trading in green; France’s CAC 40 was up 1.46%, Germany’s DAX added 1.37% and the United Kingdom’s FTSE 100 edged higher by 1.01%.