Indian equities gain strength; Nifty above 5,000 mark

Indian equities pared off some losses and regained strength as investors started accumulating stocks at the lower levels amid fear of slowdown in the economy, which kept investors nervous after reports showed that India’s September services export receipt declined by 5.63% month-on-month. The services sector contributes over 50% to India's GDP. Traders were seen were seen piling up the position in Realty, Bankex and Metal sector while selling was witnessed across Capital Goods, Power and Oil & Gas sector. L&T and BHEL from Capital Goods sector were seen putting pressure on the markets on fears that their earnings will stay muted due to sluggish economic growth amid elevated interest rates and high inflation. Index heavyweight RIL is seen trading with a cut off around more than a percent helping market bleed, with the stock falling for the third straight day. Tata Power, Siemens and Reliance Power from Power sector were seen trading in red dragging the market. Infosys, Wipro, TCS and HCL Technologies from IT sector were trading in red pulling the markets down. Hero MotoCorp, Maruti and Tata Motors from Auto pack were trading with cut of around half to two and half percent putting pressure on the market. DLF from Realty space was trading in green with more than one and half percent preventing the markets from falling down further. SBI, ICICI Bank and Axis Bank from Banking sector were seen trading in green helping to pull the markets. Tata Steel, Jindal Steel and Sesa Goa from Metals pack were seen firm in green giving the much needed support for the benchmarks.

In the scrip specific development, Bharti Airtel, India's largest telecom operator, was trading firm as the stock will be added in the Morgan Stanley Capital International (MSCI) Emerging Markets Index while Idea Cellular and PFC were too trading in green as these stock will enter the MSCI India Index. Shares of three public sector oil marketing companies HPCL, BPCL and IOC were trading weak in red after theses companies announced the reduction of petrol prices, which were effective from yesterday. On the global front, all Asian markets were seen trading in red while the European markets were trading mixed on a pessimistic note. Sentiments largely got undermined as uncertainties looming over the European region once again remained the primary overhang. Lack of clarity over the action plan from Italy and sharply higher bond yields in Euro-zone nations including France, Belgium, Austria and Spain triggered a new wave of selling pressure. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 5,050 and 16,800 levels, respectively. The market breadth on the BSE was negative in the ratio of 708:2005 while, 92 scrips remained unchanged.

The BSE Sensex is currently trading at 16,799.47 down by 83.20 points or 0.49% after trading as high as 16,872.30 and as low as 16,644.85. There were 12 stocks advancing against 18 declines on the index.

The broader indices were trading in the negative zone; the BSE Mid cap index lost 1.10% while Small cap shed 1.58%.

On the BSE sectoral space, Realty up 0.20%, Bankex up 0.15% and Metal up 0.01% were the only gainers while Capital Goods down 3.77%, Power down 1.82%, Oil & Gas down 1.17%, PSU down 0.80% and IT down 0.50% were the major losers in the space.

SBI up 2.03%, Jindal Steel up 1.82%, M&M up 1.74%, Tata Steel up 1.73% and ONGC up 1.31% were the major gainers on the Sensex, while BHEL down 5.73%, JP Associates down 4.91%, L&T down 3.48%, Hero Moto down 2.62% and Wipro down 2.48% were the major losers on the index.

Meanwhile, in order to help the domestic cash-strapped carriers, the commerce and civil aviation ministries have agreed on allowing foreign airlines to pick up stakes in Indian companies, but they still have to take a call on whether the foreign direct investment (FDI) limit would be 24% or 26%. The matter is soon likely to be discussed by the two ministries.

Commerce and Industry Minister Anand Sharma said, ‘a proposal has come from the civil aviation ministry and it is receiving our active consideration. A cabinet note will be circulated only after the inter-ministerial consultations.’ Earlier the civil aviation ministry had written to the Department of Industrial Policy and Promotion (DIPP) agreeing to equity participation by foreign airlines in domestic carriers, proposing to allow foreign airlines to invest up to 24% in local carriers within the existing cap of 49% for foreign investors.

However, DIPP is not in favour of the aviation ministry's proposal of 24% cap and had suggested a minimum of 26%, as it wants to extend all help to the besieged sector and the best way of doing that in the current situation is to open doors to foreign investments, as banks are not in a position to extend more funds to the sector.

Under the current rules, the government allows 49% FDI in the aviation sector, but at the same time, it restricts any direct or indirect investment by foreign airlines or their arms in the domestic aviation sector. A relaxation in the restriction would fly in the much-needed strategic funds for the airlines industry.

The Indian aviation industry is divided on the issue, with some private carriers opposing the proposal for the fear of large-scale takeover of the India's carriers by foreign ones. Changes in existing FDI policy have been debated for long, but after the recent disaster of chain flight cancellations by Kingfisher Airlines, the issue has gained momentum again. In the first half of the fiscal, India's airlines have made a combined loss of about Rs 3,500 crore.

The S&P CNX Nifty is currently trading at 5,040.35, lower by 28.15 points or 0.56% after trading as high as 5,059.10 and as low as 4,990.65. There were 19 stocks advancing against 31 declines on the index.

The top gainers on the Nifty were SBI up 2.14%, Tata Steel up 2.04%, M&M up 1.75%, RCOM up 1.75% and DLF up 1.71%.

BHEL down 5.46%, JP Associates down 4.93%, SAIL down 4.75%, Siemens down 4.34% and GAIL down 3.76% were the major losers on the index.

Asian markets traded on a pessimistic note, Shanghai Composite nosedived 2.48%, Hang Seng plunged 2.00%, Jakarta Composite sank 0.61%, KLSE Composite shed 0.13%, Nikkei 225 slipped 0.92%, Straits Times declined 0.54%, Seoul Composite shaved-off 1.59% and Taiwan Weighted slumped 1.38%.

The European markets were trading in mix with, France’s CAC 40 up 0.12%, Germany's DAX declined 0.87% and Britain’s FTSE 100 down 0.03%.