Benchmarks trim some early gains; mood remains upbeat

Benchmark equity indices, in the range-bound session of trade, have trimmed bit of late-morning gains on account of some profit-booking ahead of the start of European markets, which is likely to be lower ahead of further euro zone data that could prompt the European Central Bank (ECB) to change its monetary policy on Thursday. Further, bit of cautiousness ahead of factory output data on Friday and key inflation data next week also is preventing further upside of the bourses. Nevertheless, the undertone of local equity markets remains positive in-line with most of Asian pacific shares, with Sensex and Nifty trading above psychological 20,750 and 6,150 levels respectively with gains of over quarter of a percent and also as they appear to be on path of clocking their first daily gain for 2014. Meanwhile, broader indices imitating similar mood have trimmed some of their gains.

On the global front, Asian pacific shares were mostly positive on Wednesday after strong trade data boosted expectations for U.S. growth while a lessening of sovereign strains in Europe lifted stocks there to the highest since 2008. The latest figures offered investors reassurance that the Federal Reserve's decision to taper its asset buying was justified by fundamentals.

Closer home, most of the sectoral indices were in green, barring Capital Goods pivotal that was the only loser. On the flip side, Healthcare, Oil & gas and Auto counters were the prominent gainers of the session. Additionally, export-driven IT and pharmaceutical shares rallied on expectations a weaker rupee and healthier overseas markets will boost earnings. The overall market breadth on BSE is in the favour of advances which have outnumbered declines in the ratio of 1456:757; while 148 shares remained unchanged.

The BSE Sensex is currently trading at 20757.71, up by 64.47 points or 0.31% after trading in a range of 20,783.57 and 20,688.18. There were 22 stocks advancing against 8 stocks declining on the index.

The broader indices too pared some early gains; the BSE Mid cap index was up by 0.85%, while Small cap index up by 0.54%.

The gaining sectoral indices on the BSE were Healthcare up by 1.33%, Oil and Gas up by 0.87%, Auto up by 0.86%, Metal up by 0.50% and Bankex up by 0.45%. While, Capital goods down by 0.59% was the only losing index on BSE.  

The top gainers on the Sensex were Cipla up by 2.54%, Gail India up by 2.01%, Sun Pharma up by 1.98%, Tata Powers up by 1.82%, and M&M up by 1.26%. On the flip side, Axis Bank down by 1.06%, L&T down by 0.98%, BHEL down by 0.91%, Infosys down by 0.70% and SSLT down by 0.69% were the top losers.

Meanwhile, in order to meet disinvestment target at Rs 40,000 crore for current financial year, the government has planned to sell stakes in Public Sector Undertakings (PSUs) such as Indian Oil Corporation and Engineers India in January. The government also proposes to offload equity in BHEL in February and Hindustan Aeronautics (HAL) in March.

The government has so far only managed to raise Rs 3,000 crore from disinvestment in seven PSUs, including Power Grid Corporation of India, Hindustan Copper, National Fertilisers and MMTC. On the other hand, country’s fiscal deficit touched around 94 percent of the budgeted target in the first eight months of the current fiscal. The government has set fiscal deficit target at 4.8% of GDP for current fiscal.

The government has decided to offload 10 percent stake sale in IOC and EIL and are expected to yield Rs 5,000 crore and Rs 500 crore, respectively. It also proposes to garner Rs 3,000 crore from a 10 percent stake sale in HAL and Rs 2,000 crore from 5 percent stake sale in BHEL. The government will also float some PSU shares through the Central Public Sector Enterprises ETF, which is estimated to have a corpus of Rs 3,000 crore. The ETF would serve as an additional mechanism for the government to monetise its shareholdings in companies. The exchange-traded fund (ETF) is set up to reduce volatility in shares of state-owned companies and comprises 2-3 percent of the shares of PSUs.

The CNX Nifty is currently trading at 6,182.35, up by 20.10 points or 0.33% after trading in a range of 6,191.20 and 6,160.35. There were 37 stocks advancing against 13 declining on the index.

The top gainers of the Nifty were Cairn up by 2.52%, Cipla up by 2.51%, Gail India up by 2.12%,  Sun Pharma up by 1.99% and  NMDC up by 1.87%. On the flip side, BPCL down by 1.33%, Axis Bank down by 1.15%, L&T down by 1.01%, BHEL down by 0.88% and Infosys down by 0.78% were the major losers on the index.

Most of the Asian equity indices were trading in green; Nikkei 225 up by 1.94%, Hang Seng up by 1.26%, Straits Times up by 0.72%, KLSE Composite up by 0.63%, Taiwan Weighted up by 0.51% and Jakarta Composite up by 0.08%. While, Shanghai Composite down by 0.26%, Seoul Composite down by 0.02% .