Markets surge to intra-day high levels on rate cut hopes

Indian equity markets extended gains in the late afternoon session and reached at their intra-day high levels as investors’ sentiments got a boost after the Reserve Bank of India (RBI) governor Duvvuri Subbarao said that ‘perhaps’ there is a need to reduce the reserves that banks have to set aside via the cash reserve or the statutory liquidity ratios. Some support also came from the Finance Minister P. Chidambaram statement that the government would bring down CAD to 3.7 percent of the gross domestic product (GDP) in the current financial year by cutting imports, especially of gold, silver, oil and non-essential items. Further, the government’s move like amendment in the special economic zones (SEZ) norms to increase investments in these zones, also boosted the investors’ sentiments as rising investment in SEZs will also increase the exports from SEZs. 

On stock specific front, M&M, Wipro, BHEL and NTPC were trading 2.5 percent higher. The market breadth was favoring the positive trend; there were 1141 shares on the gaining side against 708 shares on the losing side, while 117 shares remained unchanged.

On the global front, Asian shares were trading in green as last week's encouraging data from the world's second-biggest economy boosted the investors sentiments.        

The BSE Sensex is currently trading at 19137.11 up by 190.13 points or 1.00% after trading in a range of 19,143.10 and 18,864.81. There were 23 stocks advancing against 7 declines on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.79%, while Small cap index up by 0.83%.

The top gaining sectoral indices on the BSE were, Realty up by 2.40%, Auto up by 1.98%, Power up by 1.91% and Bankex up by 1.71%. While, Metal down by 0.70% and Consumer Durables down by 0.64% were the only loser indices on the BSE.

The top gainers on the Sensex were Mahindra and Mahindra up by 3.71%, Wipro up by 2.75%, BHEL up by 2.67%, NTPC up by 2.60% and Bajaj Auto up by 2.43%. On the flip side, Hindalco Inds down by 3.52%, Coal India down by 2.15%, ONGC down by 1.35%, Jindal Steel down by 1.06% and ITC down by 0.28% were the top losers on the Sensex.

Meanwhile, in order to make special economic zones (SEZ) attractive for the investors, the government relaxed SEZ rules by notifying relaxations in the minimum area requirements and easing the exit clause for developers.

As per the new SEZ rules, minimum land requirement has been brought down from 1,000 hectares to 500 hectares for multi-product SEZ. While, for sector- specific SEZs, it has been brought down to 50 hectares. The SEZ norms for setting up of zones in north eastern states, hilly regions, Goa and Union Territories were also relaxed. There will be no minimum area required for IT SEZs but put condition for minimum built up area criteria for developers of 1 lakh square meters for the top-7 cities, 50,000 square meters for the next 15 cities and 25,000 square meters for the rest of the cities. Further, the minimum area required will be 10 hectares for SEZs to be set up exclusively for electronics hardware, agro-based food processing, biotechnology and handicrafts.

Further, the amended SEZs rules eased the exit clause for developers and now an SEZ unit may opt out of the zone by transferring its assets and liabilities to another entity by way of transfer of ownership including sale of SEZ units subjected to conditions like prior clearance from the approval committee. However, the unit will be transferred to the buyer if it is operational for a minimum period of 2 years after the commencement of production.

Meanwhile, considering the rising exports from SEZs, the government wants to increase investments in these zones by amending norms. In the previous fiscal year, exports from these zones grew by about 31 per cent year- on-year to Rs 4.76 lakh crore.

The CNX Nifty is currently trading at 5,668.60 up by 56.20 points or 1% after trading in a range of 5,671.40 and 5,578.90. There were 39 stocks advancing against 11 declines on the index.

The top gainers of the Nifty were Axis Bank up by 4.19%, M&M up by 3.57%, DLF up by 3.03%, Indusin Bank up by 2.91% and Lupin up by 2.87%. On the flip side, Hindalco down by 3.83%, Ambuja Cement down by 2.29%, Coal India down by 2.15%, ONGC down by 1.47% and Jindal Steel down by 0.90% were the major losers on the index.

The most of Asian equity indices were trading in green; Hang Seng up by 1.11%, Seoul Composite up by 25.07 points or 1.33% and reached 1909.90, Straits Times up by 0.45%, Shanghai Composite up by 0.14%, Taiwan Weighted up by 1.05%, KLSE Composite up by 0.51%, Jakarta Composite up by 0.42% and Nikkei 225 was up by 2.45%.