FDI approvals in different sectors pull benchmarks higher

Key domestic benchmarks, after declining about a percent in the previous session, have made a decent recovery with both the frontline gauges gaining about half a percent on back of domestic cues such as easing of foreign direct investment (FDI) limits in over a dozen sectors by the government. Increasing of the FDI cap of the Telecom sector to 100 percent from 74 percent is touted as the most important decision. Insurance sector FDI limit has been raised to 49 percent from present 26 percent, also FDI up to 100 percent through automatic route has been allowed in courier services. Sentiments also got support from Finance Minister P Chidambaram’s statement that inflation will come down to tolerable levels if crude prices do not rise again and has also assured that current account deficit (CAD) would be financed without dipping into forex reserves.

However, gains remained capped as cues from global markets were not as good, as investors in the Asian region opted a cautious approach awaiting to hear US Federal Reserve chief Ben Bernanke’s views on the future of the bank’s stimulus programme. While, the US markets gave up some of their gains overnight on renewed concerns about the outlook for the Federal Reserve’s stimulus program as traders looked ahead to Fed Chairman Ben Bernanke's testimony before the House Financial Services Committee on Wednesday.

Back home, shares of telecom services provider viz. Bharti Airtel, Idea Cellular, Reliance Communication and MTNL remained on buyers’ radar after the government has hiked foreign direct investment (FDI) cap in the sector 100%, which likely to attract more stable foreign capital in the economy. On the sectoral front, consumer durables witnessed the maximum gain in trade followed by fast moving consumer goods and power, while banking, metal and realty remained the top losers on the BSE sectoral space. The broader indices were going neck-to-neck with benchmarks, while the market breadth on the BSE was positive; there were 735 shares on the gaining side against 422 shares on the losing side while 51 shares remain unchanged.

The BSE Sensex opened at 19928.95; about 77 points higher compared to its previous closing of 19851.23, and has touched a high and a low of 19970.02 and 19915.64 respectively.

The index is currently trading at 19932.86, up by 81.63 points or 0.41%. There were 19 stocks advancing against 11 declines on the index.

The overall market breadth has made a strong start with 61.61% stocks advancing against 34.13% declines. The broader indices too were trading in green; the BSE Mid cap up by 0.56% and Small cap indices up by 0.52%. 

The top gaining sectoral indices on the BSE were, Consumer Durables up by 1.38%, FMCG up by 1.26%, Power up by 1.19%, Capital Goods up by 1.08% and Teck up by 0.78%, while Bankex down by 1.12%, Metal down by 0.53% and Realty down by 0.11%, were the top losers on the sectoral index.

The top gainers on the Sensex were Dr Reddys Lab up by 2.27%, Mahindra & Mahindra up by 1.74%, BHEL up by 1.64%, ITC up by 1.62% and Tata Power up by 1.18%.  On the flip side, HDFC Bank was down by 1.52%,  Tata Motors was down by 1.47%, Tata Steel was down by 0.82%, ICICI Bank was down by 0.73% and Hindalco Industries was down by 0.68% were the top losers on the Sensex.

Meanwhile, expressing hopes that Indian economy will pick up pace in coming quarters, Planning Commission Deputy Chairman Montek Singh Ahluwalia is expecting a better economic growth in current year, as compared to last year’s 5 percent growth. India’s growth rate declined to 5 percent, a decade low, in 2012-13 on account of global economic slowdown as well as domestic factors. Ahluwalia said that the nation is expected to see a normal growth process as euro zone will move towards positive growth by 2014.

By adding further he said the country is likely to grow, if not 8 percent then the best is at something about 7 percent, however, the 8 percent is also achievable as it is a long term projection. Though, there has been no change in official estimates of economic growth projection for 2013-14 so far, which was 6.5 percent factored by Finance Minister while presenting budget. The government in its efforts formed the Cabinet Committee of Investment (CCI) to tackle the domestic supply side problems which are impacting Indian economy.

Earlier in April this year, Ahluwalia had said that India can grow by 6.5 percent in the current fiscal during which big projects are likely to get clearances from CCI and the decision to set up CCI would have a big impact on the economic growth in the current fiscal. He added that nation’s economy will begin to see the turnaround in coming two - three quarters as the government has taken a number of measures recently to revive investment, including the setting up of CCI.

The CNX Nifty opened at 5,972.25; about 17 points higher as compared to its previous closing of 5,955.25, and has touched a high and a low of 5,988.00 and 5,968.80 respectively.

The index is currently trading at 5,976.35, up by 21.10 points or 0.35%. There were 28 stocks advancing against 21 declines, while one stock remains unchanged on the index.

The top gainers of the Nifty were Dr. Reddy's Laboratories up by 2.23%, Ambuja Cements up by 1.72%, M&M up by 1.67%, ITC up by 1.65% and BHEL up by 1.59%. On the flip side, Axis Bank down by 2.34%, Tata Motors down by 1.54%, Ranbaxy down by 1.49%, HDFC Bank down by 1.40% and PNB down by 1.28% were the major losers on the index.

Most of the Asian equity indices were trading mixed; Shanghai Composite declined 7.32 points or 0.35% to 2,058.40, KLSE Composite slipped 0.14 points or 0.01% to 1,786.25, Nikkei 225 shed 64.70 points or 0.44% to 14,534.42, Straits Times decreased 7.42 points or 0.23% to 3,217.54 and Taiwan Weighted was down by 31.77 points or 0.38% to 8,228.34.

On the flip side, Hang Seng rose 43.52 points or 0.20% to 21,355.90, Jakarta Composite increased 24.31 points or 0.52% to 4,668.35 and Seoul Composite was up by 24.21 points or 1.30% to 1,890.57.