Firm global cues, strong RIL numbers pull benchmarks higher in early deals

Extending their northward journey to sixth straight day, Indian equity benchmarks are trading in fine fettle in Tuesday’s morning deals supported by firm global cues coupled with better-than-expected Reliance Industries’ Q2 numbers. RIL reported a 14% growth in revenues to Rs 106,523 crore in the July-September quarter and posted a marginal 1.5% increase in net profit to Rs 5,490 crore. Most importantly, it became the first private sector firm to report revenues exceeding Rs 1 lakh crore in a quarter. Some support also came in from the Planning Commission Deputy Chairman, Montek Singh Ahluwalia’s statement that inflation will soften in coming months, as the steps taken by government to destock the excess food stocks would result in cooling-off of prices in few weeks ahead.

Global cues too remained supportive with the US markets ending higher overnight on renewed optimism about lawmakers reaching an agreement to end the fiscal crisis. Moreover, most of the Asian equity benchmarks were trading in the green terrain at this point of time with Japanese Nikkei trading higher with a weaker yen.

Back home, some support also came in from appreciation in rupee. The rupee appreciated in early trade tracking the Non Deliverable Forwards (NDF) market. However, the gains on the up-side remained capped as investors remained concerned on macro numbers, as retail inflation gauged by CPI, reversed its declining trend to hit a near-double-digit mark to 9.84% on-year in September. Moreover, banking sector remained under pressure as a repo rate hike in the Reserve Bank of India’s October 29 policy meet seems most probable. On the sectoral front, realty witnessed the maximum gain in trade followed by technology and software, while banking and fast moving consumer goods remained the only losers on the BSE sectoral space. The broader indices too were trading in-line with benchmarks, while the market breadth on the BSE was positive; there were 753 shares on the gaining side against 450 shares on the losing side while 54 shares remain unchanged.

The BSE Sensex opened at 20722.90; about 115 points higher compared to its previous closing of 20607.54, and has touched a high and a low of 20759.58 and 20673.84 respectively. The index is currently trading at 20677.69, up by 70.15 points or 0.34%. There were 21 stocks advancing against 9 declines on the index.

The overall market breadth has made a strong start with 59.90% stocks advancing against 35.80% declines. The broader indices were trading in green; the BSE Mid cap up by 0.21% and Small cap indices up by 0.11%. 

The top gaining sectoral indices on the BSE were, Realty up by 1.23%, Teck up by 1.02%, IT up by 0.94%, Power up by 0.88% and Oil & Gas up by 0.82%, while Bankex down by 0.36% and FMCG down by 0.16% were the only losers on the sectoral index.

The top gainers on the Sensex were Wipro up by 2.56%, NTPC up by 2.05%, Bharti Airtel up by 1.95%, Tata Steel up by 1.84% and Mahindra & Mahindra up by 1.59%. On the flip side, Hindalco Industries was down by 1.85%, Coal India was down by 1.07%, ICICI Bank was down by 0.52%, Hindustan Unilever was down by 0.51%  and Tata Motors was down by 0.40% were the top losers on the Sensex.

Meanwhile, in a bid to help special economic zone (SEZ) units amid prevailing global economic slowdown, the Commerce Ministry has planned to seek tax concessional structure for SEZ units under which the duty forgone towards sale of products in domestic tariff area (DTA) could be recovered once the economic situation improves.

The tax concession would be given to SEZ units to sell their products in the domestic market as several of these units in sectors like auto components, textiles and pharmaceuticals are not able to export due to global demand slowdown. Presently, SEZ units have to pay full duty if they sell goods in the DTA. The move will also help SEZs in boosting their manufacturing process, which in turn will create jobs and revive India's economic growth. Indian industrial output has slowed down sharply to 0.6 percent in August mainly due to contraction in manufacturing and mining.

The government has approved 576 such zones out of which 173 have commenced exports. Presently, SEZs units are struggling with global economic slowdown and so far this fiscal, around 58 SEZ developers have surrendered their projects. Further, imposition of Minimum Alternate Tax, Dividend Distribution Tax in 2011 and certain provisions in the proposed Direct Tax Code has also been denting the attractiveness of these units. During April-June period, exports from these zones stood at Rs 1.13 lakh crore as compared to Rs 4.05 lakh crore of country's overall exports in the reported period. Meanwhile, the government has announced various incentives like easing of land requirement norms to revive investor confidence in SEZs.

The CNX Nifty opened at 6,147.55; about 34 points higher as compared to its previous closing of 6,112.70, and has touched a high and a low of 6,156.30 and 6,133.35 respectively.

The index is currently trading at 6,139.75, up by 27.05 points or 0.44%. There were 33 stocks advancing against 16 declines and one stock remains unchanged on the index.

The top gainers of the Nifty were JP Associate up by 6.16%, Wipro up by 2.57%, DLF up by 2.47%, NTPC up by 2.12% and Tata Steel up by 1.97%. On the flip side, Hindalco down by 1.49%, IndusInd Bank down by 1.39%, coal India down by 1.07%, Ambuja Cements down by 1.06% and Bank of Baroda down by 0.99% were the major losers on the index.

Most of the Asian equity indices were trading in green; Hang Seng rose 133.52 points or 0.58% to 23,351.84, Nikkei 225 gained 25.56 points or 0.18% to 14,430.30, Seoul Composite strengthened 14.22 points or 0.70% to 2,034.49 and Taiwan Weighted was up by 71.74 points or 0.87% to 8,345.70.

On the flip side, Shanghai Composite was down by 3.23 points or 0.14% to 2,234.54.

Markets in Indonesia, Malaysia and Singapore remained closed for the trade today on account of holiday.