Benchmarks extend rallies on strong rupee

Benchmarks have extended their rally in late morning trade on hopes that the US Federal Reserve would stick to its easy monetary policy. Investor’s sentiments got some support with the strength in rupee against dollar, which moved higher on RBI’s announcement of purchasing bonds worth Rs 8,000 crore this week under the open market operations (OMO) to inject liquidity in the system.

On the global front, All the Asian markets were trading in green, with some of the indices gaining by over a percent in early trade, taking cues from the Chinese pledge to carry out the broadest expansion of economic freedoms since at least the 1990s. China’s Communist Party signaled a bigger focus on fiscal concerns, the party has said that the local governments will be able to sell bonds to fund construction and officials will be rated on measures including borrowing levels. However, a statistics-bureau report showed that new home prices in China’s four major cities rose last month by the most since January 2011. Back home, traders were buying, Bankex, Capital Goods and IT on the BSE. Rate sensitive sectors edged higher after the RBI governor said that several factors, besides inflation, will determine the stance of its policy review.

The market breadth on BSE remains positive with advances to declines in the ratio of 1212:551. BSE Sensex and NSE Nifty were comfortably trading near their psychological 20,600 and 6,100 levels respectively. The BSE Sensex is currently trading at 20696.04, up by 296.62 points or 1.45% after trading in a range of 20711.36 and 20570.59. There were 27 stocks advancing against 3 declines on the index. The broader indices were trading in green; the BSE Mid cap index was up by 1.11% and Small cap index gained 0.92%

The top gaining sectoral indices on the BSE were, Bankex up by 2.29%, Capital Goods up by 2.23%, IT up by 1.61%, Teck up by 1.47%, and Oil & Gas up by 1.43%, while there were no losers on the sectoral. index.

The top gainers on the Sensex were L&T up by 2.87%, ICICI Bank up by 2.83%, Wipro up by 2.41%, HDFC Bank up by 2.40%, and ITC up by 1.99%. On the flip side, Coal India down by 0.77%, SSLT down by 0.58% and Tata Motors down by 0.12% were the only losers on the Sensex.

Meanwhile, Special Economic Zone (SEZ) board will now issue industrial licences for the production of defence related goods to SEZs, a move, which is aimed at speedier approval of such projects and single-window clearance promised to SEZs. Further, special economic zone units producing defence related items will no longer have to go to the Department of Industrial Policy & Promotion (DIPP) for an industrial licence. The decision to issue industrial licences was taken in meeting of Board of Approval (BoA) for SEZs, which is headed by Commerce Secretary and attended by senior officials from key ministries including Finance, Revenue, Home, Urban Development and Micro, Small & Medium Enterprises.

Meanwhile, the SEZ Act of 2005 gives the SEZ Board, which approves proposals for setting up these zones and takes decisions on matters related to their operation, an authority to issue industrial licences, but it had not been exercising it for the last seven years owing to some uncertainty over rules, as defence is a sensitive area. During the SEZ Board meeting, the three proposal have been considered for issuing licences include Syrma Technology’s application for producing defence products such as radio and satellite communication equipment and Data Patterns’s application for design, development and manufacture of radar, sonar and electronic warfare systems and Pipavav Defence and Offshore Engg Co’s application for manufacture and development of C4I systems, electro-optical systems, underwater systems and avionics.

Investment in SEZs has reduced over the past two years due to imposition of taxes and the requirements of certain clearances. Meanwhile, the government has started taking measure to ease SEZs norms, which will helpful to enhanced country’s industrial development and increase exports. In an attempt to revive investors’ interest in the zones, Commerce Ministry has recently slashed the minimum area requirement for setting up SEZs.

The CNX Nifty is currently trading at 6,140.35 up by 84.20 points or 1.39% after trading in a range of 6,145.50 and 6,110.40. There were 43 stocks advancing against 5 declines while 2 stocks remains unchanged on the index.

The top gainers of the Nifty were L&T up by 2.85%, ICICI Bank up by 2.61%, Axis Bank up by 2.42%, HDFC Bank up by 2.35%, and  JP Associate up by 2.31%. On the flip side, Coal India down by 1.07%, SSLT down by 0.68%, Tata Motors down by 0.49%, Lupin down by 0.25%, and Ambuja Cements down by 0.20%,  were the top losers on the index.

The Asian equity indices were trading in green; Shanghai Composite surged by 29.78 points or 1.39% to 2,165.61, Hang Seng zoomed by 500.32 points or 2.17% to 23,532.47, Jakarta Composite was up by 56.82 points or 1.31% to 4,392.65, KLSE Composite added 4.50 points or 0.25% to 1,794.37, Nikkei 225 gained 21.13 points or 0.14% to 15,187.05, Straits Times was up by 9.99 points or 0.31% to 3,211.07, Seoul Composite gained 6.64 points or 0.36% to 2,012.27 and Taiwan Weighted gained 24.29 points or 0.30% to 8,201.41