Markets come off day’s high despite eight month low WPI data

After rising substantially higher in a knee-jerk reaction to eight month low January Wholesale Price (WPI) data, Indian equity markets quickly came off the day’s high as investors came to terms with higher Core CPI data, which edged higher at 3% as compared to 2.8% in December. Additionally, some prevailing caution ahead of the government’s Vote on Account on Monday, wherein Finance Minister P Chidambaram will be walking a tightrope, doling out more funds to woo voters and tax cuts to support industry, while projecting a lower fiscal deficit before elections, have also limited bourses’ further gains. Off day’s high, Sensex and Nifty, were trading near the crucial 20,200 and 6000 levels respectively, with gains of over quarter of a percent. Meanwhile, broader indices underperforming frontline indices marginally, were up with gains in the range of 0.15-0.20%

On the global front, Asian shares mostly rose on Friday, while the US dollar struggled to regain traction after downbeat US economic data pushed it to a nearly three-week low against the euro. Markets in mainland China and Hong Kong also crept higher, set for their biggest weekly gains since September, recovering from the recent rout from emerging markets despite mixed signals from Chinese inflation data.

Closer home, while most of the sectoral indices were trading in green, stocks from Information Technology, Oil & Gas and banking counters were the prominent gainers. On the flip side, Metal, Capital Goods and Healthcare counters were the top laggards. In other stock-specific action, telecom stocks rang loud, Idea Cellular and Bharti Airtel after a mobile unit of Reliance Industries did not win any spectrum in the premium 900 megahertz in an auction for airwaves, which could help ease competition in the sector. Additionally, all retail stocks, viz Shoppers Stop, Pantaloons are witnessing massive demand after Future Retail reported good set of Q3 numbers. Future Retail has reported a net profit of Rs 21.74 crore for fourth quarter ended December 31, 2013 as compared to net loss of Rs 20.41 crore for the same quarter in the previous year. The market breadth on BSE was positive, out of 2,283 stocks traded, 1,111 stocks advanced, while 1,055 stocks declined on the BSE.

The BSE Sensex is currently trading at 20246.40, up by 53.05 points or 0.26% after trading in a range of 20313.02 and 20166.08. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.15%, while Small cap index up by 0.21%.

The gaining sectoral indices on the BSE were IT up by 1.36%, Teck up by 1.22%, Oil & Gas up by 0.37%, Bankex up by 0.31% and Consumer Durables up by 0.30%. While, Metal down by 0.68%, Capital Goods down by 0.53%, Healthcare down by 0.28%, Realty down by 0.23% and FMCG down by 0.15% were the top losing indices on BSE.   

The top gainers on the Sensex were Tata Motors up by 2.14%, TCS up by 2.12%, Bharti Airtel up by 1.47%,  Infosys up by 1.35% and NTPC up by 1.34%. On the flip side, BHEL down by 2.47%, Bajaj Auto down by 2.41%, Dr Reddys Lab down by 1.64%, SSLT down by 1.48% and Cipla down by 1.47%.

Meanwhile, in a major overhaul of corporate governance norms, market regulator Securities and Exchange Board of India (SEBI) has approved a new corporate governance code, aimed at improving transparency and disclosure standards of listed companies in India. The norms, which are consistent with the new companies’ law ratified last year to enhance shareholder rights, would come into effect from October 1,2014 and cover a wide range of subjects like CEO salaries, women on board, succession plans and mandatory whistle-blower policy.

Market regulator’s norms come against the backdrop of demands for clear information on the way Indian firms operate. The norms are expected to make stocks attractive to retail investors again, who have been selling heavily since 2008 due to trust deficit.

As per the new norms, companies will now have to disclose remuneration policies of CEOs and executive directors, related-party transactions and appointment and resignations of independent directors, a move which is likely to invite huge criticism from corporate.

Further, SEBI has recommended tax incentives for mutual funds and proposed that the Employee Provident Fund Organization (EPFO) should invest 15% of its corpus in equities and MF schemes. Besides, it added that members of EPFO, who are earning more than Rs 6,500 a month, be given an  option that a part of their corpus could be invested in a MF product.

Additionally, the market watchdog announced higher net worth for asset management companies, apparently aimed at weeding out smaller funds. It upped the minimum capital requirement for an asset management company from Rs 10 crore to Rs 50 crore.

 The CNX Nifty is currently trading at 6,012.45, up by 11.35 points or 0.19% after trading in a range of 6,033.30 and 5,990.80. There were 23 stocks advancing against 26 declining and one stock remains unchanged on the index.

The top gainers of the Nifty were Tata Motors up by 2.34%, TCS up by 2.16%, NTPC up by 1.50%, Bharti Airtel up by 1.40% and Infosys up by 1.25%. On the flip side, BHEL down by 2.73%, Bajaj-Auto down by 2.40%, SSLT down by 1.72%, Ambuja Cements down by 1.66% and UltraTech Cement down by 1.62% were the major losers on the index.

Most of the Asian equity indices were trading in green; Shanghai Composite added 0.59%, Hang Seng increased by 0.48%, Jakarta Composite surged 0.18, KLSE Composite gained 0.12%, Seoul Composite rose 0.69%, Taiwan Weighted was up by 0.54% and Straits Times was up by 0.04%. On the flip side, Nikkei 225 slumped by 1.53%.