Markets spiral to day’s high; Sensex re-claims 20,500 level

Adding strength brick by brick, barometer gauges have now escalated to day’s high level on account of hectic buying activity, by both funds and investors after IT behemoth, Infosys delivered a positive surprise. The stock of IT major rallied 5% intra-day after the company revised guidance for the year upwards to 9-10% for the 2013-14 fiscal from 6-10% earlier, while just reporting marginal 1.6% rise in consolidated net profit to Rs 2,407 crore for the second quarter ended September 30, 2013, on the back of large deals and increased sales from Big Data and Cloud. Further, even positive global-up added fuel to the rally of Indian equity markets, which have taken Sensex above the psychological 20,500 and Nifty just shy of the crucial 6,100 level, with handsome gains of over a percent. Meanwhile, broader indices too continue to trade in fine fettle.

On the global front, receiving positive hand over from Asian pacific shares, European markets rose to month high level on progressing signs in Washington on ending the U.S. fiscal stalemate and averting a possible debt default. According to a Republican leadership aide, U.S. House Republicans are considering agreeing to a short-term increase in the government's borrowing authority, staving off a possible default after Oct. 17 and buying time for negotiations on broader policy measures.

Closer home, stocks from Realty, Information Technology and Banking counters are most supportive of the this uptrend, while those from Metal, Fast Moving Consumer Goods and Consumer Durables are providing a ceiling to bourses’ gains. Realty stocks gained ground after market watchdog Securities and Exchange Board of India (SEBI) has issued draft guidelines to set up Real Estate Investment Trusts (REITs) in India, which could open up new funding channels for real estate assets in the country. Meanwhile, sentimental boost was also provided to bourses after HSBC slashed its USD/INR forecast for the end of the year to 62 from 65 previously, citing improvements in the current account deficit and measures to attract inflows. The overall market breadth on BSE is in the favour of advances which thumped declines in the ratio of 1245:901; while 153 shares remained unchanged.

The BSE Sensex is currently trading at 20501.56, up by 228. 65 points or 1.13% after trading in a range of 20559.69 and 20368.06. There were only 22 stocks advancing against 8 declines on the index.

The broader indices remained in fine fettle; the BSE Mid cap and Smallcap indices were trading higher by 0.84% and 0.63% respectively.

The gaining sectoral indices on the BSE were IT up by 2.91%, Realty up by 3.32%, Bankex up by 2.61%, Teck up by 2.01% and Capital Goods up by 0.98%. While, Metal down by 0.59%, Fast Moving Consumer Goods down by 0.49%, Consumer Durables down by 0.36%, Healthcare down by 0.35% and Power down by 0.21% respectively were remained the only losing indices on BSE.

The top gainers on the Sensex were Infosys up by 4.59%, ICICI Bank up by 4.12%, L&T up by 2.72%, Maruti Suzuki up by 2.16%, HDFC Bank up by 2.05%. On the flip side, Tata Power down by 2.20%, SSLT down by 1.60%, Sun Pharma down by 1.31%, Hindalco Inds down by 1.15% and ITC down by 0.84% were the top losers on the Sensex.

Meanwhile, With an aim to lure investments to the country’s dwindling realty sector, market watchdog Securities and Exchange Board of India (SEBI) has issued draft guidelines to set up Real Estate Investment Trusts (REITs) in India, which could open up new funding channels for real estate assets in the country. However, the regulator, in its draft note for a separate regulatory framework has allowed REITs only for large assets.

As per the draft guidelines, all the REIT Schemes will be close-ended real estate investment schemes that will invest in real estate, whose returns will be derived mainly from rental income or capital gains from real estate. The objective of REITs, to be registered as trusts with SEBI, will be to organize, operate and manage real estate collective investments.

Further, as per the proposal, A REIT will be first set up as trusts which will have trustees, sponsors, managers and a principal valuer. The trust, once formed, will initially apply for a SEBI registration and only after getting approval, will be allowed to offer units to the public and get the units listed, similar to initial public offering (IPOs) of equity shares, albeit in a different structure.

However, only those companies can come with IPO, whose assets size under the REIT is not less than Rs 1,000 crore ($160 million). Further, SEBI has called for a minimum initial offer size of Rs 250 crore and minimum public float of 25% to ensure adequate public participation and float in the units. Consequently, it is proposed that the minimum subscription and unit size would be Rs 2 lakh and Rs 1 lakh respectively.

The total REIT market size in the Asia-Pacific region is approximately $205 billion but India, so far has been unable to take advantage of this funding opportunity, mainly because of the lack of an existing regulatory framework. The country back in 2008 too, issued draft regulations for REITs, but they were withdrawn in favour of allowing asset management firms to launch real estate mutual funds, with that initiative failing too. 

 The CNX Nifty is currently trading at 6,090.95, up by 70.10 points or 1.16% after trading in a range of 6,107.60 and 6,046.40. There were 33 stocks advancing against 16 declines on the index, while 1 stock remained unchanged.

The top gainers of the Nifty were Bank of Baroda up by 4.66%, Infosys up by 4.47%, DLF up by 4.35%, ICICI Bank up by 4.09% and Punjab National Bank up by 4.04%. On the flip side, Tata Power down by 2.33%, SSLT down by 1.90%, Sun Pharma down by 1.34%, Hindalco Inds down by 1.20% and ITC down by 1.02% were the major losers on the index.

The Asian equity indices were trading in Green; Jakarta Composite up by 0.57%, Straits Times up by 0.75%, Nikki 225 up by 1.48%, KLSE Composite up by 0.56%, Hang Seng up by 1.20%, Taiwan Weighted up by 0.06%, Seoul Composite up by 1.17%, and Shanghai Composite up by 1.63%.

European markets to got off to a mostly positive start; DAX rising by 0.23% and FTSE 100 adding by 0.13%, however, CAC 40 was trading down with loss of over 0.15%