Benchmarks regain strength in late morning

A bout of volatility was witnessed as Benchmarks regained strength after trimming initial gains in morning trade. The barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, hit their highest level in more than two weeks on sustained buying by funds and retail investors amid a green trend overseas. The market sentiment was boosted by data showing that foreign funds were net buyers of Indian stocks on Thursday, 26 December 2013. Foreign institutional investors (FIIs) bought shares worth a net Rs 743.70 crore, as per provisional data from the stock exchanges. However, gains on up side remained capped as the rupee opened above the 62 mark, but soon fell from session highs to trade at 62.11/12 versus its previous close of 62.16/17 as month-end dollar demand from oil importers continues to weighs.

On the global front, Asian markets were trading mostly in the green terrain at this point of time tracking firm cues from Wall Street. Back home, traders were buying, Realty, IT and Teck while selling was seen in Oil & Gas on the BSE. Sugar stocks too remained on the buyers’ radar as the cabinet okayed guidelines for interest-free loan to sugar mills, making it clear to sugar mill owners that the interest-free loan of Rs 6,600 crore is meant “exclusively” to pay the cane price including arrears to farmers.

The market breadth on BSE remains positive with advances to declines in the ratio of 1167: 640. BSE Sensex and NSE Nifty were comfortably trading near their psychological 21,100 and 6,300 levels respectively. The BSE Sensex is currently trading at 21186.49 up by 111.90 points or 0.53% after trading in a range of 21217.12 and 21113.25. There were 21 stocks advancing against 8 declines on the index. The broader indices were trading in green; the BSE Mid cap index was up by 0.51% and Small cap index gained 0.40%.

The top gaining sectoral indices on the BSE were, Realty up by 1.40%, IT up by 1.21%, Teck up by 1.07% Bankex up by 0.58% and Consumer Durables up by 0.51%, while Oil & Gas down by 0.08% were the only loser on the sectoral index.

The top gainers on the Sensex were Infosys up by 1.42%, SSLT up by 1.40%, TCS up by 1.28%, Wipro up by 1.21% and SBI up by 1.10%. On the flip side, BHEL was down by 1.43%, Maruti Suzuki was down by 0.76%, ONGC was down by 0.27%, RIL was down by 0.22% and Hindalco Inds  was down by 0.21% were the top losers on the Sensex.

Meanwhile, In order to attract pension money to the capital markets, the Securities and Exchange Board of India (SEBI) has sought for clarity on taxation policy to be applied to retirement- focused funds. The present size of Indian pension fund, including individual retirement money, provident fund and other small savings  is estimated at over Rs 1.5 lakh crore in 2010. Furthermore, the size of pension market in India is expected to rise to over Rs 2 lakh crore by 2015 and further to close to Rs 3 lakh crore in 2020 and more than Rs 4 lakh crore by 2025. Meanwhile, the share of India pension fund is almost negligible in the Indian equity markets. On the other hand, foreign pension funds including from the US and Canada regularly invest in Indian markets.

The government has allowed 15 percent investment in equities, however, Employee Provident Fund Organisation (EPFO) refused to invest in capital market. Terming tax benefits necessary to attract pension money, SEBI Chairman U K Sinha has emphasized that in order to tap huge pension fund, there is a need to work on two issues. Firstly, SEBI has to continue a dialogue with EPFO and its trustees so that they start investing in domestic equity markets, and the second is the government should provide assurance of tax benefit to other pension fund houses. If a mutual fund launches a pension product, an assurance of tax benefit is required for it, he added. Earlier, market regulator has asked asset management companies or mutual fund houses to launch pension products, so that retirement money can be brought into the capital market. Meanwhile in order to develop India’s pension sector, the government, in September has allowed 26 percent foreign direct investment (FDI) in the country's pension sector.

The CNX Nifty is currently trading at 6,307.05 up by 28.15 points or 0.45% after trading in a range of 6,319.35 and 6,289.40. There were 34 stocks advancing against 16 stock declines on the index. 

The top gainers of the Nifty were DLF up by 1.96%, NMDC up by 1.62%, TCS up by 1.34%, Infosys up by 1.26% and SBI up by 1.17%. On the flip side, BHEL down by 1.40%, Maruti Suzuki down by 1.02%, Asian Paint down by 0.89%, Grasim down by 0.34% and Power Grid down by 0.30% were the major losers on the index.

Most of the Asian equity indices were trading in green; Shanghai Composite rose 17.49 points or 0.84% to 2,090.59, Hang Seng increased 67.10 points or 0.29% to 23,246.65, Jakarta Composite jumped 24.38 points or 0.58% to 4,227.21, KLSE Composite strengthened 14.88 points or 0.81% to 1,858.98, Straits Times surged 16.67 points or 0.53% to 3,151.03, Seoul Composite added 3.91 points or 0.20% to 2,003.21 and Taiwan Weighted was up by 38.59 points or 0.45% to 8,524.48. On the flip side, Nikkei 225 was down by 81.05 points or 0.50% to 16,094.03.