Equity markets escalate to day’s high level; Nifty comfortably cruises past 6300 level

After starting fresh month F&O series on pleasant note, Indian equity markets building on early gains are currently trading near day’s high point, above the crucial 21,200 (Sensex) and 6,300 (nifty) levels respectively, with gains of over half a percent. Relentless buying in blue chip stocks after foreign institutional investors turned net buyers of Rs 744 crore in Indian shares on Thursday, bringing their monthly total so far to around $2.5 billion mainly led to up-move of local equity market amidst mostly positive global set-up. In the global market, Asian markets were well placed on Friday as Wall Street reached record heights for a fourth straight session while rising U.S. yields lifted the dollar to new peaks on the yen.

Closer home , amidst across the board buying activities, only stocks from Oil & Gas counter was trading downbeat. However, prominent gainers were stocks from Realty, Information Technology and Banking counters. Recent jobless claims data which continued to point to a sturdier U.S. economy, further brightening the outlook for India's export-dependant IT sector, contributed to sharp gains of IT pivotal, with Infosys just trading below a record high of 3,573.00 hit on December 20. Jobless claims declined by 42,000 to 338,000 in the week ended Dec. 21, a Labor Department report showed in Washington. Additionally, banking stocks also crept higher, with Axis bank extending Thursday’s gains triggered by the government's decision to clear a proposal of the bank for increase in foreign investment ceiling in the bank to 62% from 49%. The overall market breadth on BSE is in the favour of declines which have thumped declines in the ratio of 1216:595; while 32 shares remained unchanged.

The BSE Sensex is currently trading at 21202.23, up by 127.64 points or 0.61% after trading in a range of 21,217.12 and 21,113.25. There were 23 stocks advancing against 7 stocks declining on the index.

The broader indices sustained early gains; the BSE Mid cap index was up by 0.46%, while Small cap index up by 0.37%.

The gaining sectoral indices on the BSE were Realty up by 1.31%, IT up by 1.29%, Teck up by 1.14%, Bankex up by 0.68% and Metal up by 0.67%. While, Oil and gas down by 0.06% was the only loser on BSE.

The top gainers on the Sensex were TCS up by 1.88%, Cipla and Infosys up by 1.38%, SSLT up by 1.30% and HUL up by 1.22%. On the flip side, BHEL down by 1.37%, Maruti Suzuki down by 1.07%, Bajaj Auto down by 0.85%, RIL down by 0.38% and ONGC down by 0.24%.

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 6,313.40, up by 34.50 points or 0.55% after trading in a range of 6,319.35 and 6,289.40. There were 36 stocks advancing against 13 declining on the index, while 1 stock remained unchanged.

The top gainers of the Nifty were NMDC up by 2.27%, DLF up by 2.02%, TCS up by 1.88%, Kotak bank up by 1.76% and Cipla up by 1.62%. On the flip side, BHEL down by 1.49%, Asian Paints down by 1.29%, Maruti Suzuki down by 1.22%, JP Associates down by 0.73% and Bajaj Auto down by 0.69% were the major losers on the index.

The Asian equity indices were trading in green; Hang Seng up by 0.35%, KLSE Composite up by 0.77%, Straits Times up by 0.58%, Jakarta Composite up by 0.37%, Nikkei 225 up by 0.03%, Taiwan Weighted up by 0.58%, Seoul Composite up by 0.15% and Shanghai Composite up by 1.43%.