Markets remain in fine fettle riding on FDI liberalization cues

Key benchmarks extended intraday gains and were near day's high led by gains in power, Consumer Durables and FMCG sectors as buying activity picked up after the government announced FDI liberalization. The pull-back in rupee from recent lows due to dollar inflows after the RBI measures also boosted sentiment. Sentiments turned better after the government liberalised FDI limits in a dozen sectors, including allowing 100 per cent FDI in telecom and higher limits in 'state-of-the-art' defence manufacturing to shore up foreign investments and, boost the sagging economy, triggering buying by participants. Though, the market is likely to be range-bound with positive bias in the near term, with stock specific action keeping the markets buzzing in earnings season. On the global front, Asian shares were trading mixed as investors remained cautious ahead of US Federal Reserve chief Ben Bernanke’s views on the future of the bank’s stimulus programme.

Back home, the traders were seen piling up positions in Power, Consumer Durables and FMCG, while selling was seen in Banking, Metal and PSU sector. In sector specific developments, Telecom stocks edged higher after foreign investment limit in the sector was raised to 100% from the current 74%, while banking stocks remained under pressure for a second day, as the RBI's decision to raise short-term interest rates (to curb the rupee's slide) is seen hurting growth. There are concerns that the tightening will push back lending rate cuts. Meanwhile, the NSE Nifty and BSE Sensex were trading near the psychological 5,950 and 19,700 levels respectively. The market breadth on BSE was showing positive trend with advances to declines in ratio of 1010: 578.

The BSE Sensex is currently trading at 19958.55, up by 107.32 points or 0.54% after trading in a range of 19970.02 and 19881.19. 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 0.68% and Small cap index up by 0.69%.

The top gaining sectoral indices on the BSE were, Power up by 1.43%,  Consumer Durables up by 1.34%, FMCG up by 1.22%, IT up by 1.15% and Teck up by 1.11%. While Bankex down by 0.86%, Metal down by 0.24% and PSU down by 0.07% were the top losers on the BSE.

The top gainers on the Sensex were Dr Reddys Lab up by 1.99%, Jindal Steel up by 1.76%, Tata Power up by 1.68%, TCS up by 1.62% and NTPC up by 1.47%. On the flip side, Tata Motors was down by 1.53%,HDFC Bank was down by 0.98%,  Tata Steel was down by 0.84%, ICICI Bank was down by 0.72% and ONGC was down by 0.62% were the top losers on the Sensex.

Meanwhile, India’s gems and jewellery exports tumbled 41 per cent to $2.3 billion in June, 2013 as compared to $4 billion in the corresponding month previous year mainly due to shortage of yellow metal and limited inventory in domestic market. The major reason behind the shortage of raw-material for jewellery manufacturing was the government's move to curb gold imports. Though, the industry is expected to get a sufficient raw-material supply for jewellery manufacturing as the shortage is a short-term phenomenon.

India imported around 830 tonnes of gold in 2012-13. The government hiked the import duty on gold thrice in a year and raised it recently by 2 per cent to 8 per cent to curb demand. Besides, RBI too has put restrictions on banks on importing gold. Gold imports in June too are projected to have plunged to around 31 tonnes as against 162 tonnes in May and 141 tonnes in April. High imports strain the Current Account Deficit (CAD), which hit a record high of 4.8 per cent in the 2012-13 fiscal.

Meanwhile, jewellery exports declined 73 per cent as there were no outbound shipments of gold medallions and coins in June 2013. However, silver jewellery exports were up 52 per cent and outward shipments of cut and polished diamonds jumped about 22 per cent. On cumulative basis, the gems and jewellery exports declined 13.2 per cent year-on-year to $8.5 billion during April-June 2013.

India is the largest importer of gold which is mainly utilised to meet demand of the jewellery industry and the major markets for the country’s jewellery exports are the US, Europe, Middle-East, Hong Kong and Japan.

The CNX Nifty is currently trading at 5,983.05 up by 27.80 points or 0.47% after trading in a range of 5,988.00 and 5,968.80. There were 30 stocks advancing against 18 declines while 2 stocks remains unchanged on the index.

The top gainers of the Nifty were Asian Paint up by 2.27%, Ambuja Cements up by 2.17%, JP Associates up by 2.08%, DR Reddy up by 2.01% and Reliance Infra up by 1.82%. On the flip side, Axis Bank down by 1.96%, Ranbaxy down by 1.67%, Tata Motors down by 1.59%, Indusind Bank down by 1.06% and Tata Steel down by 1.03% were the major losers on the index.

Most of the Asian equity indices were trading mixed; Shanghai Composite declined 5.93 points or 0.29% to 2,059.79, KLSE Composite slipped 0.49 points or 0.03% to 1,785.90, Nikkei 225 shed 3.98 points or 0.03% to 14,592.56, Straits Times decreased 9.25 points or 0.30% to 3,215.20 and Taiwan Weighted was down by 16.14 points or 0.20% to 8,243.97.

On the flip side, Hang Seng rose 85.38 points or 0.40% to 21,397.76, Jakarta Composite increased 27.01 points or 0.58% to 4,671.05 and Seoul Composite was up by 21.31 points or 1.14% to 1,887.64.